Supply Chain Development A step-change in Supply Chain performance 08/08/2015 OFFICIAL 1 Supply Chain Focus Group – 17 th September 2014 Vic Carlill

Our drivers for change Need excellence in our key strategic themes – safe, secure site stewardship, demonstrable progress, and return on investment Accelerate hazard reduction, deliver to plan, ensure value for money to the UK taxpayer Supply Chain vital link - deliver products and services safely, to schedule, at correct quality and to agreed cost Step-change needed in Supply Chain performance, inc. SL’s role Supply Chain Development programme established to catalyse and deliver this step-change 08/08/2015 OFFICIAL 2

Programme synopsis and next steps Scope –a step-change in the relationship between SL and the Supply Chain at all levels. Adopt a continuous improvement cycle, embedded from baseline assessment, the measuring of performance and then identifying the need for further supplier assessments and improvement activities. September to December - mobilisation, design, assessment –Contract awarded to KPMG - Arup –Partners induction - nuclear safety and culture,security –Baseline performance data-gathering of our suppliers –Review assessment matrix, using best practice and parent body support (AREVA) –Design assessment method –First assessment planned November - selected from our Strategic Supplier Relationship identified listing –Developing training partner resources, KPIs, ROI and performance- tracking models –Target – up to five assessments by February in first phase 08/08/2015 OFFICIAL 3

Principles of our approach 08/08/2015 OFFICIAL 4 Principles The assessment process includes technical conformance and operational performance. Improvement activities are embedded in the normal way of working. Benefits are tracked in cost, scheduling and maturity. Supplier performance improvement should be enabled by IT system to support this

Selection and operating principles Consistent criteria for qualification and programme roll-out priority – transparent approach to programme schedule Selection process – risk, value, medium/long-term involvement Coaching and training provided to raise standards and build future preparedness Behavioural engagement approach to enable innovation Consolidating existing approaches – single engagement programme in conjunction with Supply Chain Integrated approach, aligned with support areas (e.g. Commercial, EHS&Q) 08/08/2015 OFFICIAL 5

Performance tracking Structured way of monitoring performance - key component of the programme. Three key elements to monitoring: 08/08/2015 OFFICIAL 6 Safe, secure site stewardship Performance-tracking of each supplier / group, using dashboards with consistent KPI structure and metrics that are applicable and appropriate to the area. Metrics aligned with SL strategic goals Demonstrabl e progress Assessments identify improvement opportunities; resulting plans managed within the software platform, including progress against plan and performance outcomes Return on investment Jointly find and develop opportunities - save time, effort, cost and resources (benefit for all, no detriment to end objectives). E.g. improving delivery capability, streamlining processes, reducing waste, and / or value engineering

Suppliers are managed consistently but in line with their strategic importance to SL. Assessment – all suppliers consistently ‘conform’ to the requirements of SL and the nuclear industry: Assessments are now also focused upon performance and the ‘Operational Excellence’ of the supplier. Trusted T2 suppliers are self-assessing and developing T3/4 suppliers and are competent in training a steady pipeline of assessment and development professionals. Remedial Improvement activities are the exception; developmental Improvement activities are the norm, mostly performed by T2 suppliers independent of SL (e.g. Supplier associations). There is a stable and constantly improving supply base that collaborate to deliver material performance change There is full end to end visibility of supplier performance with metrics aligned to SL high level goals updated through remote apps reporting to cloud based dashboards enabling effective real- time working. Suppliers have confidence to invest in longer term improvement activities and benefits are shared with SL. Focus of SL supply chain effort is on collaborative solutions to the problems of the next years and fixing the issues that are caused by SL themselves jointly. A supply chain Centre of Excellence exists in SL that co-ordinates knowledge transfer across the supply base and accredits practitioners. Programme goal 08/08/2015 OFFICIAL 7 Team (including the strategic supplier base) autonomously conduct a range of key activities, including assessments and a range of Improvement activities (developmental, proactive, and remedial). Performance Maturity