e Procurement strategy Case Enel Spa Ermanno Boeris
e. Procurement strategy Case: Enel Spa Ermanno Boeris Bratislava, February 2007 0 Uso: riservato aziendale
Enel in brief Our Mission Our mission is to be the most efficient, market driven, quality focused provider of power and gas creating value for our customers, shareholders and people. Our Strategy § Reducing power generation costs through plants conversion and alignment of our other operating costs with international best practice; § § § Increasing electricity generated from renewable resources; Growing natural gas distribution business in Italy, where we are the second largest distributor; Extracting value from the integrated management of electricity and gas services, and meeting our operating efficiency targets in the distribution and sale of electricity and gas; § Expanding our operations outside Italy particularly in countries where we are already present or where market liberalization and privatization efforts are in progress, allowing us to exploit the skills and experience we have acquired in the Italian market. 1 Uso: riservato aziendale
Enel Group structure Board of directors Chairman (P. Gnudi) Chief Executive Officer and General Manager (F. Conti) Corporate Activities Generation and Energy Management (S. Fontecedro) 2 Uso: riservato aziendale Market (F. Starace) Infrastructures and network (L. Gallo) International (F. Conti a. i. )
Results overview Millions € 1 H 2005 1 H 2006 % 16, 152 19, 065 18% 4, 202 4, 361 3. 8% Group Net income 1, 915 1, 978 3. 3% of which net ordinary income (2) 1, 587 1, 722 8, 5% 12, 312 14, 077 14. 3% Revenues Ebitda (1) Net debt (1) (2) (3) 3 (3) 1 H 05 EBITDA restated 1 H 05 net of Euro 328 mn capital gain on Terna disposal. 1 H 06 net of Euro 256 mn income on Wind-Weather share transaction 1 H 05 figure as of December 31, 2005 Uso: riservato aziendale
La presenza di Enel mondo Europe: 4. 005 MW and 2 million customers North and Latin America 565 MW SPAIN • 1. 592 MW Thermal • 671 MW Hydroelectric • 600, 000 customers! 80% of EUFR: • 294 MW Wind • 89 MW Hydroelectric • 62 MW Cogeneration RUSSIA North Western thermal power plant management contract 450 MW ROMANIA • 286 MW Hydroelectric • 67 MW Wind • 21 MW Biomass and Biogas 51% of Distribution companies Banat e Dobrogea • 1. 4 million customers BULGARIA 67% of Maritza East III: • 732 MW Thermal SLOVACCHIA 5% Powernext Data as of Aprile 15 1 th 2004 1 – On the regulated market 4 Uso: riservato aziendale 66% of Slovenske Elektrarne • 6. 881 MW • 171 MW Hydroelectric • 20 MW Wind
e. Procurement project brings a common vision on the process Vendors Scouting • Portal • On-line qualification Vendors Evaluation Scouting/RFI/RFQ Vendors Mgmt Aste e Gare online Catalogue 7 • Vendor Rating Tasks Strumenti Operativi Web. EDI Portale Acquisti Comunication (contractual and managerial) • Enel Portal Contract fulfillment Contract Mgmt • Electronic catalogue • Electronic data exchange (EDI) 5 Uso: riservato aziendale Enel e. Procurement model Sistema di codifica prodotti Linee Guida e Regolamenti Technical offers Tendering Economical offer and negotiation • Tender mgmt • On line tender system Abilitatori del processo
Results of e. Procurement projects implementation 6 Before After § Extensive use of microcontracts § Poor knowledge of contracted amounts § No synergies within the whole group § Low “compliance” on existing Framework Agreement § Split spending § Technical and tactical aspects overcome strategic issues § Lack of efficiency in the process § “Traditional” purchasing approach • Implementation of controlling activities • Extensive use of strategic sourcing • Broader use of Framework Agreements • “Compliance” improvements • Lower fragmentation on spending • Improved efficiency • Centralized management and controland local operational activies • Use of new methodology (Electronic catalogue, e-tender, etc…) Uso: riservato aziendale The new role of buyer
“On-line” tenders follows traditional procurement steps ENEL uses a web based application that allows any buyer to generate, customize and launch tenders of any kind of goods, services and works. On Line tender follows traditional steps of any negotiation INITIAL PHASE ANNOUNCEMENT (exchange of technical infos ) TECHNIC AL OFFER ECONOMIC OFFER (“Closed Envelope”) ECONOMIC OFFER (Tender) Achievable benefits ü Higher interaction with vendors ü Better knowledge of markets ü Improve efficiency, transparency, traceability 7 Uso: riservato aziendale NEGOTIATION PHASE AWARDING
Electronic Catalogue The electronic catalogue is a simple and shared tool that allows end-users to order materials listed in the catalogue. The catalogue is the results of a Framework Contract negotiated for all ENEL by Central Procurement Office ü Request for purchases issued through catalogue ü Electronic approval workshop ü Receive goods and control on invoices payments Send Order Request for Purchase Requester Issue Request 8 Uso: riservato aziendale Chief Approve Rf. P ERP System Supplier Receive order
Improvement area of electronic catalogue Despite the complexity of the implementation path, with the electronic catalogue there is an high rate of return considering price discounts and process efficiency gains. Achieved benefits Scale Economy ü Rationalize spending ü Concentrate spot purchases Prices dispersion Process costs ü Same price applicable to any office or power plant ü Extented use of framework agreement ü Reduce micro-contracts ü Semplify management of requests and partial contracts 9 Uso: riservato aziendale
Exchange of technical and administrative data The Web-EDI based systems uses internet as communication channel allowing the transmission of data and document with very low costs (almost zero) EDI Enel Partner XML Internet XML Major strong points ü Semplify realization activities ü Reduced management costs ü High compatibility between different hardware and software 10 Uso: riservato aziendale
Achieved results Web. EDI Catalogue Reduced costs by contract standardization Exchanged documents: 677. 620 • Of those invoices: 178. 096 • Other administrative documents: 361. 786 • Other technical documents: 137. 738 • Ca. 60 contracts (with 50 suppliers) • Increased compliance on Framework Agreements Portal Avg. Visits by month • Ca. 80 link/month per visitor • Publishing of tenders • Access to on-line documentation Qualification Tender 2. 617 tenders (of those ca. 78% on-line) for a value of 2. 057 mln € and average savings of 15% • Increased number of tenderers • Improved quality of process 11 Uso: riservato aziendale Over 10. 500 suppliers registered and out of those 1. 880 already pre-qualified • Reduced time to qualify vendors • Reduced costs on documentation handling
Thank you for the attention 12 Uso: riservato aziendale
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