Utility Procurement 2004

Utility Procurement 2004 Presenter: Albert A. Stephens, CPM Director 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 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Business Process Improvements –Eliminated the number of outdated policies by 2/3 Restructured Buyer Groups and Process Flow –Implemented new review and approval process for all requisitions Utilized Technology Tools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 BiddingNET TM For Period 1/2002 – 3/2004 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 CHAIN MANAGEMENT

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

Conceptual Overview: DWP Supply Chain Implementation Progression.... SUPPLY CHAIN.. 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.... VALUE CHAIN.. 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

Increases competition Offers better prices and value in materials and services Achieves overall cost savings Improves responsiveness and access to information –Improves communication & collaboration with all stakeholders Trains and develops professional skills in employees Improved payment processing Less costly for suppliers/vendors to do business with the Dept Contract management improvements Supplier Access Parity Supply Chain Management Benefits

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, CPM Director of Supply Chain Management Los Angeles Department of Water and Power