POWER May 2022 Intl - 5

SPEAKING OF POWER
Supply Chain Issues Mean
Planning Is More Important
Than Ever
Aaron Larson
I
t's hard to imagine a company that
hasn't been affected by supply chain
issues over the past couple of years.
Even before the COVID-19 pandemic
began, a couple of utility executives had
suggested POWER write about supply
chain issues and hold sessions on the
topic at our conferences. While POWER
has done that, the situation has gotten
markedly worse in the meantime.
In recent months, sanctions on Russia
following the country's invasion of
Ukraine and COVID lockdowns in China
have threatened to disrupt the world's
supply chains even more. China Briefing,
a business publication produced by Dezan
Shira & Associates, a foreign direct
investment consultancy, reported that a
lockdown in Shanghai, a city of 25 million
people that serves as China's financial
center, was " the largest scale lockdown
ever " and that Port of Shanghai operations
had been disrupted by the situation.
" Shipping giant Maersk estimates
trucking services into and out of Shanghai
will be 'severely impacted by 30%,' "
China Briefing reported on April 3. " Some
shipping companies have diverted their
vessels to nearby ports, such as the
Port of Ningbo in Zhejiang. However, it's
not an easy switch as COVID-19 control
measures have already caused rising
congestion outside both ports. The global
supply chain may feel the impact in the
following weeks, " it said.
Supply Chain Challenges for
Power Projects
During the Combustion Turbine Operations
Technical Forum (CTOTF) Spring
Conference held March 13-17, in Louisville,
Kentucky, a panel discussion on
day one focused on the " supply chain
crisis. " Luis Cordova, PE plant manager
of Austin Energy's Sand Hill Energy
Center, a 600-MW combined cycle facility
in Del Valle, Texas, said supply chain
issues had forced his team to postpone
work that was scheduled to occur at the
end of April.
Cordova said his group has been preparing
for about three years to do a projMay
2022 | POWER
ect this spring. The company had all the
equipment it needed on order and everything
seemed to be on track. The necessary
contractors were all lined up and the
engineering aspects of the job had been
finalized. However, when the construction
kickoff meeting was held, Cordova
received bad news. Two solid-state relay
controllers that were needed for the
project were on an eight-week backlog.
To make matters worse, the controllers
are very particular to Sand Hill's panels
and aren't interchangeable with other
controllers that may have been available,
so the project had to be rescheduled.
Perhaps the most frustrating part of
the job delay is that the controllers are
relatively inexpensive. Before the pandemic
struck, Cordova suggested they
probably could have been purchased for
less than $1,000 and received in about
two weeks, but now the unavailability
is affecting a multi-million-dollar project,
and may result in some workarounds until
the project can be completed.
" These are unprecedented times from
my perspective, " said Joe Clements, director
of Generation Procurement and
Warehousing with PPL Services Co. And
Clements' perspective is quite broad,
having worked in the industry for almost
40 years-32 years of which he's been
running supply chain organizations.
To provide context, Clements noted
that in the spring of 2021 steel tubing
for boilers had a 16-week lead time. By
the fall, the lead time had jumped to 21
weeks. Lead times for spring outages
this year climbed to 30 weeks. Following
the London Metal Exchange's decision
to halt nickel trading on March
8 after prices doubled to more than
$100,000 per
tonne
for
the metal,
Clements said he can't even get companies
to give him a quote for boiler
tubes. (Nickel is used to make stainless
steel and other alloys stronger and better
able to withstand extreme temperatures
and corrosive environments.)
" We had an active proposal out and
we had three of our OEMs [original
equipment manufacturers] tell us, 'We
can't give you pricing on that because
www.powermag.com
we can't hold it firm for the duration of
our quotation.' So, they wouldn't even
bid us raw stock material. That's unprecedented
for us and for our industry, "
Clements said.
Chelsea Kovanda-Bukowski, manager of
Business Development with OILKLEEN,
a company that supplies lubricants and
advanced oil filtration technologies to the
power industry, reported she was having
trouble getting hydraulic fluid for customers.
" We just got put on allocation for
12,000 gallons of hydraulic fluid a month.
We sell 50,000 gallons of hydraulic fluid a
month, so you're going to these customers
and you're having to figure out ways
to keep them running, " she said. " We're
also getting 10- to 14-week lead times-
six-month lead times on some-and trying
to get people product. "
The Planning Conundrum
A major problem stemming from supply
chain issues is hoarding. Many managers
don't want to get caught with their pants
down, so they place orders for items they
" might need " or order " a few extras "
so they don't have to worry if something
goes awry during installation or an unexpected
problem arises later. Admittedly,
it's hard not to overcompensate when
faced with supply chain issues and trying
to plan for every possibility, but that just
exacerbates the situation.
Clements said he's been trying to better
understand his company's supply
chain for a while. " For some time, I've
encouraged my folks to get out and understand
our suppliers-who they are,
their principals, what drives their business,
the risks that they present to us,
how they're managing those risks. So,
we've been doing a little of that but probably
not enough, " he said. " We have a
forward-looking procurement plan that
we use. It's 12 to 18 months of projects
that are coming up with new contracts.
So, we are out there forward-looking trying
to understand our risk in those markets. "
It behooves everyone in the power
industry to do the same. ■
-Aaron Larson is POWER's
executive editor.
5
http://www.powermag.com
POWER May 2022 Intl

Table of Contents for the Digital Edition of POWER May 2022 Intl
