1. AGA – Quality Management Best Practices Roundtable BGE Supplier Quality Program
February 14, 2013

2. Gas Delivery System Overview
Gas Franchise Territory: 3,000 Sq Miles
Serve Customers in 9 Counties & Baltimore City

3. Material Quality
Ensuring quality of pipeline materials and installations are becoming a strong focus of PHMSA, NTSB and legislative action
Materials quality is critical to ensure the systems safe operation
Usually the first questions asked in incident investigation
Materials records (traceability) and basis for use
“Prudency”

4. For Operators/Utilities
The life of the facility records – includes materials : due diligence
Material in-field performance is essential to long term system safety
Public expectation of reliability

5. BGE established the Supplier Quality Program in 1997
Focus was on:
Reduce regulatory risk
Reduce material failures
Consistent supplier performance measures
Reduce waste/rejections
Optimize total cost of operations
Establish supplier relationships

6. SQP – Building Blocks “Road Map”
Material Stratification:
Risk
Criticality
Economic
Material Standardization
Supply/Value determination – 80/20
Focus on Critical Suppliers

7. Supplier/Material Quality Management Program Components
Manufacturers quality program
Audits, sampling rates, certification, acceptance levels, etc.
Code compliance certification
Product performance testing/measurement
Failure analysis, corrective action
Manufacturing processes (JIT, lean, etc.)
Supplier plant auditing

8. Supplier Quality Program Some of the hard stuff -
Management support – there will be cost and relationship pressures
Long term focus
Critical coordination between engineering, field forces and purchasing – equal partners

9. SQP – Results at BGE Material standardization Supplier consolidation
Reduced incoming product inspections
Lower inventory – costs
Lower total costs – material spend
Increased service level
Reduced OQ scope for materials
Closer supplier relationships – support
Finding issues before they “hit the field”

10. SQP - Program Observations
Time for culture change
Better procurement efficiency
Field force confidence
Market insight – planning
Training – standardization
Must have a strong audit program
Trust but verify
Include outside testing
Ensure credentials of utility auditors

11. SQP - Recent Implications
Material traceability
Component origin – certification
Buy America Act (FHWA)
System records
Field inspection – construction quality
Manufacturing /ownership changes
Locations/plants/consolidation
Outsourcing
Specifications (outside of code)

12. Communication & Industry Awareness is Key
The current marketplace is dynamic and global
Monitor the marketplace – stay plugged in
Develop strategies for international sourcing with regulatory compliance assurance
Keep specifications current
Contract flexibility
Always remember – we own the safety of our systems

13. BGE - SQP Some statistics Q&A Thank you
Steve Troch – Manager of Gas Compliance
Joe Opert – Principal Engineer of Gas Engineering