Less is more: Streamlining Spend Management – a case study with BC Hydro


When a company serves almost all of British Columbia’s population (4.6 million people spread over almost 1 million kilometers), there’s no room for inefficiency in any aspect of operations. BC Hydro and Power Authority was founded in 1961, and operates out of its Vancouver, British Columbia headquarters. As a provincial Crown corporation, BC Hydro has a mandate to generate, purchase, distribute and sell electricity, serving 95 percent of the province’s population. It is the third largest electric utility in Canada with 30 hydro plants and more than 300 substations.

Around 2006, the company began to notice some missed opportunities in spend management efficiencies. BC Hydro had not yet implemented a card program strategy; up to that point, the company used cards primarily for travel. Transactions were completed through a manual Local Purchase Order (LPO) process, suppliers were paid primarily by check and there was a lack of process consolidation for enterprise suppliers. “At the time, BC Hydro was not reporting on LPO spend for sourcing opportunities,” said Debra McGill, enterprise contracts & corporate card program manager at BC Hydro. “That’s when we began to seek out ways to improve the payment process for our suppliers.”

Tackling the challenge of streamlining payment efficiencies

In 2007, Debra took on the challenge of managing BC Hydro’s corporate card program. Through her initiative, the company set out looking for opportunities to define best practices, followed by a concerted effort to improve process efficiencies, improve card program stats and develop reporting for spend visibility. During this search, BC Hydro concluded that it needed a partner with significant experience and knowledge in the public sector, and that realization led the company to partner with BMO Financial Group (BMO). The relationship kicked off with BMO completing a detailed spend analysis, which established the current state of spend, growth areas and processes. “BMO’s spend analysis helped us to identify strategic suppliers and processes, which turned out to be an invaluable exercise,” said McGill.

BC Hydro soon found that incorporating payment card solutions can increase the efficiency of an organization by streamlining operations, enhancing spend management and analytical  capabilities and helping upgrade out-of-date systems and processes. BC Hydro soon implemented a corporate-wide One Card program, which started with more than 2,700 cardholders in 2008 and has grown to more than 5,100 cardholders presently. Through the adoption of this initiative, BC Hydro saw numerous benefits, including standardized policy and procedures and strengthened internal controls, consolidated banking services and maximum rebate initiatives.

Tangible benefits from BMO’s One Card program 

“Through the analysis of different spend paths such as electronic funds transfer (EFT), wires and card use, my team and I can now identify the best areas in which to enhance spend management systems,” said McGill. Her team found that card use is significantly more effective than manual LPO, streamlining processes, improving
cash flow for suppliers and strengthening reporting capabilities. McGill’s also eliminated check payments for Canadian vendors through EFT adoption. The One Card program was ideal for BC Hydro for a number of reasons:
• There was significant overlap of cardholders who needed both purchasing and travel cards.
• The company was able to create one corporate liability structure.
• Adoption drove a single unified accounting process with reduced administrative costs and necessary effort.
• Ultimately, it increased employee satisfaction.

Since introducing the One Card program in 2008, card program spend has doubled through the promotion of card use and card only payment for targeted suppliers. BC Hydro has achieved significant savings by reducing the manual LPO process through card payment process implementation and eliminating check payment for Canadian suppliers. They’ve also observed improved supplier relationships and even unlocked increased rebate potential through the change in its payables strategy. With its second spend analysis recently completed; BC Hydro and Debra McGill’s team are in the process of reviewing and identifying further opportunities. “The experience with BMO over the past several years has been exceptional,” said McGill. “We’re hoping to work with the BMO team to look at payments and receivables holistically and identify quick hit supplier enablement opportunities.”

BC Hydro Case Study_E

 

Download PDF - 487 KB

BC Hydro Case Study_E

Download PDF - 487 KB


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