Developing the Commercial Strategy in Partnership with Suppliers Phil Bennett & Rebecca Shepherd

Supplier Engagement Working Group

DR Supplier Workshop Objectives Pipeline Overview/ Transparency Describe process for provision of pipeline to supply chain Confirm Budget structure and certainty Tender formation – to identify Scope Contract Model Key Principles ITT Process Experience and Lessons Learned Embed Continuous improvement

DR Supplier Workshop – Key Messages DR adopting a new approach to supplier collaboration Open to innovative ideas such as JVs, partnering, consortiums etc Entrench new behaviours – Alliance charters Contract will facilitate this Moving away from penalties to incentives Establishing methods to influence a change in behaviours and outcomes Reduce commercial protectionism Behaviours and culture are paramount Price will not be the highest weighted evaluation criteria Innovation is key to the future of the railway

DR Supplier Workshop – Lessons Learned Supplier’s need certainty of tendering Sufficient tendering time is paramount to high quality proposals Clarity on scope and contract is critical Innovation must be facilitated To work effectively, innovation must flow through the entire supply chain; Innovation occurs at all levels of the supply chain – not just tier 1s All parties must manage risks within their control The current NR contracts need to be amended to facilitate the level of collaboration required/ alternatives such as NEC3 considered

DR Supplier Workshop - Conclusion Demonstrative of DRs commitment to including the supply chain Beneficial process to ensure that suppliers are kept informed Allows supply chain to provide constructive first hand feedback into DR regarding tender processes Open forum with no inhibited conversations Allows the supply chain to raise concerns/ needs directly into DR

DR Supplier Workshop - Coverage Lessons Learnt (positive and negative) from past tenders Pipeline transparency Budgeting constraints and structure Tender Formation Incentivisation Innovation Contract Structure and the KPI/Balance Score Card approach Contractual Terms and Conditions Collaboration, Culture and Behaviours

Example Only Contract Structure, KPIs and the Balanced Scorecard 8

Phase 2 Demonstration Norwich – Yarmouth – Lowestoft (NYL)

NYL – Delivery Strategy Traffic Management (Incl. C – DAS) ETCS COMPASS Track & LX works GSM-R & FTNx Data FiC & Freight Train Fitment OTM Fitment Passenger Train Fitment Existing Activity (LINX, EULYNX, DRACAS, safety case etc. SYSTEMS INTEGRATION PROGRAMME MANAGEMENT Collaboration & incentivisation DR IP NRT BUSINESS CHANGE GBS DR NSC ToC DR

Future Delivery Strategy Development

Next steps New round of stakeholder sessions with stakeholders and suppliers over spring 2016 Draft OBC strategy developed by late spring 2016 New round of supplier engagement groups in summer 2016 to review Learning from NYL procurement incorporated into final strategy proposals Final OBC commercial strategy published autumn 2016