Logistics Procurement

21 Apr

Summary

Deecon supported SGN in the end-to-end procurement of a Third-Party Logistics Provider (3PL) to deliver a fully integrated logistics solution, managing over £25 million in materials across a projected £3 billion operational spend. This procurement formed a key part of SGN’s transformation programme and was aligned to 10 key design principles. These principles included aspects such as maximising the productivity of the frontline, ensuring improved safety and regulatory compliance, reduction of functional silos and increasing the organisation’s ability to demand-plan and strategically forecast, ensuring the development and continuous updating of robust contingency plans for potential disruptions.

The Requirement

Deecon were engaged by SGN to support in the end-to-end procurement of a Third-Party Logistics Provider (3PL) to deliver a fully integrated logistics solution.

The Solution

The scope of the procurement was divided into two lots. Lot 1 covered Logistics Services and Implementation, while Lot 2 related to an Engineering Application for onsite materials ordering. The requirement encompassed both upstream and downstream logistics, including the management of distribution centres and depots, the introduction of a new Pick‑Up Drop‑Off (PUDO) locker network, transport and distribution services, reverse logistics, and the implementation of a new Warehouse Management System. SGN also required real‑time tracking of high‑value assets, waste management services, and a commitment to continuous improvement through training and system updates.

The procurement process followed a Competitive Dialogue Procedure in accordance with the Utilities Contracts Regulations (UCR) 2016. It comprised several stages, including a Pre-Qualification Questionnaire (PQQ), Invitation to Submit an Outline Solution, Invitation to Submit a Detailed Solution, and an Invitation to Submit a Final Tender, including a Best and Final Offer (BAFO) round. This process culminated in the appointment of the Most Economically Advantageous Tenderer. Key procurement activities included multiple dialogue sessions between tenderers and SGN stakeholder groups spanning Logistics, Operations, Commercial, Property, Legal, IT, and other functions, alongside solution presentations and detailed clarification sessions. The structured dialogue, combined with iterative feedback and final negotiations, enabled SGN to secure cost reductions of 8.5% for Lot 1 and 28% for Lot 2 from the previous rounds of the successful tenderer.

Scope of Services Delivered:

Strategic Sourcing & Category Management – Led the full procurement lifecycle under the Utilities Contracts Regulations 2016 via a Competitive Dialogue Procedure, including PQQ, tender documentation, evaluation, and negotiation phases

Contract & Supplier Management – Introduced a dual-structure contract model with ‘Spine’ (core) and ‘Bolt-On’ (optional) services, with fixed pricing, unit rates, and a Gain Share Mechanism to incentivise continuous improvement

Cost Reduction & Profitability Advice – Achieved significant cost reductions: 8.5% for core logistics services (Lot 1) and 28% for engineering applications (Lot 2)

Documentation, Governance & Policy Review – Managed risk, compliance, and stakeholder alignment across commercial, operational, legal, IT, and property teams; embedded robust governance and reporting frameworks

Technical Integration & Innovation – Oversaw integration of advanced Warehouse Management Systems, asset tracking solutions, and a PUDO locker network, future-proofing logistics operations

The Results

Outcomes & Impact

Identified Logistics as a key strategic transformation opportunity for SGN, estimating a net yearly saving of circa 35% of contract value, largely due to potential operational efficiencies