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Billions wasted due to lack of collaboration in Utilities industry

Billions wasted due to lack of collaboration in Utilities industry

4 Jul 2015

Utilities companies across the globe are wasting about $2.5 billion each year managing supplier information because they are not working together to tackle the administrative burden.

In a recent survey, 82% of utilities firms from across the world said their domestic and international ‘arms’ require the same standards for suppliers in terms of health and safety, quality, sustainability, ethics and environmental issues.

Yet only a third (34%) of utilities businesses said they work with other companies in the same industry to manage supplier risk. Two-thirds (60%) do not collaborate with other businesses to share the administrative burden of carrying out due diligence such as pre-qualification, regulatory compliance, verification and audits.

The research was carried out by IFF, an independent research company, which interviewed 65 supply chain professionals from large power and utilities companies in the UK, Brazil, USA/Canada, the Nordics and Spain.

The market survey was commissioned by Achilles which runs five online platforms serving the utilities industry across the UK, Latin America, the Asia Pacific, Central Europe, Southern Europe and the Nordics. These platforms allow utilities buyers and suppliers to share business critical information – but not commercials. Suppliers create online ‘profiles’ of their compliance and risk management information, which are visible to all utilities firms in the relevant regions. It means supplier information is only submitted, validated and audited once on behalf of the whole sector.

The research comes as utilities bosses are crying out for streamlining of regulations affecting the sector. The PwC 2015 Global CEO Survey recently found that 89% of power and utilities CEOs are concerned about the threat of over-regulation to their organisation’s growth prospects.

Richard Collins, global director at Achilles, said: “Across the world utilities companies are spending about $5 billion every year managing supplier information. In our experience about half of that is being wasted.”

“Power and utilities companies are struggling with an ever-increasing burden of regulation affecting their supplier base.”

“Now is the perfect time for utilities firms to come together and share this burden of administration.”

“Information about compliance is mandatory so there is no competitive advantage for any firm to work in isolation on collecting this data.”

“Our utilities communities across the world have seen it can be up to 10 times more efficient to establish common standards required of all suppliers in term of health and safety, ethics and compliance and then share the administrative burden of gathering, validating and auditing that information. This non-commercial data can then be shared through a secure, online portal. This means suppliers need only apply once to be eligible to work for all the utilities companies in the group.”

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