Optimizing Supply Chain Processes to Ensure a Reliable Electric Power System

The power industry supply chain is facing unprecedented strain as utilities race to upgrade aging infrastructure against a backdrop of lengthening lead times and increasing project complexity. As one Midwestern utility executive recently noted, “Transformers that once arrived in three months now take up to two years to source,” highlighting a crisis that extends far beyond inconvenience to threaten grid reliability and resilience. These critical components, alongside circuit breakers, switchgear, and other essential equipment, have become the bottlenecked lifelines of an industry in transition.

This supply chain gridlock arrives precisely when utilities face mounting pressure to modernize systems. Infrastructure dating back several decades requires replacement while utilities are simultaneously trying to integrate renewable energy into the grid, meet electrification demands, and respond to climate resilience needs. The collision between yesterday’s supply chain models and tomorrow’s grid requirements has created a perfect storm: utilities must plan years in advance for equipment they once sourced in months, all while navigating geopolitical tensions restricting critical materials, manufacturing limitations, and increasing global competition for limited resources. As the industry confronts this growing crisis, innovations in procurement, manufacturing, and strategic planning are essential.

“Utilities can optimize their supply chain for grid modernization projects by taking a collaborative approach between the services themselves and how they can support the projects, as well as having a partner to be able to leverage their sourcing capabilities and have the relationships with the right manufacturers,” Ian Rice, senior director of Programs and Services for Grid Services at Wesco, explained as a guest on The POWER Podcast. “At the end of the day, it’s how can the logistical needs be accounted for and taken care of by the partnered firm to minimize the overall delays that are going to naturally come and mitigate the risks,” he said.

Headquartered in Pittsburgh, Pennsylvania, Wesco is a leading global supply chain solutions provider. Rice explained that through Wesco, utilities gain access to a one-stop solution for program services, project site services, and asset management. The company claims its tailored approach “ensures cost reduction, risk mitigation, and operational efficiencies, allowing utilities to deliver better outcomes for their customers.”

“We take a really comprehensive approach to this,” said Rice. “In the utility market, we believe pricing should be very transparent.” To promote a high level of transparency, Wesco builds out special recovery models for its clients.

“What this looks like is: we take a complete cradle-to-grave approach on the lifecycle of the said project or program, and typically, it could be up to nine figures—very, very large programs,” Rice explained. “It all starts with building that model and understanding the complexity. What are the inputs, what are the outputs, and what constraints are there in the short term as well as the long term? And, really, what’s the goal of that overall program?”

The answers to those questions are accounted for in the construction of the model. “It all starts with demand management, which closely leads to a sourcing and procurement strategy,” Rice said. “From there, we can incorporate inventory control, and set up SOPs [standard operating procedures] of how we want to deal with the contractors and all the other stakeholders within that program or project. And that really ties into what’s going to be the project management approach, as well in setting up all the different processes, or even the returns and reclamation program. We’re really covering everything minute to minute, day to day, the entire duration of that project, and tying that into a singular model.”

But that’s not all. Rice said another thing that sets Wesco apart from others in the market is when it takes this program or project approach, depending on the scale of it, the company remains agnostic when it comes to suppliers. “We’re doing procurement on behalf of our customers,” he said. “So, if they have direct relationships, we can facilitate that. If they’re working with other distributors, we can also manage that. The whole idea here is: what’s in the best interest of the customer to provide the most value.”

Outsourcing allows utilities to focus on their core operations while leveraging specialized expertise in areas like supply chain management, logistics, and workforce training. Wesco’s tailored project site services, including kitting, labeling, and advisory services, ensure that projects stay on track, risks are minimized, and resources are used efficiently.

“Again, it’s very transparent how we’re building out these models, and operating and executing according to the plan, and this is even including the real estate, the equipment, and human capital required for that project or program,” Rice said. “What this all ultimately means, though, is firms can clean up their balance sheet and move CAPEX [capital expenditure] allocations to OPEX [operating expenses], and overall, there’s just a cleaner line in the sand between firms and the core business or that exact project.”

To hear the full interview with Rice, which includes more about grid modernization challenges, asset management systems, working stock programs, technology and the role artificial intelligence may play in the future, returns and reclamation procedures, and more, listen to The POWER Podcast. Click on the SoundCloud player below to listen in your browser now or use the following links to reach the show page on your favorite podcast platform:

For more power podcasts, visit The POWER Podcast archives.

—Aaron Larson is POWER’s executive editor (@AaronL_Power, @POWERmagazine).