TVEL Fuel Company seeks to organize a professional, responsible and transparent procurement management system to support its activities
Procurement implementation using the electronic platforms promotes openness and transparency, and saves labor and financial resources. TVEL Fuel Company performs procurement procedures using the electronic platforms of United Electronic Market Place JSC, Fabrikant LLC and Economics Development Center JSC.
In 2018, total amount of procurement was 8.1% higher compared to previous year and amounted to RUB 102.9 bln, while savings resulting from procurement procedures on an open competitive basis made RUB 2.0 billion.
Share of procurement through public competitive procedures under the UIPS, %
Not less than 93
Total amount of procurement of TVEL FC, RUB mln
Total amount saved by subsidiaries of TVEL FC from procurement through public competitive procedures on an open competitive basis, RUB mln
Not less than 2.000
The largest procurement groups are the products and services purchased from the companies of nuclear industry, power supply. These are the largest categories in procurement from sole supplier.
Some of the key suppliers and contractors of the Company enjoy monopolist position on the market. Under the provisions of UIPS (Uniform Industrial Procurement Standard of Rosatom State Corporation) no tender is provided for such contractors (natural monopoly entities), only according to the “Procurement from Sole Supplier” procedure.
Key documents that regulate procurement and set TVEL Fuel Company supplier and contractors selection criteria:
- Federal Law No. 223-FZ “On Procurement of Goods and Services by Particular Types of Legal Entities”;
- Rosatom Uniform Industrial Procurement Standard;
- TVEL JSC Corporate Standard “Procurement Process”
up to 98.1%
Basic groups of competitive procedures:
- materials and equipment;
- construction and installation works;
- manufacture of components;
- repair and maintenance of equipment.
Pursuant to the provisions of the Uniform Industrial Procurement Standard of Rosatom the Company may not provide any preferences to the suppliers on a territorial basis. Local suppliers participate in competitive procedures on a common basis.
In planning and implementation of procurement activity the enterprises of TVEL Fuel Company afforded priority rights to small and midsized businesses in accordance with the Federal Law No.223-FZ “On Procurement of Goods and Services by Particular Types of Legal Entities”, and in accordance with the Resolution of the Government of the Russian Federation d/d December 11, 2014 No.1352 “Concerning special aspects of participation of small and midsized business in procurement of products, works, services by particular legal entities”. The share of procurement from small and midsized business related to certain enterprises of TVEL Fuel Company makes from 46.8% to 98.1%, when the regulatory level is 18.0%.
In 2018, the Arbitration Committee of TVEL JSC received 117 complaints related to procurement activities of the Fuel Division. 17 complaints were admitted as reasonable (partially reasonable). For details, see the Internal Control System section
Suppliers and contractors are evaluated using the criteria of labor practices, impact on society and environment subject to availability of all permits and licenses set by the law. Such criteria also include availability of management system certificates as evaluative ones i.e. forming the final evaluation for a member of procurement procedure. The Company does not perform any evaluation study of actual and potential impacts in the supply chain; all concluded contracts are checked for compliance with the Russian legislation.
In 2018, the Fuel Company continued the implementation of the program “Transformation of the equipment and material procurement process”. A number of activities have been implemented to significantly reduce labor costs and improve the quality of data in the accounting system of TVEL Fuel Company (SAP ERP): automated planning for non-nuclear goods and materials, unified process of design specification creation, implemented system of equipment and material procurement control. Quantitative results:
- within the framework of increasing the inventory turnover of non-uranium materials and resources, the reduction of unclaimed goods and resources was more than RUB 230 mln. (reduced warehousing costs for non-uranium goods and resources);
- the principle of “just in time” delivery was accomplished on materials and resources for RUB 1.47 bln;
- the principle of consignment storage was accomplished on goods and materials for more than RUB 400 mln;
- decrease in the cost of purchased goods and resources (except for uranium-containing) for more than RUB 430 mln. (target value - RUB 400 mln per year);
- as part of measures aimed at improving the deliveries quality of critical items through qualified suppliers, 109 audits were conducted to check the reliability of data obtained from manufacturers, service companies and contracting enterprises.
Apart from that, in the reporting period the Company implemented a project on organization of a service department for functional customers of TVEL Fuel Company’s enterprises. The objectives of this project were to remove from customers non-core works on procurement, create a “single window system” on the whole process, conduct competitive procurement procedures from RUB 0 to 100 mln on the basis of the Fuel Company’s authorized body (Industrial Innovations JSC), reduce process lead time due to robotization of user activity and introduction of artificial intelligence (automatic calculation of nominal (maximum) contract price, checking design specifications, etc.).
ROBOTIZATION OF PROCUREMENT PROCEDURES
In 2018, Industrial Innovations JSC (specialized in procurement procedures and information technology, subsidiary of TVEL JSC) implemented a pilot project on robotization of user’s routine operations in SAP ERP information system of TVEL Fuel Company.
The software robot released the commercial service employees from primary documents paperwork for procurement procedure (in particular, the remuneration report of the authorized procurement authority). Working in the background, the robot analyses the appearance of agreed final protocols of procurement procedures at specified intervals, forms the calculation of remuneration, the corresponding card in electronic document flow SAP ERP and sends it to the responsible officer for acceptance.
As a result, the time spent on generating reports was reduced by 50%, human mistake factor disappeared: responsible employees only need to coordinate the automatically generated documents.
PLANS FOR 2019:
- decrease of the unclaimed goods and materials share in the structure of stocks;
- qualification of all suppliers of responsible items;
- replication of “just in time” delivery principles;
- replication of purchases on consignment storage conditions;
- organization of the process of automated planning the needs in materials and equipment;
- reducing warehousing costs at least 10% due to the introduction of advanced practices, development of a system for visualizing the parameters of warehouse operations;
- reduction of labor costs by at least 10% due to the robotization of individual user operations in the equipment and material procurement process.