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Supply Chain Case Studies

DEPCOM Differentiates Itself by Forming Partnerships with Key Suppliers

DEPCOM has installed more than 1 gigawatt of solar energy — comprising 55 solar plants across the United States

DEPCOM Power began operation in 2013 with 11 solar industry veterans and a white board, says Mark Brown, one of the company’s founders. Five years later, the Scottsdale, Ariz.-based company found itself ranked fifth on Inc. magazine’s list of America’s 500 fastest-growing private companies. Last year, DEPCOM ranked No. 5 on Solar Power World’s list of top contractors that perform engineering, procurement and construction (EPC) work in the solar power industry.

DEPCOM has installed more than 1 gigawatt of solar energy — comprising 55 solar plants across the United States — and credits its steady growth in part to several best practices it has implemented with its suppliers.

Most of DEPCOM’s suppliers are not one-and-done participants on power plant projects. They are partners aligned with DEPCOM’s long-term goals and participate on multiple projects.

Doing Business in a Different Way

DEPCOM’s founding team believed in doing business a different way with suppliers. The team’s members believed  the model of just bidding out all projects to a wide group and asking suppliers to respond to requests for quotations (RFQs) on singular projects wasn’t going to allow them to respond at the speed that modern business requires and wasn’t going to provide them the volume needed to drive toward the best-in-class cost structure that’s essential for success in the highly competitive solar EPC industry. From the company’s founding, Brown and others from DEPCOM reached out to potential supplier partners about forming relationships to work on several projects.

“I always view my role as much more than tactical execution,” says Brown, DEPCOM’S vice president of procurement/supply chain. “It’s not just about today — it’s about today, tomorrow and next year. The only way to be successful in this industry is to make sure you’re always thinking strategically and never taking your eye off your long-term goals.”

From the beginning, DEPCOM targeted up-and-coming suppliers that hadn’t yet reached “top tier” status but had solid technology, were looking to grow quickly and shared the same corporate philosophy as DEPCOM.

“The sum must always be greater than the parts,” says Brown, when describing DEPCOM’s approach to supplier engagement. He adds that “intelligent risk taking” is also a key component to the company’s success. DEPCOM has partnered with several suppliers to bring their new technology and products to the mainstream industry.

”We believe in bringing exceptional value to our customers and one of the ways we do that is to make sure we use the absolute best technology and products in our power plants,” Brown says “We know how to assess technology and execution risk.”

Taking a long-term engagement approach with suppliers allows them to be more invested in your success Brown says. “I told them, ‘If we win business, then they win business,’” Brown says. “It was my job to sell them the vision of where we could go together.”

Not Your Normal Start-up

DEPCOM wasn’t your normal start-up. Brown says he and his founding partners had established a successful track record in the industry and developed deep relationships with many potential suppliers from their days with First Solar, a manufacturer of solar panels and an industry player in utility-scale solar EPC. In fact, several of DEPCOM’s management team, including CEO Jim Lamon, were key members of the management team that drove First Solar.

Brown leveraged those relationships and the team’s track record, but those potential suppliers also liked DEPCOM’s “partnership” approach to supplier engagement. “Our discussions were about how we could jointly grow the business,” Brown says.

Like himself, he notes, many suppliers were growing tired of the old-school model of bidding on droves of individual projects and only winning a handful of them because they didn’t bid low enough.

“The solar power industry is one of the most competitive out there,” Brown says. “The old approach of bidding 10 jobs to win one just requires too much time and overhead to be successful in the long term. Being successful is much more than just having the lowest up-front cost.”

DEPCOM wanted to form a “collaborative consortium” with suppliers so they could openly discuss topics like cost curves, development cycles and lessons learned from the field so their suppliers could drive product innovation and identify all potential opportunities for driving down total overall cost of ownership.

“We’ve always believed in providing open and honest feedback to our supplier partners so they can develop better products for us and the rest of the industry,” Brown says. “We’re all in this together, striving to drive down the cost of solar power, which ultimately increases the potential market for all of us.”

‘Building Blocks’

Standardization is another best practice that DEPCOM promoted to suppliers. While Brown realizes that all power plants can’t be built the same, certain “building blocks” and “standard” products can be developed and used to build the plants. By leveraging this standardization, efficiencies in plant design and construction can be gained, material lead times can be reduced and suppliers can gain economies of scale, which drives down their production costs, Brown says And through partnerships with the same suppliers, DEPCOM has built a “library” of standard products and designs that serve as “building blocks” that can be used over again, which cuts down on complexities and keeps costs in check, he stresses.

When DEPCOM began, the first conversations its management team had were about what they needed to do to compete with other companies much bigger than they were and many of which that had been in business for decades. Brown says the best practice of taking a partnership mentality with key suppliers struck a nerve and helped DEPCOM differentiate from its competitors.

“In order to succeed long term in our industry, it really does have to be about partnerships with the supply base. Nobody wins alone these days,” he says.