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Key Topic

Supplier Management

TVA is using industry best practices to improve its procurement process in order to operate more efficiently and reduce costs.

Background

TVA's transition to a "category management" system for purchasing will reduce the number of suppliers and contracts by grouping purchases into "families" of goods and services – streamlining the process and allowing better cost management.

Key points

  • TVA's buys about $3.5 billion a year in goods and services that range from turbines and generators to janitorial services and office supplies. This new approach is expected to reduce costs over the next three years by a total of $250 million to $300 million.
  • This savings is a critical component in TVA's ability to keep power prices competitive and affordable.
  • With category management, TVA is moving toward procuring standardized products through a smaller number of more strategically aligned suppliers. The result will be better prices from suppliers and lower costs as TVA handles fewer products, optimizes its supplier base and reduces its overall number of purchases, contracts and invoices.
  • TVA is committed to doing business with targeted businesses, such as small or minorityowned businesses or those based in the TVA service territory that can provide the products and services that meet TVA's requirements with the best value.
  • In some cases, suppliers who no longer have direct relationships with TVA may be able to continue to do business as subcontractors to TVA's primary suppliers.
  • TVA will follow its approved processes in working with current and potential suppliers competing for TVA contracts.

Other information

  • Previously, TVA has often had multiple contracts with separate suppliers for similar products. For example, in 2009 TVA was purchasing 50 different types of screwdrivers with the same form, fit and function from 50 different vendors.
  • TVA's Organizational Effectiveness Initiative, a comprehensive program to improve TVA's performance, identified the procurement process as an area in which TVA could streamline its operations and achieve significant savings.

January 2011

 

 

           
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