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Gaynor Whyles, JERA Consulting DIGITAL INNOVATION FOR REGIONAL GROWTH Thessaloniki April 2014 Efficiency, quality & sustainability through PPI.

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Presentation on theme: "Gaynor Whyles, JERA Consulting DIGITAL INNOVATION FOR REGIONAL GROWTH Thessaloniki April 2014 Efficiency, quality & sustainability through PPI."— Presentation transcript:

1 Gaynor Whyles, JERA Consulting DIGITAL INNOVATION FOR REGIONAL GROWTH Thessaloniki April 2014 Efficiency, quality & sustainability through PPI

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3 What do we mean by innovation?  Innovation is often confused with research  They are in fact very different processes  Research is a way of turning money into knowledge  Innovation turns knowledge into money  Research is about doing things for the first time  Innovation is about using known things for a new purpose

4 What do we mean by innovation?  You don’t know the results of research in advance  Innovation is always targeted on known outcomes  A key success factor for innovation is an accurate understanding of the unmet need it is targeting Innovation is the process of translating technology and knowledge into new, usable products and services

5  Innovation procurement? –Buying goods and services in a way that stimulates the supply chain to invest in developing better and more innovative goods and services to meet the unmet needs of an organisation

6 The procurers view of innovation  Sensible procurers worry when they hear the word “new”  New products and services have risks. They might….. –not work as expected –not be delivered on time –cost more ….. and anyway, have no track record  We try to avoid innovation because it is risky  But in some cases (more than we admit) we have no choice – the old solutions don’t fit anymore  Many existing products and services cannot deliver what we need.  If we keep buying them we will fail.  How can we buy new goods and services sensibly?

7 The suppliers view of innovation  Developing new products incurs technical risk and requires investments of time and money  Rational suppliers develop new products only if they have to e.g. –to protect margins –to win business –to retain business  Technical and resource risks are under the control of the supplier and can be managed  The risk that the supplier can’t control is: –Having developed the product will someone buy it? –Is there a genuine and credible demand?

8 Forward Commitment Procurement (FCP) A practical innovation procurement (PPI) methodology Identification Market Engagement Procurement “It is the lack of credible articulated demand that is at the root of the relative failure of innovation in the environmental goods and services sector”. Dr Jack Frost, OBE

9 Risk to company Government grant support Development Demonstration Commercial sales Scale up Revenues Decreases as the product approaches market and risks increase Risk is at its highest when a supplier needs to commercialise - the risk is high because demand is not visible Information that a real market exists reduces the risk and enables a supplier to invest in anticipation of future revenues  It is all about investment risk - not investment costs for a supplier  Many products and companies fail at the demonstration and scale up stage  The gap between development and commercial sales is often referred to as the ‘valley of death’ - in fact it is more a mountain of risk…………. Stages in bringing a product to market more less Why innovation procurement - the role of demand side measures - the suppliers perspective EIAG 2006, developed by Whyles, van Meerveld, Nauta 2014

10  FCP thinking drawn from innovation policy, procurement professionals, UK Office of Government Commerce, and critically, suppliers  FCP mirrors the active approach to supply chain management taken by the private sector –Clearly identify and articulate future needs –Search out and engage with potential suppliers –Provide a credible promise of future sales –Provide demand side information and support delivery –(while maintaining competition) –(compliant with the legal framework)

11 The Forward Commitment Procurement Methodology 1. Identification Recognise problems, unmet needs & opportunities Consult with stakeholders and set up team Define an outcome based requirement Prepare a FCP project outline/business case Project approval/sign off 2. Market Engagement Market Sounding Market sounding review & analysis Supply chain feedbackMarket consultation Market consultation report 3. Procurement Develop a pro- innovation procurement strategy Feedback to the supply chain and stakeholders Implement procurement strategy Negotiate Procurement Contract

12 PPI and PCP in action: Peer Learning Workshop Birmingham, UK, Summer Birmingham City Council - JERA - Technology Strategy Board - Contact: (Free)

13 The problem? 40,000 + mattresses to landfill / year High and increasing cost of disposal Sustainability targets not met Time consuming for staff Unmet need? Zero waste mattresses – no cost increase Outcome FCP? No mattresses to landfill Cost saving €5 million Innovation in fabric, changing recycling process, ‘cradle to grave’ managed service MINISTRY OF JUSTICE Zero Waste Prison Mattress

14 ROTHERHAM NHS FOUNDATION TRUST Future Ward Solution The opportunity? Ward refurbishment over 8 years Vision of CEO – hospital of the future Unmet need? A ‘step change in the patient experience’ Ultra efficient lighting, future ready, progressive improvements Cost effective based on whole life costs

15 IMI - Typical ward versus the IMI ward

16 ROTHERHAM NHS FOUNDATION TRUST Future Ward Solution Outcome FCP? New off-site built solution Future ready for LED / OLED Same cost as traditional refurbishment Lower operational cost Innovation? New product on the market Lighting technology: LED, and OLED Lighting design Off-site build And……new SME formed

17 RAWICZ HOSPITAL Low Carbon Uniforms The need and opportunity? Budget to replace uniforms Uniforms heavy and costly to launder User consultation showed uncomfortable, poor quality, not fit for purpose Unmet need? Functional, attractive,and user friendly, easy to clean, durable, cost effective and environmentally sustainable.

18 RAWICZ HOSPITAL Low Carbon Uniforms Innovation? Eucalyptus fibre Biomaterials Eco-textile and….a local company! Outcome FCP? New uniforms with lower whole life costs (-20%) Comfortable nursing staff Carbon reduction More sustainable

19 ERASMUS UNIVERSITY MEDICAL CENTRE Sustainable bed washing facility Unmet need? Clean beds – 70,000 / year Resource efficiency Carbon reduction Cost effective The need and opportunity? New hospital being built Old bed washer end of life and resource intensive No longer produced Supplier consultation day at Erasmus MC

20 ERASMUS UNIVERSITY MEDICAL CENTRE Sustainable bed washing facility Innovation? Robotic bed washing solution Steam jets patented Cross fertilization across supply chains and….an SME, can be applied to other cleaning needs Outcome? Auditable bed cleaning Resource efficiency Carbon reduction (- 63%) Lower Total Cost of Ownership (- 35%)

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24 Innovation procurement v green procurement?  Green/sustainable procurement  Innovation procurement (future ready for Organic LEDS) Efficiency Quality AND Sustainability An energy efficient bed bed lamp

25 More information…… EcoQUIP Associates Programme

26 Summary  Innovation is needed to enable society to adapt, overcome societal challenges and prepare for the future. –There is a wealth of untapped potential and creativity in the supply chain –Many new and better products that deserve a market  The way we buy things can release or inhibit an innovative response  Procurement as usual will not deliver what is needed.  FCP has proved to be a valuable framework to create new options and manage the risk of innovation.  BUT it means thinking differently and changing the way we approach procurement

27 INNOVATION PROCUREMENT Making the world a better place one procurement at time


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