Sandia Labs tops DOE facilities in supply chain savings

Sandia National Laboratories has reduced supply chain costs more than any other U.S. Department of Energy site over the past 12 years.

Totaling $439 million in savings, Sandia is responsible for nearly a quarter of the $2 billion in cost reductions from DOE’s Supply Chain Management Center since 2013 — when Sandia joined the program — according to a May news release from the lab.

The cost savings align with President Trump’s recent goals to cut back on spending though the DOE work has spanned multiple administrations.

And, it’s an especially important time to save money amid economic uncertainty happening on a federal level, caused by global tariffs the Trump administration has threatened, implemented or plans to implement, said local trade expert Jerry Pacheco.

“One of the hardest jobs in the world right now would have to be supply chain manager and trying to save money here and there, because you could be subject to tariffs, either exporting your goods or importing to the United States,” said Pacheco, executive director of the Border Industrial Association.

Sandia’s savings are a result of establishing purchase agreements that multiple DOE sites can share, according to Sandia’s news release. There are 117 contractor agreements across the entire Supply Chain Management Center.

“Collaboration is key,” said Scott Bissen, senior director of the DOE’s Supply Chain Management Center, in a statement. “This achievement is proof of what happens when prime contractors work together for the benefit of the enterprise.”

University of New Mexico Economics Professor Matías Fontenla agreed that a centralized supply chain has clear benefits, adding that it comes with consistency and less paperwork on top of savings.

“As long as it allows for some flexibility to deal with specific issues, the transparency and cost efficiencies win out,” he said.

Government supply chains tend to be centralized, according to Julie Niederhoff, associate professor of supply chain management in the Whitman School of Management at Syracuse University.

“Decisions are made for a larger geographic area or across several locations or product lines,” she said. “With this bigger perspective, a company can get volume discounts and make sure products and services are price competitive, at a consistent quality and generally consistent across the network.”

Pacheco said every company involved in global supply chains needs to think about their business positions, applauding how Sandia is doing it.

“This is the kind of innovative thinking I think we need right now to mitigate risk and to bring a little more certainty to industry,” he said.