30 August 2006 | Paul Snell

Thames Water is targeting "smarter procurement" as a way of making the company more efficient.

In an update to staff yesterday, chief executive Jeremy Pelczer said: "As we seek to drive the efficiencies needed to meet our goals, some of them will come through smarter procurement, but some will come from different ways of working which will involve job cuts."

He added that the company needed to demonstrate to water regulator Ofwat that it provides an efficient service. Thames Water's operational efficiency affects how much Ofwat will allow it to charge customers in its 2010 price review.

The company declined to provide supplymanagement.com with details of the new approach to procurement, saying it wished to inform staff more fully first.

The staff update did say that the efficiency programme could lead to up to a 25 per cent reduction in staff by 2010 - around 300 people per year. It said it would try to keep compulsory redundancies to a minimum by redeploying workers.

In 1995 Thames Water outsourced all of its purchasing and logistic operations to Accenture. But in 2002 the company brought the sourcing element of the contract back in-house. It said this was because if procurement would have a "bigger impact" if it worked directly within the organisation.

Thames Water would not confirm if procurement roles were at risk, or if procurement was involved in directing the efficiency drive.

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