Inventory Reduction Plan

Transcription

1 Inventory Plan

2 Inventory Balance Trend $2.4 Inventory Balance ($B) $2.3 $2.2 $2.1 $ $

3 Adjusted for Appropriate Comparison Inventory Value per Customer Exelon 2016 Inventory Benchmark Size of bubble is M&S Inventory Value Xcel AEP PG&E Entergy PSEG NextERA DTE Southern Dominion Duke Inventory Value per MWh When compared to peers with similar generation mixes and on a common basis, the opportunity for inventory reduction is ~$250M Draft - Working copy only 3

4 Year 2017 Targets ($67M Nuclear Fleet target was the assigned portion of $500M Enterprise 3 Year Target) 2016 Year End Inventory Spring 2017 (%) Spring 2017 Fall 2017 (%) Fall 2017 Online (%) Yr 2017 Online excluding very high value components Very High Value Yr 2017 Online Very High Value Yr 2017 Spring 2018 Purchases Budgeted Inventory Year 2017 Total Year 2017 Total (%) 2017 Year End Inventory Site BNP CNS HNP MNS ONS RNP Totals and Total Effective Notes: 1. Data in Millions 2. Online reduction accounted for after fall outage (December, 2017) ; however, the kpi will amortize the online reduction 20% in each of the months August - December 3. Online reduction at 1.25% per unit (except MNS at 1% per unit due to dual outage year) 4. reduction at 3.3% debited in the months of Aug and December 5. Input "%" values to calculate reductions 6. Spring 2018 purchases include ONS-3, CNS-2, BNP-1, HNP, are estimated at 2% of 2016 Year end inventory value and will be amortized across the last 5 months of year 2017 (Aug - Dec) 7. Very High Value items are non-recurring, single cataloged issues > $2M 8. $600k inventory reduction applied in December 9. Purchasing for fall, 2017 outages accounted by reducing outage reduction by 2% (from 3.3% to 1.3%)

5 Key Lessons Learned SIOTs-Conducting sessions with key stakeholders using supply chain information making balanced, appropriate decisions Centralized Purchasing Controls -Purchasing criteria that triggers additional reviews and confirmation of material needs Inventory Controls Policy -Issuing fleet wide policy to clearly define and compile roles, responsibilities and expectations Min/Max Levels -Adjustment of min-max levels so that we don t reorder to previous levels without determining proper impact to inventory Online Work Management -Revising the management of Material Requests that lack a scheduled (work) date to reduce unnecessary purchases Work Management -Including scope decisions and reporting expectations to include inventory considerations in scope and schedule changes Purchases -Delaying the arrival of material from T-4 to T-1 is expected to validate material needs and accommodate planning changes without impacting outage preparations Modifications-Revising procedures to use existing material and prioritize implementation of approved modifications ready to install Metrics and Measures -Creating and addressing goals, trends and information reflected in metrics and projection tools

6 Nuclear Generation Fleet

7 Year 2018 Targets Site 2017 Year End Inventory Spring 2018 (%) Spring 2018 Fall 2018 (%) Fall 2018 Online (%) Yr 2018 Online excluding very high value components Very High Value Yr 2018 Online Very High Value Yr 2018 Spring 2019 Purchases Budgeted Inventory Year 2018 Total Year 2018 Total (%) 2018 Year End Inventory BNP CNS HNP MNS ONS RNP Totals and Total Effective Notes: 1. Data in Millions 2. Online reduction accounted for after fall outage (December, 2018) ; however, the kpi will amortize the online reduction 20% in each of the months August - December 3. Online reduction at 0.75% per unit 4. reduction at 1.75% debited in the months of Aug and December 5. Input "%" values to calculate reductions 6. Spring 2019 purchases include BNP-2, MNS-1 estimated at 1.5% of 2017 Year end inventory value and will be amortized across the last 5 months of year 2018 (Aug -Dec) 7. Very High Valueitems are non-recurring, single cataloged issues > $2M 8. $600k inventory reduction applied in December 9. Purchasing for fall, 2018 outages accounted by reducing outage reduction to 0.25% (1.75% consumption less 1.5% incoming)

