The following procurement best practices bolster utility supply chain management overall, helping electric companies achieve optimal performance and cost savings.
Practice category management
Procurement professionals can reduce costs with category management, which is a method of managing procurement in terms of product classes (rather than a singular, contract-driven instance) in ongoing collaboration with distributors. A cyclical process (rather than a typical linear one), this approach helps procurement professionals better engage with business unit leaders and respond quickly to market changes.
Integrating distributors into the process is the key to making category management successful. Enhanced communication with the distributor leads to greater efficiency and transparency.
Utilities that work closely with distributors can also achieve more innovative solutions that lead to big savings in the long term. In order to make the change to category management, it might help to start with categories that will impact business units quickly, which is especially helpful if the goal is to gain support early on.
Reduce risk with the right distributor
In the big picture of utility supply chain management, it helps to have disaster recovery plans in place in case of unforeseen disruptions. This is another area where effective supplier integration is key.
Quality control is important, too, especially when it comes to maintaining critical components. Ultimately, all elements of a supply chain need to be closely aligned with the right distributor in order to reduce risk.
Manage inventory with the right processes
Too much inventory doesn’t look good on the balance sheet, potentially presenting revenue problems over the long term. Of course, there are critical components that must be kept on hand in case of emergencies. This is especially true in the case of certain state requirements.
Setting the right tracking processes can help a utility identify unnecessary inventory. Sometimes, however, new inventory comes in faster than procurement staff can clear out unneeded inventory. This is where it can be beneficial to have senior management help change the way procurement operates. The goal is to make sure procurement professionals have the tools and authority needed to better match inventory to business needs without affecting reliability.
Well-defined metrics are necessary to track the success of new strategies across an entire supply chain. It will be helpful to connect metrics to overall strategic goals set forth by senior management.
These tips can improve utility supply chain management
When it comes to utility supply chain management, it’s all about achieving the most efficient and cost-effective supply chain possible. By following the tips mentioned above, electric utilities can achieve success by taking a holistic approach to managing their supply chain.