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From The Manager


Supply Chain – Keep it Together!

If you haven’t heard anything about supply chain issues over the last year, you really haven’t been listening. But even as an advanced-degreed economist I’m not sure I completely get all the issues causing holdups and price increases on all the “stuff” we’ve typically been able to get on-demand and at stable prices in the past. Here are some insights to supply chain issues and the impact they are having on Brown-Atchison Electric Cooperative, and the actions we are taking to address the issues.

What is a supply chain?

Supply chain is the sequence of processes involved in the production and distribution of a product, according to the Oxford Dictionary. But what is causing the constraints within the supply chain? Economists don’t seem to be able to pinpoint any single thing, but rather a combination of things that have all added constraints within the supply chain. Specifically:

THE PANDEMIC – It seems like a good global excuse for about everything these days, but it does have some merit in contributing to supply chain issues. With the degree the world economies are linked, supply disruptions due to COVID-19 have slowed down production or created a backlog of supply for critical components of many products. An easy example is computer chips, which has dramatically delayed the ability to produce new vehicles and equipment and a host of other products.

THE GREAT RESIGNATION – More Americans quit their jobs than ever before. Reasons abound, rediscovering the value of “family time” during the pandemic, wages that are considered too low, overly generous benefits for not working, etc. This has particularly impacted product delivery from shipping ports to local delivery.

ONLINE PURCHASING – Increased online purchasing has also increased the need for local delivery.

PENT-UP DEMAND – Demand for both goods and services has increased in a post-pandemic economy.

What does this mean for Brown-Atchison Electric?

It means we are rearranging our purchases of vehicles because of how long it takes for them to arrive. For example, a digger derrick now takes about three years from order to arrival and unfortunately costs 25% more. It means certain transformers take double the time to arrive and cost twice as much as they did only a year ago. Virtually, everything we need costs more and takes longer to get here than it did before.

How are we managing these difficulties?

We have taken several steps to manage the new reality we face regarding the supply of the materials and tools we need to provide reliable service.

We are planning our construction timing more carefully to better determine when materials are needed.

We are working with vendors to better manage inventory and lower costs.

We are considering alternative materials or products (like reconditioned pole-mount transformers) if it is cost-effective to do it. In short, we are doing our best to plan better, delay purchases where possible, find alternative products, and ultimately keep rates as low as possible consistent with running a safe and reliable distribution system.

In this environment where products are expensive and hard to come by, I am pleased to say we are not expecting an increase in our base rates this year despite the difficulties we experience related to supply chain and the accompanying inflation.


-Michael Volker, General Manager