Through strategic alliances and supply chain management, PECO Energy Distribution was able to reduce its year-end inventory from USdollars37 million in 1995to USdollars7 million in 1999. The stores loading rate decreased from 21 percent to 8 percent, reports David Amico, supply management-commodity/alliance manager of Exelon Infrastructure Services, a non-regulated subsidiary of PECO Energy Co.
Part of PECO's success was setting up a supplier integration project. This project differs from the inventory model where the utility keeps inventory fed by bulk shipments from bulk order to the supplier. When job-specific demands arise, the utility is tapped to supply the service building or job site. This system has redundancy in material handling and labor.
Under the supplier integration model, material demand is sent to the supplier via job-specific demands through an electronic data exchange. The supplier then sends kitted job orders to the service building or job site. PECO's inventory and material handling are eliminated.
In sum, the inventory (kept by the utility) model is costly, slow to react and labor intensive. Supplier integration is cost sensitive, closely linked and automated.
Who would have thought that utilities partnering with vendors, contractors and each other would be economically beneficial? It's true in this report, according to utilities, contractors, vendors and consultants attending the Fourth Annual World Partnering Conference in Washington, D.C., Oct. 25-27, 1999, which was sponsored by T&D World, Utility Business and Energy Manager magazines.