How Enphase Built a Sustainable Semiconductor Procurement Process with Z2Data
Industry
Company Size
Location
The Background
Enphase is an energy technology company founded in 2006 in Fremont, California, and has the distinction of being one of the first companies to successfully manufacture and commercialize the solar microinverter, an electronic device that connects to individual solar panels and converts direct current (DC) into alternating current (AC). (Microconverters convert energy accumulated in solar panels into AC, allowing individuals to store excess power for their homes or sell it to the grid.) As a result of its success, Enphase is one of the world’s foremost manufacturers of these power inverters, and the firm has sold upwards of 70 million units in over 145 countries to date.
Today, Enphase’s portfolio of products has grown to feature a range of renewable energy devices and solar solutions. This includes next-generation Wi-Fi and Bluetooth-enabled EV chargers that let individuals tap into their solar energy to power their vehicles.
Challenge
Kamalesh Sampathkumar is a senior manager for global procurement and analytics at Enphase. With over two decades of experience in sourcing, procurement, and other supply chain roles, he manages a wide array of responsibilities, including purchasing parts, analyzing procurement data, and handling claims from the company’s contract manufacturers. As with many procurement managers, one of his most essential ongoing tasks at Enphase is sourcing parts. Sampathkumar oversees the procurement of electronic components and semiconductor devices that are crucial for Enphase’s microinverters, batteries, and other solar-storing products.
When the COVID-19 pandemic struck in the early months of 2020, Enphase’s sourcing and procurement teams found themselves facing a volatile supply chain roiled by lockdowns, shutdowns, and supply shortages on a staggering scale. As the pandemic moved into 2021, Sampathkumar was struggling to consistently secure the semiconductor components that Enphase needed to maintain manufacturing continuity and hit production targets. “There were huge issues in getting these semiconductor parts from across the world,” he said. “The lead times were so high, and all the parts were getting delayed.”
As the pandemic moved into 2021, Sampathkumar was struggling to consistently secure the semiconductor components that Enphase needed to maintain manufacturing continuity and hit production targets.
Sampathkumar and his team scrambled to respond to each new disruption the pandemic brought, including a historic chip shortage that plagued manufacturing and cost the world economy hundreds of billions of dollars. In response to the strings of delays and increasingly prohibitive lead times, Sampathkumar began carrying out ad-hoc measures for finding and securing alternative sourcing. He and his colleagues started reaching out to their contract manufacturers to obtain information on specific manufacturing inputs, and then scouring online databases and other websites to find viable alternate parts. “It was completely manual,” he said.
Eventually, the procurement manager realized that the haphazard strategy he and his team had adopted in response to the mounting supply chain crisis was neither efficient nor sustainable. If they were going to stabilize their sourcing and help keep Enphase on the extraordinary growth trajectory it was enjoying—the firm was in the midst of a multiyear revenue surge that saw it rapidly expand into a billion-dollar company—they would need to develop a faster, more standardized strategy for mitigating risk in their supply chain and solidifying alternative sourcing.
Eventually, the procurement manager realized that the haphazard strategy he and his team had adopted in response to the mounting supply chain crisis was neither efficient nor sustainable.
Solution
During the first half of 2021, as Sampathkumar continued to be immersed in long, labor-intensive efforts to diversify Enphase’s semiconductor supply chain, he began wondering whether there might be a way to make the process more effective. He remembered asking himself, “Is there any tool, any easier way to get the alternate inputs, supply chain inputs, all of that?” He was discussing these obstacles with a colleague at another company when the Z2Data platform came up. Recognizing a potential opportunity to enhance his team’s current, low-tech approach to multisourcing, he booked a demonstration.
He remembered asking himself, “Is there any tool, any easier way to get the alternate inputs, supply chain inputs, all of that?”
