Duke Energy's challenge
Following recent mergers and acquisitions, the number of products Duke Energy was purchasing had increased dramatically, along with the number of suppliers these products were coming from.
In order to simplify the purchase process for buyers, reduce the number of purchase orders, and to benefit from bulk discounts from suppliers, Duke Energy needed to standardize purchases across multiple product categories.
The assignment
A team of undergraduate students from the Poole College of Management had two key tasks:
1 - Identify standardization opportunities in the paper product and pipe valve categories as a means to generate cost savings
2 - Research change management initiatives to implement and communicate these changes outside of the supply chain functions
For paper products, the team evaluated product options for several different categories (cloth, towel and paper) and closely considered product quality and cost when choosing which ones to recommend as the new standard.
For pipe valves, they focused on four valve types: butterfly, globe, gate, and ball valves.
Outcomes
The team was successful in identifying products that would allow Duke Energy to benefit from a more cost-effective, standardized catalog of products without disrupting existing business operations.
For the paper product category, the team projected that Duke Energy could achieve savings on the analyzed paper product spend with the recommended standardizations.
For the valve category, the team faced several uncontrollable data-related limitations, but they were able to provide a summary table that organized all the pipe valves based on the four necessary matching characteristics — a resource they were confident would provide savings opportunities for Duke Energy moving forward.
Through their change management research, the team found that Kurt Lewin’s “Unfreeze, Change, Refreeze” tactic would be the best option for Duke Energy to successfully implement the standardization changes.
"We’ve had the opportunity to work with talented teams of NC State Supply Chain students for many years. With each team and project, we walk away with concepts and recommendations that we can leverage as we manage opportunities within our organization. The materials standardization effort was an exciting project that combined a tangible opportunity with a focused team of students that leveraged analytics and problem solving. The members of this team were informed, motivated and inquisitive, driving to provide data-informed recommendations that aligned with our business and operations. In addition to the savings identified, the team’s ability to recommend a change management method and direction added to the value that we received." — Joshua Martin, Manager, Duke Energy Supply Chain
“The most valuable part of the experience was that we got to present our recommendations to the Duke Energy leadership team, including their CPO at the time. Standardizing the data was definitely the most time-consuming part of the project since inputs were not standardized. Once we accomplished that, we were able to compare data, create pivots, and identify key cost factors for Duke Energy. My favorite part of the experience was working with my team - both at NC State and Duke Energy. We truly had to work together to accomplish all of the data research, provide recommendations, and present to the Duke Energy team.” — Elizabeth Folk, Poole College of Management alumna
“This was a great project — I always use it as an example of a team that was able to teach their client something surprising. I can remember the looks on the faces of the CPO and the Head of IT when the team outlined just how much work needed to be done on their data in order to standardize components, and the real savings they could see moving forward.” — Betty Minton, SCRC Executive Advisor