As the largest public utilities corporation, China State Grid Group ranks the 15th among the Fortune Global 500. With the power network construction and operations as its core business, the client corporation carries out the fundamental missions of providing safe, economical, clean and continuous power supply in 26 Chinese provinces, autonomous regions and municipality, accounting for 88% of China’s total territory. It has over 1.5 million employees and provides power supplies for a population of more than 1 billion.  

1. Materials Management

− Failure of placing supply chain/materials management as a key component of the corporate strategy

− Lack of supply chain performance management and a process assurance system for continuous improvement

2. The integration of project management and project purchasing

− Increased supply chain cost resulting from project changes

− Insufficient in-depth analyses over materials classification and negative impacts on purchasing opportunity identifications and purchasing strategy formulations

3. The large planning and comprehensive supply and demand coordination platform

− Lack of coordination for project investment, operations, maintenance and materials demands

− Lack of standards for production work kits, project construction prototype designs and materials allocations  

− Lack of a forecasting system for materials demands  

4. Distributions & Inventory management

− Failure of building a centralized planing ability as materials management was dispersed in various business functions

− Lack of a centralized distribution system as materials distributions mainly relied on distributors

5. Distributor relationship management

− Lack of a cooperative relationship with distributors as the client corporation mainly entered the quality and price based contracts with distributors

− Lack of a performance evaluation system and process for monitoring and evaluating distributors

6. Standardized management

− Failure of reflecting the needs of materials standardization from the outsourcing strategies and means

− Difficulties for controlling the unit quantity increases in the inventory  

1. The Introduction of strategic purchasing into each phase of project management to reduce costs associated with project changes

2. The Integration of materials demands and the centralized purchasing to realize the operations of scale

3. The establishment of advanced materials classification and multiple purchasing strategies  

4. The establishment of a medium term ( 3 months) and a short term comprehensive plan for asset materials demands and services

5. The assessment for demand and supply fluctuation: the evaluation after the demand plan and the analyses for its impacts on finance and timing

6. Inventory forecasting and statistical analyses for inventory turnover

7. The strategy of building centralized distribution network and inventory allocations

8. The distributor performance management and the development of appropriate distributor relationship to increase the value of distributors  

9. Early participation in the business of supplies to identify potential operating risks and increase the abilities of suppliers

10. The establishment of the standard material management process and the full life cycle cost cycle

11. Simplified and standardized contract clauses

1. The tertiary organizational structure and function positioning for materials management  

2. The materials classification strategy and the corresponding purchasing strategy

3. The process design for materials supplier relationship development and management and the performance evaluation system design