1. Utility Procurement 2004

2. Utility Procurement 2004 Presenter: Albert A. Stephens, CPM Director of Supply Chain Management Los Angeles Department of Water and Power

3. Supply Chain Management with e-Commerce Solutions Provide Savings, Access Parity, Quality Products and Services For Less

4. 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. 5 – member Board of Water and Power Commissioners Appointed by the Mayor Confirmed by the City Council for 5-year term LADWP Quick Facts

6. Workforce: 8,100 employees Area Served: 464 square miles Population Served: 3.8 million residents 2025: 30% growth expected LADWP Quick Facts

7. 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

8. Total Generating Capacity: 7,000 megawatts Los Angeles Peak Demand: 5,200 megawatts Electric Service Connections: 1.4 million

9. 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

10. Caucasian: 55.1% Hispanic: 40.3% Asian: 10.4% African American: 7.6% Native American:.9% CUSTOMER DIVERSITY

11. Seems impossible? MISSION POSSIBLE Supply Chain Management and e-Procurement Goals

12. 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

13. ACCOMPLISHMENTS

14. Business Process Improvements –Eliminated the number of outdated policies by 2/3 Restructured Buyer Groups and Process Flow –Implemented new review and approval process for all requisitions Utilized Technology Tools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

15. COST SAVINGS

16. 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

17. Cost Savings for BiddingNET TM For Period 1/2002 – 3/2004 Savings: $12,160,355 Avg. Monthly Savings: $450,384

18. Cost Savings Source: FSO Study, November 2002

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

20. Diverse Business Enterprise Activity *Projected figures based on contract dollars awarded through April 2003.

21. Diverse Business Enterprise Activity *Projected figures based on contract dollars awarded through April 2003.

22. Diverse Business Enterprise Activity *Projected figures based on contract dollars awarded through April 2003.

23. SUPPLY CHAIN MANAGEMENT

24. The ‘three T’s’ to optimize the supply chain processes and structures:

25. Time Transparency Trust Source: Dr. Richard Wilding Cranfield School of Management, UK

26. Conceptual Overview: DWP Supply Chain Implementation Progression.... PURCHASING.. Paper Meetings Files, Copies Turf Claims Snail Mail, Telephone, Fax, Email Reactive Development of Services

27. 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

28. 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

29. 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

30. Seems impossible? MISSION POSSIBLE Supply Chain Management and e-Procurement Goals

31. Supply Chain Management with e-Commerce Solutions Savings – Time and Dollars Access Parity Quality Products and Services For Less

32. Utility Procurement 2004 Presenter: Albert A. Stephens, CPM Director of Supply Chain Management Los Angeles Department of Water and Power