Utility Procurement 2004

Utility Procurement 2004

Presenter: Albert A. Stephens, CPMDirector of Supply Chain Management

Los Angeles Department of Water and Power

Supply Chain Management with e-Commerce Solutions

Provide Savings, Access Parity, Quality Products and Services For Less

• Established in 1902 to deliver water

• Electric distribution began in 1916

• Today, largest municipal utility in the nation

• 2003-2004 Budget: $3.04 billion (water and electric)

LADWP Quick Facts

• 5 – member Board of Water and Power Commissioners

• Appointed by the Mayor

• Confirmed by the City Council for 5-year term

LADWP Quick Facts

• Workforce: 8,100 employees

• Area Served: 464 square miles

• Population Served: 3.8 million residents

• 2025: 30% growth expected

LADWP Quick Facts

• Water Usage: 194 billion gallons

• Residential: 427,627 acre-feet (64%)

• Commercial/Gov: 146,575 acre-feet (24%)

• Industrial: 22,393 acre-feet (3%)

• Other: 67,030 acre-feet (6%)

• Pipe: 7,100 miles

Water Service Connections: 670,000

• Total Generating Capacity: 7,000 megawatts

• Los Angeles Peak Demand: 5,200 megawatts

Electric Service Connections: 1.4 million

• Residential: 6,531,813 megawatt-hours (30%)

• Commercial: 12,901,820 megawatt-hours (59%)

• Industrial: 2,382,942 megawatt-hours (11%)

• Number of Poles: 290,239

• Number of Street Lights: 250,000

ELECTRICITY USAGE

• Caucasian: 55.1%

• Hispanic: 40.3%

• Asian: 10.4%

• African American: 7.6%

• Native American: .9%

CUSTOMER DIVERSITY

Seems impossible?

MISSION POSSIBLE

Supply Chain Management and e-Procurement Goals

• Increase access to the local and diverse business community

• Have accurate and timely reporting for purchase, procurement, construction, and professional services contracts

• Improve the efficiency of the Department’s internal buying operations

• Increase accountability and control

• Reduce the processing time from requisition to award through payment

Supply Chain Management and e-Procurement Goals

ACCOMPLISHMENTS

• Business Process Improvements– Eliminated the number of outdated policies by 2/3

• Restructured Buyer Groups and Process Flow– Implemented new review and approval process for all requisitions

• Utilized Technology Tools– e-commerce solutions– Transparent purchasing process– Decreased processing time– Increased diverse business contract awards– Increased accountability and control

• Supply Chain/CPS Internal Accomplishments– Comprehensive internal training program– Collaborative efforts (Accounts Payable)– Supply Chain Links Newsletter– Customer Survey/Forums

Accomplishments

COST SAVINGS

• Implemented a cost savings program that will save the Department $20 million per year by 2004

• Currently with 60% implementation, hard savings are $10.3 million to date

• Reduced processing time by an average of 35% from contract requisition to award

• 57% savings in processing informal bids

Cost Savings

Cost Savings for BiddingNETTM

For Period 1/2002 – 3/2004

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

Series2 Series1

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

Series2 Series1

Savings: $12,160,355

Avg. Monthly Savings: $450,384

Cost Savings

Source: FSO Study, November 2002

Measurable Improvements

*Projected figures based on contract dollars awarded through April 2003.

Diverse Business Enterprise Activity

*Projected figures based on contract dollars awarded through April 2003.

Diverse Business Enterprise Activity

*Projected figures based on contract dollars awarded through April 2003.

Diverse Business Enterprise Activity

*Projected figures based on contract dollars awarded through April 2003.

SUPPLY CHAINMANAGEMENT

The ‘three T’s’ to optimize the supply chain processes and

structures:

• Time

• Transparency

• Trust

Source: Dr. Richard

Wilding Cranfield School of Management, UK

Conceptual Overview:DWP Supply Chain Implementation Progression

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PURCHASING

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Paper Meetings Files, Copies Turf Claims Snail Mail, Telephone, Fax, Email Reactive Development of Services

Conceptual Overview:DWP Supply Chain Implementation Progression

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SUPPLY CHAIN

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Internet & Intranet Document Management Work Flow System Procure Essentials Advanced E Mail, Pager, Cell Phone Proactive Client Services Static Helpdesk, File Sharing Transparency Menu Driven Systems Cost Savings Increased Supplier Access Inventory Management

Conceptual Overview:DWP Supply Chain Implementation Progression

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VALUE CHAIN

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Internet, Intranet, Extranet Work Enhancement Logistics, Contract Management Economic Development Market Tracking By Information Push Interactive Catalog Auto Response Help Increased $ Availability Follow-Me Communications Hyperlink File Navigation Supplier Access Parity

Seems impossible?

MISSION POSSIBLE

Supply Chain Management and e-Procurement Goals

Supply Chain Management with e-Commerce Solutions

• Savings – Time and Dollars

• Access Parity

• Quality Products and Services For Less

Utility Procurement 2004

Presenter: Albert A. Stephens, CPMDirector of Supply Chain Management

Los Angeles Department of Water and Power