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2	Agenda Sourcing Strategies for Major Equipment Purchases
3	Executive Summary Overview – Major Equipment Sourcing Strategies Over 40% of the utilities, and 38% of the suppliers believe double-digit price/cost reductions are available in their major equipment purchases if more advanced sourcing strategies, including total life cycle cost techniques were incorporated. The balance believe a 3-8% price/cost reduction exists. 75% of the suppliers believe the reductions could be achieved if lowest total life cycle cost (LTLC) sourcing strategies were used. On the other hand, 38% of the utilities believe LTLC and 25% believe equipment standardization would yield the best results. Cross-functional teaming, supplier alliances and supply base improvements were sighted as offering the best returns by the balance of the utilities
4	Executive Summary Overview – Major Equipment Sourcing Strategies Key Findings: (continued) 78% of suppliers and 66% of utilities report utility engineers and end users exert the most influence on the major equipment buys. Cross-functional teams were noted as having the most influence by only 11% of the suppliers and 17% of the utilities. Only 13% of utilities report purchasing involvement up front in the requirements definition and functional analysis phases of the sourcing process, indicating lowest total life cycle cost evaluations are being ignored at the beginning of the sourcing process.
5	Question #1 (All) Utility Supplier
6	Definition and Characteristics Characteristics of Major Equipment⁽¹⁾Purchases
7	Question #2 (Utilities Only)
8	Major Equipment Focus: Which of the following best describes the level of focus your organization has placed on major equipment sourcing management? Limited Maintenance Focused Operations Focused Cross-functional Integration Life Cycle Cost
9	Strategic Sourcing Major Equipment Risk Management
10	Strategic Sourcing
11	Question #3 (Utilities Only)
12	Question #3 (Utilities Only) Needs identification Functional analysis/design specification Supplier research, evaluation, and selection Price and terms establishment Order processing and delivery Installation and service Maintenance, performance measurement, and disposal
13	Total Cost of Major Equipment “Under the Hood” Elements of Total Cost
14	Question #4 (Utilities Only) End User (Operations and/or Maintenance) Senior Management Plant Management Engineering Purchasing Cross-functional Teams
15	Question #4 (Suppliers Only) End User (Operations and/or Maintenance) Senior Management Plant Management Engineering Purchasing Cross-functional Teams
16	Question #5 (Utilities Only) 0%: We can’t do any more 1-3%: We’ve pretty much explored all total cost reduction areas 4-8%: We see some fairly good opportunities 9-15%: We see some very good potentials + 15%: We can do much better, the potential is significant
17	Question #5 (Suppliers Only) 0%: We can’t do any more 1-3%: We’ve pretty much explored all total cost reduction areas 4-8%: We see some fairly good opportunities 9-15%: We see some very good potentials + 15%: We can do much better, the potential is significant
18	Strategy Development Process 12 Sourcing Strategy Considerations
19	Strategy Development Process 12 Sourcing Strategy Considerations
20	Question #6 (Utilities Only) Nonexistent: We are primarily driven by immediate business needs, and strategic sourcing is not at the top of the list. Operating Budgets: Each year we talk about capital equipment strategic sourcing, yet really focus on buying on price versus total cost. Annual Plans – In additional to an annual budget, each department involved with major equipment develops annual department goals. The various departments’ goals are typically not linked. Planned – We do go through a cross-functional, goal-oriented sourcing strategy development process. Our plans are terrific, it’s operating to the plan that we struggle with. Fully Planned and Integrated – Strategic sourcing is a systematic, cross-functional and operational process. Our strategy is written, business driven and includes active supplier contribution. We operate according to the plan.
21	Question #6 (Utilities Only) Non-existent Operating Budgets Annual Plans Planned Fully Planned and Integrated
22	Question #7 (All)
23	Question #7 (Utilities Only) Standardization Supplier Alliances Supply Base Outsourcing Cross-functional Teaming Total Cost Focus E-procurement
24	Question #7 (Supplier Only) Standardization Supplier Alliances Supply Base Outsourcing Cross-functional Teaming Total Cost Focus E-procurement
25	Success Acceleration Pathway Major Equipment Strategic Sourcing Results
26	Success Acceleration Pathway Where Are You?
27	Success Acceleration Pathway Where Are You?
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29	Integrated Strategies Team Steve Trecha – President and CEO
30	Integrated Strategies Mission Statement
31	Integrated Strategies Core Capabilities and Strengths
32	Integrated Strategies Core Capabilities and Strengths
33	Integrated Strategies Aggressive, Systematic Supply Chain Approach
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35	Strategy Development Process
36	Strategy Development Process
37	Strategy Development Process
38	Strategy Development Process
39	Strategy Development Process