Material Purchasing Management in Distribution Network Business
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In the last decade noticeable and long distribution outages around Finland have been caused by severe weather conditions. The outages have changed the public opinion and a more reliable electricity distribution is demanded. Lastly the Ministry of Employment and the Economy (TEM) has composed a new, more demanding law concerning of the electricity market, which came into the effect at 1.9.2013. The new law reduced allowed outage times caused by weather conditions to six hours in an urban area and to 36 hours in rural area. The new requirements have to be fulfilled at the latest in 2028 and during that time it is estimated that 3,5 billion euros have to be used for the network investments. This thesis work is done for Elenia Oyj, which has been in the past years one of the foregoing in the branch of business. It is said that Elenia has taken the contractor partnership network management to the new level in the branch of business. Elenia has also introduced a brand that is focused for underground cabling, called as “weather proof”, a framework that has begun as early as 2009. These heavily increased investment levels are a driver for the more sophisticated management methods for material purchasing. The objective of this thesis is to research and implement the key aspects of the modern material purchasing methods and practices based on the literature review and group studies. During the research process it came clear that special attention is needed for four different purchasing management areas: material portfolio analysis, supplier selection, supplier performance evaluation and demand forecasting. These aspects were selected because of the detected potential of efficiency improvement. In the thesis all these four different aspects are presented in own chapters. The main results of the thesis are the introduction of Kraljic portfolio matrix, AHP supplier selection method, supplier scorecard and an improved tool for the demand forecasting.