8 2018 Inventory Targets by Business Unit $100 $80 $16.0 $9.5 $60 $40 $32.9 $93.4 $20 $0 $35.0 Distribution FHO Nuclear Transmission Total Inventory Value: ~$235M ~$875M ~$880M ~$250M ~$2.25B Targets developed from an in-depth, ground-up planning process 8

9 2018 Nuclear Inventory Strategy 2018 Plant Brunswick $3 Catawba $4 Harris $3 McGuire $0 Oconee $6 Robinson $1 Total $16 Inventory Efforts SIOTs Balance purchasing decisions through multidiscipline Site Inventory Optimization Teams Modifications Consume existing warehoused material by prioritizing the associated ready-to-work modifications Procurement Approach Recognize timely procurement results by relaxing the parts-on-hand milestone Alliances Leverage the vendor alliances established to dispense excess material and to expand key supplier inventory stocking offerings Efforts to reduce future inventory expenditures: Catalog ID consolidation & supplier stocking alliances leading to lower min/max levels Only ordering critical contingency material and delaying non-critical purchases Centralized purchasing controls triggering additional reviews 9

10 2018 Distribution Inventory Strategy 2018 CGIP Material $25.6 Project Initiatives: $25.6M in reportable inventory tied to CGIP Actively use this inventory in 2018 Ensure new material runs through 3 rd Party Hybrid Operation Centers Other Excess Material $9.4 Total $35 Excess Materials: Evaluate re-stocking methodology post storm to reduce inventory buildup Build and implement a pooling model to determine stocking locations and levels for strategic items Analyze and lower min/max levels where appropriate Focus on planning further into future to reduce unnecessary purchases Focus on reducing lead times 10

11 2018 FHO Regional Strategy 2018 Region Carolina Gas ($6.7) Carolina Coal $8.6 Regulated Renewables ($0.3) Florida ($6.2) Midwest $2.7 Edwardsport ($3.8) Inventory Opportunities: CT parts associated with 5 planned outages (no replacement) Crystal River South Retirement Bad Creek Pump Storage Spring Regional Inventory Teams and initiatives: Reducing min/max stocking levels Transfer / utilization of materials between facilities Administrative control on materials >$1,000 TGS (Turbine Generator Services) $38.6 Total $ Inventory Growth Drivers: New Plant Additions Citrus County CC ($9.5M), Sutton CT ($.35M), WS Lee CC ($1M) Ash Management system installations 11

12 2018 Transmission Inventory Strategy 2018 Static Inventory * $1 Excess Inventory $8 Panel Shop Outsourcing $2.5 Third Party Distribution Centers (3PDC) $1 Inventory Balancing $5 Other $2 Transformer Sparing Strategy ($10) Total Inventory $9.5 Inventory Efforts Panel shop production being outsourced to third party including sale of inventory 3PDC: Midwest focus but exploring the option in other regions Inventory Balancing: Adjusting min/max and reducing overall inventory levels Inventory Teams formed in each jurisdiction to focus on: Excess inventory Static inventory Engineering assessment prior to order fulfillment Potential for 2018 Inventory Growth due to Capital Expansion $300M increase of capital budget could cause a YE inventory increase (~$18M) due to timing of inventory and reporting 12

13 Selecting Metrics To Incent Inventory Management Behavior Business units are in different growth/decline stages and need to manage to different metrics Business Unit Metric Reason Distribution Lower Returns Incents better planning and less contingency Higher Turns Result of better planning and lower min/max levels FHO Inventory Transferred Demonstrates actively looking to use inventory from other sites prior to purchasing Stocking Level s Reduces future purchases that could lead to inventory build Nuclear Lower Returns Measure improvements in the decision making of contingent and additional material Transmission Lower Returns Incents better planning and less contingency Higher Turns Result of better planning and lower min/max levels 13

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