Overview of the Solar Energy Industry
Solar energy is an efficient form of unconventional energy and a convenient renewable energy source to reduce greenhouse emissions and global warming.
Globally, the demand for solar energy is driven by an increase in environmental pollution and the provision of government incentives and tax rebates. Also, the decrease in water footprint associated with solar energy systems has fueled their demand in power generation sectors. Also, the demand for solar cells has increased drastically owing to a surge in rooftop installations, followed by an increase in applications in the architectural sector. Moreover, the demand for solar power towers and parabolic troughs for electricity generation is expected to fuel the demand for concentrated solar power systems.
However, our analysis of the latest trends affecting the renewable energy sector shows that the solar energy providers are facing challenges in terms of:
Oversupply: As solar energy installations began to grow across the globe, providers typically rush to produce materials and panels that are needed to generate renewable electricity. Even with record growth in the industry, the entry of new solar energy suppliers has created a situation of oversupply. Since the supply is so much higher than the demand, many of these companies have gone out of business.
Inefficiency: Although the cost of solar power has decreased over the years, it’s still an expensive investment, considering its inefficiency. This issue is mainly because most solar panels are stationary and can’t move to meet the sun’s direct rays.
To counter such challenges, renewable energy suppliers are optimizing their supply chain and cutting down on operating costs. With the aid of supply chain analysis, renewable energy suppliers can map out specific activities within the generic value chain activities and look for ways to create efficiencies. Supply chain analysis also helps companies capture the competitive advantage and increases their overall profit.
The Business Challenge and Journey
Client background: The client is specializing in advanced solar technology and distributed solar power systems. They wanted to streamline supply chain and logistics operations and identify the best third-party logistics (3PL) provider to manage their growing logistics operations in Asia-Pacific.
Client issue: The client’s existing logistics process was complicated due to the presence of numerous entities at various stages of the supply chain. Also, the lack of a central control tower impacted coordination and time management. As a result, they wanted to reduce average logistics spend per project by 25% and increase customer satisfaction with the improved quality of service.
To help the solar energy provider identify the ideal logistics approach, the supply chain analysis experts at SpendEdge, conducted a comprehensive research and carried out discussions with prominent suppliers of solar energy. The experts also compiled information from a wide array of proprietary sources such as paid industry databases, company presentations, and industry forums to help the client find the right third-party logistics provider.
Client journey: During the course of this supply chain analysis engagement, the solar energy provider was able to identify the ideal logistics approach to select the right third-party logistics provider. Also, the client was able to devise a sophisticated, uniform reporting tool that allowed them to control the supply chain and reduce logistics spends.
Key questions answered in this supply chain analysis engagement
With the help of this supply chain analysis engagement, the client realized a reduction of about $5.5 million on its estimated spend of $25 million for logistics. The client not only achieved savings but also improved its policies and processes across business units.