With limited options to gener- ate more revenue through higher prices, utilities must be resolute in wringing costs from their operations and maintenance activities. For many utilities, significant cost reductions can be gained in the procurement area. Typical utilities spend between 40 percent and 60 percent of their operations and maintenance budgets on third-party materials and services. But, here's the challenge: Despite the need to generate greater cost savings, the procurement function many times lacks the information systems, human capital and senior management attention necessary to achieve this goal. With the bulk of utilities' management attention going toward optimizing asset management and delivering customer satisfaction, generation efficiencies and distribution costs, there often is little time or money left for upgrading the performance of the procurement function.
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