Elektrikraft: Global Sourcing Initiative (a)

19 Pages Posted: 1 Jun 2017 Last revised: 25 Sep 2017

See all articles by Timothy M. Laseter

Timothy M. Laseter

University of Virginia - Darden School of Business; Emory University - Goizueta Business School; University of Navarra, IESE Business School; London Business School; New York University (NYU) - Leonard N. Stern School of Business

Rebecca Goldberg

University of Virginia - Darden School of Business

Abstract

This case pairing is used in multiple Executive Education courses to define Strategic Sourcing, as well as in Darden's Operations Strategy course elective. The chief procurement officer had finished her presentation on the progress of the global sourcing initiative at Elektrikraft Corporation. It had gone well; the other senior executives had liked hearing about the progress her team had made during its first year. Although she was happy with this early success, she knew more work remained to be done. Now Phase II of the project was under way, and the team needed to continue performing at the highest level to meet its long-term goal of becoming a world-class supply chain management organization.

Excerpt

UVA-OM-1484

Rev. Feb. 22, 2014

Elektrikraft: Global Sourcing Initiative (A)

Ingrid Richter, chief procurement officer, had finished her presentation on the progress of the global sourcing initiative at Elektrikraft Corporation (EKFT). It had gone well; the other senior executives had liked hearing about the progress Richter's team had made during its first year. Although she was happy with this early success, Richter knew more work remained to be done. Now Phase II of the project was under way, and the team needed to continue performing at the highest level to meet its long-term goal of becoming a world-class supply chain management organization.

Company History

Founded in 1914, EKFT was a midsize independent power company. It owned and operated more than $ 17 billion of assets in 13 countries on four continents, including 71 power-generation facilities that provided approximately 27,000 megawatts of generating capacity. EKFT also operated 11 electric-distribution companies that delivered electricity to some 5 million end users. About 37% of EKFT's revenues came from northern Europe, 26% from North America, 22% from South America, and 15% from southern Europe and North Africa. The company was divided into two business segments: (1) contract generation included multiple power-generation facilities that entered into long-term contracts to limit exposure to electricity price volatility, and (2) large utilities handled the generation, transmission, and distribution of electricity in each of EKFT's four geographic markets.

To meet its goal of providing reliable, affordable energy to customers, the company demanded high performance from its 17,500 operations and management staff. Autonomy and decentralized decision making played a key role in the firm's culture. Initially, this decentralized, entrepreneurial approach allowed the company to focus on new development opportunities and expansion efforts until investments in Argentina, Ireland, and Belgium began experiencing serious cost pressure.

Early in 2011, Hans Antwerp was appointed CEO and shifted the company's management structure to a more centralized one. Specifically, Antwerp set up a cost-cutting office housing a new global sourcing organization to develop economic efficiency in procuring services and supplies. He asserted that, in addition to supporting EKFT's immediate financial goals, the new organization would make supply chain management a competitive advantage for EKFT and serve as a model for effective centralization.

. . .

Keywords: change management, global sourcing, supply chain management, electricity meters, category profiling, industry analysis

Suggested Citation

Laseter, Timothy M. and Goldberg, Rebecca, Elektrikraft: Global Sourcing Initiative (a). Darden Case No. UVA-OM-1484. Available at SSRN: https://ssrn.com/abstract=2974992

Timothy M. Laseter (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/laseter.htm

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

Rebecca Goldberg

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
0
Abstract Views
82
PlumX Metrics