BC Hydro showing Canada how complex supply chain is done
56,000 GWh of electricity produced per year, close to 300 substations, 18,500km of transmission lines, 60,000km of overhead and underground distribution lines, 300km of underground and submarine transmission cables.
Sounds like a big operation, right? Well, if you’re generating, purchasing and delivering electricity to 95% of British Columbia’s four million people across the vast expanses of some of the world’s most unforgiving terrain, ‘big’ tends to be the only option.
BC Hydro, a provincial Crown corporation that reports to the BC Ministry of Energy and Mines, has a workforce of close to 6,000 people, spread across offices in more than 100 communities throughout the province.
With such a huge operation to manage, any opportunities to improve reliability and efficiency are valuable. That’s why BC Hydro’s electric transmission system is connected to the transmission systems of neighboring province Alberta to the east and Washington state to the south.
This is great for trade, which allows BC Hydro to run an overall tighter ship, but it adds to what is already a great challenge in managing a sprawling and complex supply chain. The organization spends more than $2 billion per year. Who it buys from, how it buys it, and even when it buys it, all has an impact on costs and ultimately the prices it can offer customers.
The sheer scope of BC Hydro’s supply chain means it’s always been a challenge to manage supplier relationships – making sure they’re paid on time and having solid policies and controls that cover the entire supply chain.
BC Hydro’s Supplier eCommerce Manager Hanif Dhrolia was well aware of this problem – one faced and handled with varying degrees of success by most large organizations – and set out to find a way to solve it.
A few years ago, BC Hydro kicked off a pilot program on the Ariba Network, a cloud-based B2B marketplace where buyers and suppliers can do business within a single, networked platform. Initially a small selection of key suppliers was brought on board to test the waters and gradually more were added as the approach proved successful.
“Early on there was some reluctance from both suppliers and internal stakeholders to move supplier transactions to a cloud network. Some didn’t want to mess with the way their invoicing was done, and others saw it as extra work,” said Hanif.
While change is often met with resistance, Hanif maintained a firm belief that everyone would eventually appreciate the long-term benefits. His instincts were right; all involved have seen how the invoice compliance required in the Ariba Network – i.e. getting it right the first time – saves effort and money in the end.
It turns out that managing orders and invoicing over a business network in the cloud has exceeded Hanif’s expectations. His target was to have at least 93% of invoices paid on time; he reached 95%. BC Hydro is saving $1 million a year in accounts payable costs, and is also finding opportunities to cut spending through dynamic discounting over the network.
For Hanif, the success is not only about saving money, but is also about improving supplier relationships. “The benefits to our suppliers of an e-commerce platform are the increased speed and frequency of on-time payments, the ability to track invoices and orders online in one place, fewer invoice exceptions, and paperless, environmentally-friendly trade.”
It all adds up to a happier and healthier supply chain for BC Hydro, and has cemented Hanif’s place as a digital supply chain pioneer in Canada.