By Bob Moser

As turbine suppliers' global supply chains expand, industry players say new strategies must emerge to boost efficiency, transparency and communication within complex trade networks that are starting to show signs of stress.

“We keep screaming that a lot of wind manufacturers, only after they've sourced big components, do they start thinking of transport, logistics and coordinating supply chains,” says Luc Rom, manager-director for TMO Logistics.

“They end up sometimes paying a lot to get things where they want, and we keep emphasizing that they need to get every party involved as early as possible.”

The turbine industry is in a state of overcapacity in all major demand centers across the globe, none more so than in the US, where tremendous growth throughout the supply chain in recent years has run up against a fallout in demand, says Dan Shreve, director of Americas for MAKE Consulting, a leading wind energy advising firm.

Expectations of significant upward growth, macroeconomic factors, low natural gas prices and a stagnant effort on federal climate change legislation have cooled turbine demand in the US. Elsewhere, China faces concerns over the sluggish pace of connecting new turbines to its grid, and the EU is experiencing a shift of both demand and production centers to the Americas.

Just-in-time a step too far?

Turbine suppliers now may be just as concerned with filling orders in a timely manner as they are with maintaining effective plant utilization to justify the lofty start-up investments of recent years. More manufacturers are going lean, producing as orders come in and expecting their complex supply chains to keep up every step of the way.

Close liaison with supply chain members helps turbine manufacturers like Clipper Windpower level-load their production, minimizing bottlenecks so they're not producing 50 units one month and five the next, says Ian Cluderay, vice president of supply chain management.

With that, improving supply chain transparency will help partners react to manufacturing fluctuations. Understanding the potential backlog of the end-user in the supply chain - the turbine maker - is critical for parts suppliers, many of which may face growing competition in a niche market where demand lags behind supply.

“A new level of frank honesty is in order between turbine suppliers and every partner on their supply chains regarding where their order streams are headed,” Shreve said.

For long-term planning for a specific region, coordinating suppliers and turbine makers will help avoid problems like excess inventory, late or short deliveries, penalties for those missteps and inconsistencies in pricing, all issues that are starting to appear in trade circles, analysts say.

Shreve is not sure if public transparency of the supply chain is necessary, or even recommended, because while it may give stockholders and supply partners peace of mind, competitive advantage could be at stake.

“[Manufacturers] have to be comfortable enough with confidentiality to trust the chain with that information,” Shreve said. “The ability to run a tight ship will be key to competitiveness for these turbine manufacturers, and their suppliers.”

Convincing industry partners of that value has been an uphill battle for some.

“It's very clear that the more transparency there is in the supply chain, the better off you are, but sometimes industry doesn't want to share all that information,” Rom said.

Local infrastucture networks are key

As supply chains and production are introduced into new regions like South America, expansion will necessitate new distribution warehouses, trade and transportation networks and more logistics aid, but none of it will work without on-the-ground support that understands the intricacies of the region.

“It'll be important to get regional folks who are well aware of local logistics, the duties and customs of those countries. Don't underestimate how critical that (human element) will be,” Shreve said.

What may be called for are new Enterprise Resource Planning (ERP) systems, which can tie together every aspect of the turbine supply chain digitally, in real-time. Those systems can be set up for manufacturers, suppliers, shippers and coordinators throughout the supply chain to react to one another's needs instantly.

ERP systems exist today for a wide range of businesses, but haven't been perfected yet for the unique needs of turbine supply chains. Until they are, daily reviews, followups and forecasting are what Clipper Windpower uses to stay on top of supply chains.

“The key thing is that very close communication,” Cluderay said. “We have daily meetings, review output, and anything supply-related the right stakeholders are contacted right away.”

While cutting-edge communication networks may indeed help supply chains, some believe the industry's coordination struggles are overblown, and easy to diagnose. A simple dose of accountability and more frequent glances at your inbox may be in order.

“There is a lack of transparency, but it's not more complicated than using (Microsoft) Excel and e-mail better. It's honestly that simple,” Rom said. “It is more an attitude about sharing information, rather than a new tool we need.”

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