PECOS™
Case Study
Tennessee Valley Authority (TVA)
Elcom PECOS™
Currently enables over 60,000
buyers within 200+
organizations to manage more
than $16 billion in total
procurement spend each year.
These buyers transact with over
120,000 suppliers connected
into their network.
Both buyers and sellers benefit
from their use of PECOS™
through lower transaction
costs, fewer disputes, faster
payment cycles, improved
procurement controls and
better visibility of spend.
Utilities take eProcurement
to the grassroots
The World Wide Web is experiencing a grassroots
renaissance in the utility industry. While limitless
connectivity appeared to hold limitless value for
commerce, communication, and community, in setting
limits, the utility industry is reaping rewards of
technology.
Initially, e-commerce with consumers emerged and
utilities grew their customer connection, offering
products and services and rapport to a known group.
Learning from this, utilities have looked within and
applied technology to trading and procuring online.
With technology integration and implementation
becoming accessible and affordable, utilities are
bolstering instead of negating existing relationships in
open marketplaces by starting private markets for
eProcurement.
This case study discusses how Tenesee Valley Authority
(TVA) created their eProcurement marketplace, and the
benfits they have gained from this
TVA play by their own rules
The Tennessee Valley Authority (TVA) exemplifies the trend in private e-procurement.
TVA has already implemented strategic sourcing and conducts 99 percent of transactions electronically,
according to Tim Tilley, manager of Internet Procurement at TVA. During installation of a new enterprise
resource management (ERP) system, TVA studied online exchange options and, without succumbing to hype,
recognized the Internet trend, but harnessed it according to their own rules. They have consequently grown an
e-procurement system from the grassroots, put themselves and their business partners online first, enhanced
their local and virtual community, and kept the option to link to external marketplaces.
In the midst of a massive ERP installation, TVA was not ready to bombard their information systems
department with another company-wide technology overhaul project, said Tilley. Furthermore, TVA had nearly
all procurement activities under contracts. However, they did want to address and better control procurement
activities and gain process improvements, provide links to and among customers and suppliers, and drive
down costs.
"The smartest thing we did was to stay out of the public marketplace," said Tilley. TVA wanted to create a
venue that was uniquely their own, tailored for their needs, supporting criteria including: existing supply chain,
contract access, internal collaboration, purchasing control, digitized catalogs, and RFP/RFQ capability.
In Tilley's words, TVA was looking for a basic e-procurement set up that was not prohibitively costly or tied to
an outside marketplace. A Software As A Service Solution offered by Elcom Inc. filled the bill.
TVA not only met the criteria with Elcom's PECOS Internet Procurement Manager but also had quick, no-glitch
implementation, said Tilley.
TVA have loaded more contracts than they originally planned - and the number is still growing - and also set up
an internal surplus catalog. Tilley said that users were trained quickly and the new e-procurement system was
well-received by suppliers under contract, who gained ability to connect with TVA customers and distributors
and increase their sales.
TVA set a trend by using the new e-procurement system to punch-out to other procurement e-marketplaces.
They have already linked to Staples.com, with whom they had a contract, and are exploring links out to larger,
open e-procurement marketplaces via their private marketplace system.
TVA is adding value for both customers and shareholders. With Elcom technology, TVA can invite their own
customers to buy from suppliers that TVA has set up, and extend benefits of negotiated rates, favorable terms
and discounts and more. Elcom's "multi-organizational capability" allows easy deployment and rollout to
enable additional users. This is one benefit described by Elcom. Companies add value to the community since
they don't give up their brand name in their service region.
Further benefits of Elcom's and TVA's approach include preferred buyers and volume discounts, paperless
transactions, and automated search, requisition, approval and order transmission and expedited turnaround.
Another advantage is data capture-where a company can get a grip on just who they're buying from, what
they're buying, how much they're spending, supplier performance, and order tracking and quality.
NB: Sections of this case study originally appeared as an article in “Electric Light and Power”. Elcom is grateful to Teresa Hansen, Chief Editor of Electric
Light and Power, for permission to reprint areas for this case study.