Centralized Procurement Agent Practices in Large

Chinese Enterprise Groups

Mr. Zhang Zhifeng

Vice President

State Grid Materials Co., Ltd

tendering

Contents

General introduction

Centralized procurement agent practices

Advantages of doing centralized procurement through a tendering agent

30+

provincial

transmission

networks

300+

transmission and

substation projects

A Professional Centralized Procurement Agent

established in July 1998

the first professional tendering company in the electric

power industry of China

has provided agent services to dozens of international

thermal, hydro, wind power and transmission projects using

the World Bank, ADB and foreign government loans

has accomplished thousands of electric power projects

the most professional tendering agent in electric power

industry of China

Tendering Projects Funding

Shanghai Waigaoqiao Power Plant 2×900MW Phase I project World Bank

Yixing Pump Storage Power Station project World Bank

Zhanghewan Pump Storage Power Station project ADB

Henan Yuzhou 2×300MW Power Plant project ADB

Shanxi Shentou No.2 2×500MW Power Plant Phase II project Foreign goverment

Shanxi Yangcheng 6×350MW Power Plant project Foreign goverment

Tendering Projects Funding

Jindongnan-Nanyang-Jingmen 1000kV UHV AC pilot project Own fund

Huainan-Shanghai 1000kV UHV AC demonstration project Own fund

Xiangjiaba—Shanghai ±800kV UHV DC transmission demonstration project Own fund

Jinping—Sunan ±800kV UHV DC transmission project Own fund

Three Gorges—Guangdong ±500kV HV DC transmission project Own fund

Three Gorges—Changzhou ±500kV HV DC transmission project Own fund

Qinghai-Tibet ±400kV DC interconnection project Own fund

Transfo

rmer

Instru

ment

transfo

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Capacito

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Reacto

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Arc su

ppre

ssion

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GIS

Bre

ake

r

Isola

tion sw

itch

Sw

itchgear

Pow

er ca

ble

Gro

unded lin

e

Tow

er

Insu

lato

r

Fiber o

ptic ca

ble

Fittings

Pow

er

transm

ission

desig

n

Substa

tion

constru

ction

Pro

ject

Superv

ision

Sm

art m

ete

r

Ele

ctricity

acq

uisitio

n d

evice

Bulk o

ffice

su

pplie

s

com

pute

r

Substa

tion

pro

tectio

n d

evice

Com

pute

r m

onito

ring d

evice

DC

pow

er su

pply

Optica

l co

mm

unica

tion

1000kV UHV

35kV~220kV HV

330kV~750kV EHV

220V~10kV

Practices: Centralized Procurement Scope Enlarging

Practices: Centralized Procurement Amount Growing

2005 2011

14.2 billion

80.2 billion

Practices: Regulated Centralized Procurement Procedure

instilled with quality-emphasized and technique-advanced theories

offered open, transparent, and equal platform for all bidders

cultivated a fair-competing market environment within the transmission and

transformation industry

procured high-quality equipment for safe and stable operation of power grid

significantly prevented corruption

Centralized Procurement Agent Practices：Based on former experience, SGM develops a operation procedure

covering all steps, and the procedure has been incorporated into the

E-commerce platform.

Thanks to this platform, a standardized and

transparent centralized procurement operation

procedure has been established to provide free,

equal and unlimited access to bidding for all

potential bidders.

ERP ECP Master DataDecision Making

Decision Making Decision Making

Business Control and Execution

PlanningProcuremen

tContract

Management Execution

Distribution Management

Warehousing Management

Quality Management

Waste Material

Management

Supplier Management and Coordination

Procurement Standards

Specialist Management

Master Data ManagementBusiness Data Management

• More than

28000

experts of

evaluation of

bid

• 5 levels of

experts

major, totally

210 majors

• More than

12500

registered

suppliers

• More than

7000

suppliers

bidding

• Deploy 46

templates

of Contract

• 470,000

Signed

contract

• 150,000

records of

Material

Master Data

• 792

templates of

Structured

Procurement

Standards

• 619

Designing

Institutes

• Completing

234

batches，m

ore than

1100

procurement

projects

• About

2,538,000

bidding files

Procurement Planning

Supplier ManagementBidding

Signed Contract

E-Commerce Platform of SGCC

Procurement Standards

• 536,000

records of

Procurement

Request

• Max 64148

records in

one

procuremen

t batch

From go-live on Jun/2011 to Aug/2012:

