Kansai Electric Power Group Overview

Value Creation Story

Medium-term Management PlanBXBusiness Overview

Foundation to Support Value Creation

Financial and Corporate Information

Promoting Value Analysis (VA)
■ General overview of VA activities
The Group is promoting Value Analysis (VA) activities as part of its
efforts to achieve cost reduction targets toward BX (Building arobust corporate constitute) as set forth in its Medium-termManagement Plan.
In July 2021, with strengthened procurement functions, westarted cost structure reform efforts in cooperation with ouroperating divisions and suppliers.
VA is an approach that includes collaboration from theplanning stage between not just our procurement and operating
divisions but also suppliers and other parties involved tothoroughly examine efficiency improvement in expenses, repairs,
and capital investment for each operating division from allperspectives along the supply chain.
For example, in procuring materials and equipment,
contracted construction work, etc., we analyze the cost structurewith a focus on the original function and purpose and discuss
ideas from many different angles. This has led to waste elimination
through specification review, equalization of the amount ofmaterials, logistics improvement, etc., realizing minimized costs.
Perspectives for cost reduction
Strategic
perspective

Examples of viewpoints
Change quantity
Change quality level

Changespecifications

Change method
Change special product togeneral-purpose productOptimize life cycle cost, etc.
Change construction method
Change scope

Changeprocess

Change the timing ofimplementation
Change request level, etc.

Concrete examples
Examine closely to minimize manhours required
Reduce excessively demanding
specifications
Unify specifications among offices
and with other companies
Expand competitive orders throughgeneralization
Cost evaluation and minimization
throughout the life cycle
Simplified construction method,
shortened construction period
Separation of materials andconstruction costs, integration ofdesign and construction
Avoiding demand concentrationand periods of high prices
Relaxation of excessive quality
requirements and supplierqualification levels

Change purchasing method

Changeprocurement
methodChange suppliers’ competitiveenvironment
Work with suppliers to reduce
costs
Optimize supply chain
Strengthen bargaining powerin price negotiation, etc.

Collective order, joint procurement,
multi-year contract, etc.
Create competition, third-party,international procurement, etc.
Cost reduction activities throughcollaboration
Total optimization of businessprocess, including internal sales andoutsourcing by group companies
Negotiation within assessed pricerange, comprehensive consensus
building, etc.

■ Concrete measures
Example of cost reduction in maintenance services
Until now, the function of IT equipment used at our thermal
power plants, such as general-purpose servers, has beenensured by renewal of equipment for which the manufacturer’s
warranty period has expired.
In considering the effective use of equipment beyond themanufacturer’s warranty period, as a new initiative, we began toconsider using a third-party maintenance provider (a company
that provides services to prepare for possible failures byextending hardware maintenance periods after the
manufacturer’s warranty period expires).
In consideration of this, the Thermal Power Division and theSourcing and Procurement Division collaborated to conduct
research on third-party maintenance providers and technicalinvestigation, and requested competitive quotes from multiple
companies that were confirmed to have satisfied our required
standards, achieving substantial cost reduction.

Example of cost reduction through cost engineering*1 by
Kansai Transmission and Distribution, Inc.
Kansai Transmission and Distribution, Inc. undertakes costengineering of procured products and engages in costcutting activities to achieve a win-win situation with suppliers.
Through disassembly of equipment actually used and cost
analysis based on a series of studies in line with the Sangen
Principle (Three Actuals)*2, the company identifies costcutting potential and proposes changes in component
structure, specifications, materials, etc., to its suppliers. This
also encourages our suppliers to make counterproposals,collectively achieving cost reduction, including changes intypes of contracts and equalization of order quantities.
Kansai Transmission and Distribution, Inc. and the Company’s
Sourcing and Procurement Division will continue to work
together with the aim of becoming the industry's top runner incost engineering by utilizing internal and external knowledge.

Cost engineering workshop
engineering: Skills to analyze costs based on knowledge of the market,*1	Costsuppliers, product manufacturing and processes, and technologies owned byeach division, etc., in order to identify cost reduction opportunities

Principle (Three Actuals): An approach for solving problems involving*2	Sangenobserving the “actual thing” at the “actual site” and understanding the “actualsituation”

Kansai Electric Power Group Integrated Report 2023

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