Treasury Today Country Profiles in association with Citi

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Magnox Ltd, Highly Commended, Best Card Solution

Andrew New, Magnox and Meg Coates

The nuclear decommissioning sector is highly regulated and has come under increasing pressure in recent years to seek increased value both in terms of the efficiency and effectiveness of sourcing activity. The government is looking for tangible evidence of innovation across this activity. This solution addresses this with a bespoke card solution.

Photo of Andrew New, Magnox and Meg Coates.

Andrew New

Head of Magnox Procurement and Supply Chain

Magnox Limited, owned by the Cavendish Fluor Partnership Limited, is the management and operations contractor responsible for safely managing 12 nuclear sites and one hydroelectric plant in the UK. Working for the sites’ owner, the Nuclear Decommissioning Authority (NDA), Magnox are responsible for managing the sites through their lifecycles, overseeing all aspects of decommissioning, defueling and electricity generation.

The challenge

Although the procurement department of Magnox was already widely using payment cards, the typical high volume/low value transactions were spread over a number of different cards and provided no effectiveness in terms of source.

Moreover, the company was using multiple payment cards issued by different providers, which didn’t offer enough control over the spread of the purchasing. As a result, there was a lack of quality management and spend-analysis information to help identify cost efficient suppliers and take greater control. The team thought that there had to be a quicker way of securing the pathway with a recognised supplier that would offer greater control and security.

In addition, the team at Magnox also wanted to work more strategically so that they could obtain more data from the purchase cards, which would then help to shape the development of the purchasing function and inevitably make the process quicker. It also required help with negotiations, taking Magnox away from always being on the back foot and allowing them to be far more proactive in their approach.

The solution

A single provider was required. Magnox therefore engaged the services of their bank’s commercial cards team to help them make the innovative and critical transition from multiple payment cards, to a streamlined, automated single card transaction system.

Following a design phase where the company’s needs were outlined, the bank identified what issues the system should address and proposed a bespoke solution using their Approval2Buy web-based technology.

This new single card technology offered Magnox complete control and flexibility – all transactions must be pre-approved by a line manager or meet the spend criteria set by the business before purchase, making the overall process much slicker.

“Magnox are truly thrilled to be winning this Adam Smith Award. This is the first major non Public Sector accolade to be bestowed on the Procurement function for a period of time. In addition, it recognises the continued role that private sector has in working in partnership with Magnox in driving innovation within the Nuclear Decommissioning business. This award will serve as a reminder to all Magnox resource that there are no limits to their continued endeavours to seek better efficiency and drive better value on behalf of the tax payer.”

The data is collated in real time prior to the transaction being made, providing an up-front reconciliation tool, when previously there had been a lag due to the reliance on staff to complete this detail after the transaction had been made.

The pilot scheme for this highly tailored version of the banks solution was launched with an initial tranche of suppliers, on two sites, from the beginning of 2015. With this extended pilot now complete (allowing for a company reshuffle and some delicate change management approaches), the proposed move to the solution for the second larger tranche of suppliers in the summer is set to revolutionise the way Magnox manages spend and supplier relationships.

As Andrew New, Head of Magnox Procurement and Supply Chain explains: “The extended trial has allowed us to run through snagging and amendments making the system as stable and efficient as possible in order to accommodate the increased volumes expected from the roll out.”

Best practice and innovation

The solution wasn’t simple to implement and required input from many stakeholders within the company and the bank. To do this Magnox formed a hybrid IT project team which worked together with the bank to implement a virtual one-use card payment system that is completely unique to Magnox and that delivers tangible benefits to the business, alleviating pressure, and allowing time to spend on more strategic matters.

New concludes: “Our procurement department needed to move from a reactive supplier-led response to stronger control and direction.

Armed with better and more accurate information, the solution has provided the function with a useful analytical tool to look at how we are working with suppliers and where efficiencies and cost savings can be made. We have championed the bespoke nature of Approval2Buy, and started the conversation around how to handle virtual card technology with our suppliers. This will help reshape our procurement function as a whole.”

Key benefits

  • Increased control and flexibility.

  • Enhanced data analysis and management reporting.

  • Improved reconciliation.

  • Reduced errors.

Key takeaways

Simple solutions are the most effective and assist with smooth take-up with the end user:

  • Working with RBS as a partner ensured the best and most creative minds were on the task.

  • The introduction of a process offering enhanced governance and control does not have to mean highly complex solutions.

  • Spending time fully understanding the limitations and strengths of the current process is key to designing in a better solution.

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