Creative Procurement Solutions

EPB of Chattanooga is a municipal utility that provides energy and connectivity services to approximately 193,000 premises located in a 600-square-mile service territory.  Our 100 percent fiber optic network serves as the backbone for one of the most advanced smart grids in the country. This fiber optic network allowed us to launch EPB Fiber Optics, which delivers Gigabit speed internet, television, and telephone services.

EPB’s procurement process is vital to ensuring we have materials for both our electric and fiber optics divisions. It’s important to have a fair, equitable, and efficient process when securing suppliers.  Our purchasing department is responsible for obtaining quality goods and services at the best available value. This is accomplished through a competitive bid process that requires a bid for purchases over fifty thousand dollars.

Over the last several months there have been many factors impacting Energy Procurement functions from COVID-19, labor shortages, and resin shortages to core steel demand and chipset shortages. These factors made it much harder to obtain distribution transformers, electric conductors, utility poles, and internet routers.

We saw lead times on distribution transformers go from 2-3 months to 9-12 months and now up to 16 months. Not only have lead times grown, but some manufacturers are not providing quotes or taking orders on some transformers, due to production slots being filled up 18-24 months out. These long lead times combined with our demand caused us to identify creative ways to order transformers and how to preserve our on-hand inventory. We started forecasting 2 years in advance for our transformer usage. Early in the process, we placed several large quantity orders to be delivered month after month. This allows us to get several orders in production slots to be delivered at future dates. We eventually caught up and now have deliveries coming each month.

From a procedural perspective, we would normally install a single-phase pad mount transformer in a new subdivision prior to homes being ready to order electricity. This allows us to be better prepared to serve our customers upon their request. However, we had to pivot. Let’s take a 40-lot subdivision that requires 10 pad-mount transformers to serve the houses as an example. We decided to install the needed conduits, wire, pull boxes, connectors, etc. to ensure the underground work was completed except for the transformers. With everything in place, we could properly and effectively install the transformer at a future time. We install a transformer once a house is ready to order service. This process change allowed us to maintain adequate inventory and reduce having hard-to-get transformers installed but not generating revenue.

Our smart grid provided us with information on installed pole-mount transformers that didn’t have a load on them.  We used this data to get an accurate count of where we could pull pole-mount transformers in case of an emergency. These transformers provide us with a buffer as we navigated the procurement process of extended lead times due to reduced supply. During these times it’s more than just your purchasing procedures, you must also consider your policies and processes to understand how they impact inventory. Unprecedented times require us to think beyond the status quo. It takes close collaboration across your organization to minimize the impact supply chain disruptions have on our community and the individual customers we serve.