Loading

Duke Energy - Valve Standardization and Change Management BUS 479 | Fall 2017

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

The students' approach

First, the team obtained and reviewed Duke Energy’s historical spend data for both categories (paper products and pipe valves).

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.

The team arranged the valve data based on the four characteristics that needed to match in order to be standardized: valve type, material, pressure, and diameter.

They then used data analysis techniques to consolidate opportunities and identify the most cost-effective options.

Finally, the group researched change management techniques and, with Duke Energy’s specific business needs in mind, identified the strategy that would allow the company to most effectively implement and communicate its new standardization changes.

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
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
Betty Minton, SCRC Executive Advisor

The NC State student team members (L-R): Lauren Pederson, Meredith Guthrie, Elizabeth Folk, and Adam Johnson at the SCRC's Gallery Walk event in 2017.

_______________________

_______________________

The NC State team

Elizabeth Folk

Meredith Guthrie

Adam Johnson

Lauren Pederson

Betty Minton (faculty advisor)

The Duke Energy team

Vince Zito

Joshua Martin, Manager, Supply Chain Operations