Using the “Lean Concept” to Improve Contract Procurement Processes of Service Utility Companies

Abstract

Annually, a service utility company in the Kingdom of Saudi Arabia processes thousands of contracts for bidding. These contracts will in turn generate projects to maintain the quality and consistency of the generation, transmitting and distribution of electricity to the company’s consumers. The service utility company’s Contracting Department is responsible for the process of bidding for these contracts. Contracts subject to bidding must be signed in less than 175 days from the date of approval to allow adequate time for the implementation of the company’s maintenance and operational goals. However, at present, this conditional time allowance is rarely met. Hence, to improve the current situation, the “Lean Concept” is now applied and has resulted in a vast improvement in the contracting process. Contract cycle time has improved, waste has been eliminated and defects have been minimized. Improved cycle time of the contracting process has marked an increase in client satisfaction as a result of the finalization of contract signings in a shorter period in addition to a subsequent increase in the achievement of customer (utility user) satisfaction. The standard period for contracts signed-out has been reduced from 58.87% to 10.34%, and the sigma level process has jumped from -0.23 to 1.26.