July 15, 2024 - 6 minutes read
Transforming Utility Supply Chains: Emerging Trends and Solutions
The utility supply chain is a critical backbone of a nation’s infrastructure, but it faces numerous challenges. Given the geopolitical, economic, and pandemic-related uncertainties of recent years, many supply chain functions are still focused on immediate survival rather than strategic transformation. According to the PwC Digital Trends in Supply Chain Survey, 64% of executives in energy and utilities report “increasing efficiency” as their primary goal. This focus on immediate improvements and cost management surpasses other long-term priorities like process automation and integrated planning. Unfortunately, this brings up concerns about how well-prepared these companies will be in the face of the next major disruption.
This blog will explore the challenges and trends that are defining the utility supply chain and how emerging technology solutions can help address these issues to establish greater resilience and agility.
Challenges in the Utility Supply Chain
The utility supply chain is up against several significant challenges that impact efficiency and operational stability. Understanding these challenges is crucial for developing strategies and leveraging technology to mitigate their effects.
Antiquated Systems and Decentralized Information
Utility companies often rely on a myriad of local “on call” carriers for special projects, emergency situations, or additional capacity needs. These non-traditional moves aren’t typically booked as standard shipments in traditional TMS, making it challenging to track carrier activities. The decentralized nature of information across various internal systems strains resources and complicates record-keeping. This fragmented data management leaves utilities dependent on carrier invoices without a reliable way to verify details like driver hours and job specifics.
To address this, utility companies need a solution that standardizes and centralizes data from multiple systems, including carrier systems. This ensures accurate tracking of non-traditional moves and provides a clear, unified view of operations, reducing reliance on disparate records and improving resource management.
Rising Costs and Cost Management
Increasing costs in raw materials, transportation, and regulatory compliance are straining the utility supply chain. The global metal supply chain, still reeling from COVID-19 and ongoing tensions in Europe and Asia, is a prime example, with critical minerals experiencing price surges and ongoing availability concerns.
Utilizing advanced analytics and data management solutions can help utility companies manage and reduce costs by providing detailed insights to guide operational changes and optimization. These technologies enable better forecasting and resource allocation to help keep costs under control and, ultimately, improve financial stability.
Supply Chain Disruptions
Natural disasters, geopolitical tensions, and other disruptions significantly affect the utility supply chain. These events can stall or even stop operations, delay critical deliveries, and increase costs. Proactive risk management and real-time monitoring are essential to managing these disruptions and minimizing the fallout. Technologies that offer centralized data accessible to all stakeholders enhance collaboration and quick issue resolution, ensuring that supply chain managers can respond to unexpected challenges and maintain business continuity.
Sustainability and Environmental Impact
There is a growing demand from both consumers and regulators for sustainable practices in the utility supply chain, yet implementing these initiatives remains elusive for many companies. According to a Deloitte survey, while many electric power and renewable sector companies name environmental, social, and governance (ESG) initiatives, only 36% of them include sustainability metrics in their procurement processes.
Modern supply chain platforms can track and optimize supply chain sustainability initiatives by monitoring key performance indicators (KPIs). These tools help utilities balance cost efficiency with environmental responsibility, ensuring compliance with ESG and corporate social responsibility goals.
Labor Shortages
Labor shortages across the supply chain, from sourcing to logistics, present a significant challenge. Recruiting, training, and retaining staff is increasingly difficult and costly. According to a survey by the industry trade association MHI, recruiting and keeping qualified workers is the leading challenge for 57% of the supply chain executives surveyed, with 56% also struggling with specific talent shortages.
Automation technology in routine logistics tasks minimizes the need for manual data entry, freeing up employees to focus on critical initiatives. By automating these processes, companies can minimize the impact of labor gaps and improve efficiency across supply chain operations. This technological approach is essential for overcoming workforce challenges and maintaining smooth operations.
Utility companies need to rethink their approach to overcome these obstacles. Embracing advanced technology can turn these hurdles into opportunities for growth and innovation. By integrating data-driven solutions, companies can mitigate immediate issues while building a more adaptable and resilient supply chain for the future.
Emerging Trends in the Utility Supply Chain
Several trends are critical to reshaping the utility supply chain. These trends highlight the need for constant innovation and adaptation to meet current and future demands.
Digital Transformation
The shift towards smart technologies and supply chain digitization has been a major trend in the utility industry in recent years. Unfortunately, despite substantial investments, 69% of operations and supply chain officers report that these technologies have not fully delivered the expected results. This gap often arises from fragmented tech investments and a lack of holistic integration to link siloed data sources.
Adopting integrated platforms that unify various digital tools to centralize data from disparate systems allows companies can achieve better stakeholder coordination. These advanced platforms provide a complete view of operation processes to support more informed decision-making and enhanced performance.
Increased Focus on Cybersecurity
Protecting supply chain data from cyber threats is more critical than ever. The rise in cyberattacks has prompted initiatives like CIP 13, which focuses on software supply chain security. Recent guidelines from the Energy Department emphasize the need for robust cybersecurity measures, including real-time threat detection, automated responses, and comprehensive security audits. They further recommend utility providers adopt continuous monitoring of supply chain networks, implement zero-trust architectures, and improve their incident response capabilities.
Modern supply chain platforms incorporate these advanced security protocols to safeguard sensitive data, ensure compliance with industry standards, and provide a fortified defense against cyber threats.
Regulatory Compliance and Standards
The complexity of regulatory requirements in the utility industry is continually increasing, making compliance a significant challenge. Adhering to regulations is crucial to avoiding penalties and maintaining operational integrity. For instance, utilities must comply with standards set by the North American Electric Reliability Corporation (NERC) and the Environmental Protection Agency (EPA).
Compliance automation tools are vital in this context, as they track and enforce guidelines to ensure shipments meet necessary standards. These tools streamline the compliance process by reducing manual errors and accelerating reporting to identify potential compliance violations. By integrating compliance automation, utility companies can maintain adherence to regulations while optimizing their supply chain operations amidst an ever-evolving regulatory landscape.
The utility supply chain is on the brink of transformation, but companies need to take the leap to embrace the innovative tech that will move them forward. By harnessing these advancements, utility companies can transcend current limitations, turning challenges into opportunities for growth. The future belongs to those who adapt swiftly and think ahead.
Discover the Future of Utility Supply Chains with Agistix
Agistix stands at the forefront of modernizing the utility supply chain, with a comprehensive suite of capabilities that address critical industry challenges. Here’s how Agistix transforms utility supply chain management:
- Integration and Visibility: Agistix integrates seamlessly with thousands of systems, including ERPs, TMSs, WMSs, and carrier systems to provide a holistic view of the entire supply chain. This level of supply chain visibility ensures that every transaction and shipment is tracked in real time, enhancing transparency and speeding up decision-making.
- Collaboration and Risk Management: By enabling streamlined communication among suppliers, transportation providers, internal teams, and customers, Agistix creates an environment for seamless stakeholder collaboration. Its proactive risk management tools predict and mitigate potential disruptions, ensuring operational continuity and agility.
- Cybersecurity and Compliance: Agistix incorporates advanced cybersecurity measures to protect sensitive data and adhere to industry standards and regulatory requirements. Its compliance automation tools monitor and enforce guidelines, reducing manual errors and speeding up regulatory processes.
Are you ready to revolutionize your utility supply chain? Contact Agistix today to schedule a demo and discover how their platform can drive efficiency, resilience, and success.
