One of the key benefits of the supply chain crisis we are in is increasing visibility for everyone involved. (Source: ProLift rigging)
In this edition of Voices of the industryRobert Moffit, Executive Vice President of BluePrint Supply Chain, explores the importance of transparency in supply chain management.
Boots on the ground Lookout point
In recent years, the data center construction market has performed steadily and started very strong with a 29% increase from the first quarter of last year, shared during a mid-year construction outlook from Dodge Data & Analytics. This strong start can be attributed to high demand for data as companies continue the trend of working from home due to the COVID lockdowns. Through our strategic partnership with ProLift Rigging, we have continued to serve stakeholders with ground support while continuing to address this construction demand with local storage, last mile transportation and rigging support.
From our perspective and our partners starting from the ground vantage point in the construction process, synchronizing the production and delivery of oversized and overweight critical products on construction sites has been a challenge for the upstream Cloud Provider. Well before the COVID and recent delivery restrictions, cloud providers had little visibility into reliable product readiness, shipping and delivery dates due to high competition restrictions.
Often this leaves multiple layers of construction site contractors, such as ProLift Rigging, on standby and pushes construction finish dates further to the right. An update report on data center market conditions by Turton Bond states that “delays are putting pressure on schedules and increasing construction costs. Data center operators with a primary focus on early procurement of key material and equipment (i.e. switchgear, UPS, chillers, generators, etc.) .) and building good relationships with suppliers to ensure delivery, find success in a tough market.Early sourcing, off-site warehouse storage of key equipment and fixing prices before quarterly increases is the current recipe for successful sourcing in a data center development .”
In 2019, ProLift shared the same sentiment in a DCF article, stating “your planned” [data center construction] site is only a small part of the burgeoning data center construction market and you run a high risk of getting lost in demand […] if the correct buffering is not assigned to your schedule.” This is now more relevant than ever before. The impact of COVID restrictions and constraints in the global materials supply chain have only exacerbated these problems, giving the cloud provider a challenging dynamic to critical construction completion dates.
Creating these dynamics of critical product demand planning, proactive procurement, supplier relationship management, logistics and transportation coordination, strategic warehouse locations, and on-site delivery and installation requires extreme ownership and visibility from all stakeholders involved. However, at the end of the day or the construction project, the Cloud Provider is the one that takes the hit when extreme ownership and visibility among stakeholders is lacking. Without transparency between all parties, the data center construction process will not function at maximum efficiency, leading to delays in the construction of the site and missed opportunities for the cloud providers.
But who is responsible for advocating this transparency? We believe that a strong construction supply chain management company is the missing part of the transparency that is so much needed.
Owner Enabled Supply Chains
Years of conversations and experience in the market clearly show that many Cloud Providers have the ability to seize market opportunities and they need a partner to fight the market constraints and accelerate the scaling of an elite supply chain team aligned to their needs. size and function. Cloud providers require different levels of support depending on their growth plans and current operational constraints, such as immediate deployment of procurement and logistics team and strategic sourcing of new supplier partners to deploy physical infrastructure faster.
Based on our experience partnering with Cloud Providers, the most efficient and effective way to rapidly deploy new data center sites is to build an unassigned inventory of OFCI products that can predictably be deployed to sites in the strategic geography of the world. Cloud Provider. In simple terms, decoupling the oversized and overweight critical cooling and power products from the site level building range. Getting there requires redesigning legacy models of manufacturing, procurement, transportation, and construction to align ownership, incentives, metrics, and ultimately performance with the rapid innovation impacting Cloud Providers’ core markets.
What does this look like? Here are a few ways cloud providers can rethink their supply chain and build process to help combat current market constraints and ultimately build faster.
- Get visibility and commitment from Tier 2, 3+ suppliers: Tier 1 suppliers are affected by a lack of raw materials, manufactured components, sub-assemblies, etc. We believe there are strategic opportunities to build robust relationships with Tier 2 and 3 suppliers to ensure that Tier 1 OEMs and Integrators Are Positioned to Meet Their Commitments. This could mean taking control of critical Tier 1 inputs. Finding a path to expand strategic sourcing services to help address this opportunity in both OFCI and CFCI procured products is critical, whether that be self-developed or a strategic partner positioned to support this effort.
- VMI and safety stock/buffered inventory of OFCI equipment: Dynamic demand to build and deliver additional 40+ MW capacity within the “need by” constraints requires the elimination of OFCI delays. With demand models informing the VMI and ownership levels, owners need a solution to manage the execution and production of orders, the receipt and management of that inventory (chain of custody, quality, warranty, fulfillment). In addition, strategically located warehouse facilities are essential for the flexible deployment of equipment. Not only in the markets currently being targeted, but also in the ability to grow these capabilities quickly.
- Shift responsibility for transport reach from suppliers and manufacturers to a single responsible party: Manufacturers do not have a strategic focus on transportation. Their focus is on increasing production capacity and capacity. Even if a manufacturer is proficient in sourcing and coordinating transportation, Cloud Providers will experience fragmented transportation coordination as each of the various suppliers is responsible for the transportation of their product. This is a major cause of the lack of visibility across the supply chain, which inevitably leads to delays and inefficiencies.
- Shift Last Mile Delivery and Site Rigging from Suppliers and Site Subcontractors to a single responsible specialist contractor: The last mile delivery and site rigging is already done and executed on every project site, but with little control or visibility to the Cloud Provider. These rigging costs are already incurred at project level upstream to the Cloud Providers. By shifting responsibility to a single supplier, these costs are shifted from the scopes Integrator, General Contractor, M&E Subcontractor and Local Crane and Rigging Subcontractor. This step provides the opportunity to save at least 20% or more on storage costs only and provides an owner-enabled supply chain. The key here is that the site is fully ready for the Cloud Provider’s products before deploying specialist contractors in the field, eliminating standby time and rework. The perfect model is the “shell-ahead” model where all civil, underground, foundations and building shells are completed before the owner’s products are placed, allowing for faster installation, faster connection and lower overall heavy rigging costs.
Robert Moffit is the Executive Vice President of BluePrint Supply Chain† BluePrint Supply Chain accelerates the leaders of the industrial future by empowering, scaling and building a resilient construction supply chain. Contact to learn about their processes that provide clear visibility across the entire supply chain, ultimately creating an Owner Enabled Supply Chain.