The heart of the materials procurement strategy developed by Baltimore Gas & Electric Co (BGE) is the SQP (supplier quality program), which has focused on improving management of materials quality and inventory, as well as on relationships with suppliers. After a complete analysis of its procurement practices several process changes were made at the corporate level, including adopting procurements cards, raising purchase order limits, and deploying purchasing staff to customer locations. In order to address product quality as an essential factor in safe operation, long-term performance, and regulatory compliance in the gas distribution business, the SQP established requirements for supplier certification. The goal of the inventory management strategy was to achieve desired levels of customer service, product quality, and total cost management. By focusing resources on items with the greatest impact on the company's business, BGE was able to implement specific inventory strategies by material group classification. The review of all material specifications resulted in the standardization of material items. Based upon a ranking of materials, a supplier's status was classified as critical, strategic, or commodity. Working with critical suppliers enabled BGE to reduce inventory levels while increasing internal service levels. Each supplier is held to high service level goals, requirement coordination, and continuing new product development. Report cards are used to document performance and communicate efforts. As a result critical and strategic materials service levels increased to 99.8 %, total inventory was reduced by 25 %, over 4 Mio USD cost savings could be realized since 1997, and successful alliances have been established.
BGE cuts operating costs with materials procurement strategy
Pipe Line and Gas Industry ; 84 , 2 ; 40F-40H
2001
3 Seiten, 1 Bild
Article (Journal)
English
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