Mining Gold From The Supply Chain

 

 

Utilities and vendors take a hard look at online procurement.

Feel like saving your company $50 million? That's the question Joseph Zelechoski, director of supply chain at PPL, has for those who haven't tried online supply chain management.

He thinks many executives don't view supply chain management as a critical resource. Yet, if utilities are buying $1 billion in materials and services-not unlikely at the larger energy companies-and could save 5 percent, they would save $50 million. "Fifty million against your bottom line is huge!" Zelechoski exclaims.

E-Marketplaces Still Hanging On

At the height of the dot-com boom, online supply chain management (SCM) was hot. Millions were poured into several flavors of online B2B (remember that moniker for business-to-business?) portals, all of which promised to fulfill the potential of e-commerce, bringing buyers and sellers together to save buyers money and help suppliers find more markets. Tombstones and dark Web sites are all that remain of many B2B portals, but two portals focused on the energy industry, Pantellos and Enporion, have survived and may yet thrive.

With online marketplaces, and indeed by using specialized software packages in-house, energy companies can issue online requests for proposals (RFPs) for recurring procurement needs-wood poles, for example-and hold auctions for spot purchases, such as turbines. The initial appeal to buyers is cost savings through lower unit prices, achieved by pushing potential suppliers to compete directly against one another-a sort of LendingTree.com for utilities.