Procurement team keeps up with fluctuating markets

Each year, Basin Electric’s Procurement team purchases $400 million dollars of goods and services on the cooperative’s behalf; however, there have been challenges the past couple of years with product availability and lead times. 

“Products such as boiler tubes have fluctuated from a nine-week lead time, up to 60 weeks, and back down to 20 weeks,” said Jon Klein, Basin Electric vice president of Procurement. “Lead times on products such as pumps, pipes, and valves change daily, while larger purchases can take up to two years to receive.” He said due to worldwide labor shortages and an inexperienced workforce, his team has had to adjust both their expectations and their strategy when it comes to acquiring product and services.

Together with Basin Electric and Dakota Gasification Company’s planning and operations teams, Procurement has begun planning further ahead in an effort to allow enough time for products to be delivered when they’re needed. The team also expanded their bid list in order to get a stronger competitive bid and to award projects six to 12 months in advance. 

During the bidding process, Procurement found several highly qualified turbine contractors that will save Basin Electric significant dollars over the next three years. They have negotiated fixed-priced contracts with protections in place for late delivery, quality, and performance. 

When it comes to alliance contractors, Procurement bids on their work, which includes scaffold, industrial cleaning, and emergency services, on a triannual basis. “These contractors are prepared to mobilize at a moment’s notice 365 days a year. Per their contract, they must perform each time they get a call,” Klein said. “The value our contractors provide to the cooperative is a true testament to the strong partnerships we have formed with them. Through COVID-19, weather events, holidays, and supply chain shortages, these contractors are vital to helping keep the lights on.” 

Klein said things are still volatile, with some areas improving and other areas still presenting a challenge; some prices are improving, while others are still on the rise. “What is consistent is the inconsistency of the electrical supply market-it’s very time sensitive and unpredictable,” he said.