Nowadays, T&D utilities are operating on high alert, managing through COVID-19 pandemic waves and their impending ripple effects on the global supply chain.
Decision-makers are rescuing infrastructure components from unprecedented delays in supply chain deliverables. They are cutting through cybersecurity restrictions prohibiting procurement options from China and Russia. They are also fighting global price wars caused by the ripple effects.
Pandemic disruptions have boosted supply chain management up to a “mission-critical” function. Should any grid mission-critical components become deteriorated or disabled, the result could yield a “mission impossible” in averting severe grid infrastructure degradations and hazardous failures.
Preventing “mission impossible” in your supply chain demands
With supply chain management’s new “mission-critical” role, utility decision-makers will need to be more proactive in foreseeing potential shortcomings.
Utility companies are finding it increasingly difficult to purchase infrastructure equipment at an expected pace that adequately enables them to service customers, while complying with resiliency and regulatory standards. One disruption in the supply chain can create a powerful whirlwind effect that could derail asset management strategy plans aimed at long-term infrastructure resilience.
More than ever before, there is an urgency for utilities to assess the state of their infrastructures for the short-, medium-, and long-term.
Decision-makers are viewing the current pandemic as a precedence for anticipating contingencies of future supply chain uncertainties, based on various risks.
Cyber-security risks & procurement obstacles
Complex or bulk T&D utility components (i.e., power transformers, substations, and large generators) are only being offered by a few geographically dispersed suppliers in the world. With globalized trade, Former-President Trump’s May 1 cybersecurity executive order, which protects U.S. electricity systems from cyber-attacks and foreign influence, could put barriers on the import of some bulk power grid components from adversary countries, notably China and Russia. In the last 10 years, China has exported more than 200 large power transformers to the U.S., which represents a considerable 10% of the total market share.
These factors, among others, are widely contributing to current slowdowns in the global supply chain, and we are witnessing that is becoming more difficult and riskier to procure the required complex and bulk T&D components. Securing the timely availability of components demands careful planning many years in advance.
Tighter collaboration with OEM partners to take on uncertainties
In response to the rapidly shifting landscape and its unprecedented supply chain challenges, T&D utilities should deepen collaborations with current OEM partners to pin down supply chain strategies in a more proactive and agile manner following pandemic vulnerabilities and challenges in staffing, production stagnations, and material shortages.
Utilities should become faster and more accurate in re-balancing evolving priorities, risks, costs, and levels of service. Supply chain disruptions and uncertainties would then be curtailed and accounted for years in advance. Innovative technology, agile enough to rapidly change gears to adapt to spontaneous changes, is essential.
Decision-makers should gage all risks to achieve optimal investment of time, energy, and resources. A tighter collaborative partnership can help overcome the challenges of inaccurate prioritization of deliverables and imprecise supply market vision.
The future for utilities supply chains
In conclusion, utility companies should aim to leverage modern technologies to help them identify new strategies to visualize and rise above potential supply chain obstacles that could delay commitments in delivering infrastructure sustainability and customer satisfaction.
Since certain supplies could take years to plan for, fostering a deeper collaboration with suppliers could assist utilities in mitigating all supply chain risks (i.e., those related to OEM suppliers, contractual issues, geopolitical disputes, cyber-related threats, etc.).
In summary, to ensure future-proof supply chain management, utilities should:
- Prevent “mission impossible” results in supply chain requirements by assuming a more proactive role in foreseeing potential shortcomings in asset management strategy plans for long-term infrastructure resilience and sustainability.
- Develop greater visibility to the impacts of cyber-security risks & procurement obstacles. Since President Trump’s cybersecurity order may create risks for the procurement of complex and bulk T&D components from China, utilities must secure the availability of components several years in advance.
- Build tighter collaboration with diverse OEM partners. Strategize on new contingency plans with sufficient lead-times. Curtail eventual supply chain disruptions and risks. Prioritize deliverables with a clear vision on all possible risks, costs, and levels of service.
Consider Asset Investment Planning (AIP) to optimize your procurement strategy. AIP assists decision-makers with visibility, analytics, and future-ready strategies for supply shortage contingency planning. It allows decision-makers to foresee and evaluate both the potential impact and outcome of all decisions related to delays and disruptions. It mitigates risks and logistical ruptures in the supply chain. AIP is agile in prioritizing/resetting business models and investment strategies based on “what-if” scenario analysis, which consider all uncertainties that could disrupt the supply chain flow on the short-, medium-, and long-term.
Didem Cataloglu is CEO of DIREXYON Technologies.