Experts Database

Suppliers Management Model ： First-level Management of headquarters

Suppliers

Registration on the E-

commerce Platform(ECP)

Audit and approve

Participate in all bidding at E-

commerce Platform(ECP)

Registration of suppliers

Verification of qualification

& performance

Evaluation of

performance of

suppliers

Treatment of bad

behavior of suppliers

Supplies Management

System

Applied to the bid evaluation business

Establish a centralized supplier management system, unify external service window, and enhance the quality of service. Coordinate supplier’s performance evaluation with bidding

evaluation organically, to supporting the bid evaluation.

Strengthening material intensive management by the means of information.

Coordination room, as the coordination institutions of the e-commerce platform(ECP)

in application, through the coordination of scheduling, business monitoring and

statistical information aggregation functions, to globally co-ordinate, monitor and

reasonable coordinate the deployment of various businesses.

Based on the Two-Level and Three-Line operation and maintenance(O&M) system, abide

by the rule of “Unified operation, Unified customer service entrance, Unified operation and

maintenance work orders & problem, Hierarchical management”, establish a e-commerce

features unified operation and maintenance framework.

Headquarters Customer Service Platform （ Call Center-86-10-63411000 ）Headquarters Customer Service Platform （ Call Center-86-10-63411000 ）

Users of E-commercial Platform(ECP) （ Include internal & external Users ）

Computer hardware / network vendor support

Computer hardware / network vendor support

Server hardware / network / channel vendor support

Server hardware / network / channel vendor support

Software provider support

Software provider support

Consulting service

providers Support

Consulting service

providers Support

System M&O

System M&O

Business M&O

Business M&O

State Grid Material

Co., Ltd/Province & State company

Business applications support

Business applications support

State Grid Information Communication Co., Ltd.

State Grid Information Communication Co., Ltd.

State Grid IT support service center

ERP system

E-commerce platform (ECP)

procurement

management

Quality

assessment

expert

manageme

nt

Waste materia

l

program

management

Storage &

distribution

management

Main proces

s

contract

management

procureme

nt standard

Performance

appraisal

Quality

management

Main data

supplier management

Well-organizied Bid Opening Ceremony

Checking bid price online

after bid opening ceremony

Separated Evaluation

Bases for Large Scale

Procurement

Sealing

Communication Tools

Evaluating through

E-Commerce

Platform

Save so

cial a

nd

natu

ral re

sou

rces

to p

rote

ct the e

nviro

nm

ent

provide a more comprehensive and

accurate suggestion to the tenderee for his

centralized procurement decision-making,

and help the tenderee avoid making big

mistakes in his management of quality,

schedule and price level setting.

Rich Experience

Advantages of doing centralized procurement through a tendering agent ：

provide comprehensive and accurate

understanding of relevant laws and regulations;

know how to play with international rules and

how to execute regulations of the lending

institutions; good at executing all the

regulations and requirements; can use modern

analysis model to analyze all the bidding data.

Professional Personnel

Advantages of doing centralized procurement through a tendering agent ：

The system provides access to all tendering

information, so the procurement is more

efficient, fair and transparent. It stores and

manages a large amount of electronic

documents and thus improves the efficiency

of the procurement activities.

AdvancedE-commerce

Platform

Advantages of doing centralized procurement through a tendering agent ：

adhere to the principles of “receiving orderly,

opening transparently and efficiently,

evaluating rigorously and carefully ",

develops a standardized centralized

procedure to ensure that the procurement is

open, fair and just.

Standardized Procurement

Procedure

Advantages of doing centralized procurement through a tendering agent ：

based on the professional classification

criteria developed by evaluation experts in

China, SGM establishes a database of experts

with five categories, involving 210 majors.

The pool now has 20,000 experts from around

the country, and it can basically meet the

demand of various types of procurement.

Comprehensive Pool of Experts

Advantages of doing centralized procurement through a tendering agent ：

Conclusion

As a professional procurement agent, SGM, for the past 7

years, has been a successful agent for SGCC’s large scale

centralized procurement. Practice has proved that the use of

professional tendering agent service can make the centralized

procurement of a big enterprise group fair, transparent,

standardized and efficient, establish a tendering platform for

standardized and fair competition, and can bring win-win result

to all relevant parties.

Thank You