Over the course of the demo, Sampathkumar observed several features that he immediately felt would be assets to him and his colleagues in Enphase’s sourcing and procurement division. Z2Data offered part-to-site mapping, which allowed customers to use part numbers to gain visibility into manufacturing locations all over the world. And when users put a manufacturing part number (MPN) into the platform, it provided a part score and a supplier score based on comprehensive proprietary algorithms. “That was so impressive,” he said.
Z2Data offered part-to-site mapping, which allowed customers to use part numbers to gain visibility into manufacturing locations all over the world.
Sampathkumar also saw how the tool showed users where disruptions were actively occurring throughout the global supply chain, including everything from logistics issues and factory shutdowns to fires and extreme weather events. “That was a buying factor for us,” he recalled. Finally, Z2Data automatically suggested cross-references for all of Sampathkumar's high-risk parts—an indispensable feature that explicitly addressed the specific procurement challenges Sampathkumar and his team were still navigating.
While Enphase considered other supply chain risk management solutions during its search, the company ultimately decided that Z2Data offered the most complete and competitive package. The demo was “so impressive,” Sampathkumar remembered thinking, that the consensus among the company’s decision-makers was that “we should go for Z2Data.”
While Enphase considered other supply chain risk management solutions during its search, the company ultimately decided that Z2Data offered the most complete and competitive package.
Result
Enphase first implemented Z2Data in 2021. Since then, Sampathkumar and his team have incorporated the tool into a wide range of critical processes, and the platform has become an essential part of their broader supply chain risk management (SCRM) strategy.
A significant aspect of Sampathkumar's work as a procurement analyst is assessing the relative risk posed by individual electronic components. After bringing on Z2Data, he began regularly drawing on the tool to help make the most informed, comprehensive evaluations possible. Using the individual MPN, he utilizes the platform’s Part Risk Manager to get individual risk scores for parts. He then employs the platform’s Supply Chain Watch to access part-to-site mapping in order to identify component manufacturing locations. Finally, he references Z2Data’s supplier risk scores (which can be accessed through Supplier Insights).
After bringing on Z2Data, he began regularly drawing on the tool to help make the most informed, comprehensive evaluations possible.
Enphase maintains its own risk dashboard for parts and suppliers, and all the detailed scoring Sampathkumar obtains from Z2Data’s platform now serves as integral factors in the company’s own internal assessments. “They are acting as major metrics in my PSL scorecard,” he noted. “This is definitely a key input.”
In addition to deepening Enphase’s risk analysis strategies, Z2Data is also helping the company better prepare itself for consequential developments in U.S. trade regulations. The Office of the U.S. Trade Representative is planning to make changes to Section 301 of the Trade Act of 1974—which allows the agency to impose trade sanctions in response to foreign practices—and next year the rate of tariffs on semiconductor imports coming from China is set to increase from 25% to 50%. This tariff hike has major implications for Sampathkumar and his team’s sourcing practices, and they’re using Z2Data’s country of origin feature to quickly and accurately identify which of their semiconductors are being imported from China. When they confirm that a specific component is coming from a Chinese manufacturer and is therefore set to incur the 50% tariff, they use Part Risk Manager to glean potential alternatives. “That’s how we’re using this for our strategic approach,” he remarked.
In addition to deepening Enphase’s risk analysis strategies, Z2Data is also helping the company better prepare itself for consequential developments in U.S. trade regulations.
On the whole, the platform has been a vital source of data and intelligence for Sampathkumar, and it’s been instrumental to the way his team analyzes and mitigates risk in its various procurement processes. When asked whether he would recommend the product to others, Sampathkumar was emphatic in his endorsement. “Definitely yes, a hundred percent,” he said. “This would be helpful for all semiconductor-based organizations—they should all use this tool.”
Enhanced Supply Chain Resilience
Streamlined Sourcing Processes
Strategic Compliance
When asked whether he would recommend the product to others, Kumar was emphatic in his endorsement. “Definitely yes, a hundred percent,” he said. “This would be helpful for all semiconductor-based organizations—they should all use this tool.”
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