Saturday, November 15, 2014

Sempra Energy: The Supply Chain Network of Natural Gas and Electricity in Southern California

Sempra Energy is a public, for-profit, Fortune 200 company that refines, collects, and distributes natural gas throughout Southern California under the oversight of federal regulations. The holding company, Sempra Energy, is made up of the four companies: San Diego Gas & Electric, Southern California Gas Company, Sempra US Gas & Power, and Sempra International. This corporate organizational structure is a complex supply chain network created to satisfy multiple stakeholders - energy customers, company shareholders, and federal government regulations. San Diego Gas & Electric and Southern California Gas Company are California utilities that are federally regulated to run the monopolistic role of energy providers within Southern California. Sempra US Gas & Power and Sempra International “develop and operate energy infrastructure and provide gas and electric services in North America and South America” through the transportation infrastructure of the two utility companies [1]. Figure 1 below depicts the various resources and operations of Sempra Energy used to provide Sothern California with natural gas.
Figure 1
The well thought out corporate structure of Sempra Energy forms a supply chain network that delivers natural gas and electricity to customers safely, both, physically and financially. Sempra has chosen to implement mainly internal sourcing with some captive offshoring to best please involved stakeholders. Controlling the vertical stack of energy flow from energy harnessing (ie. wind farms, natural gas power plants), transportation (gas pipelines, electrical lines), to distribution (Gas/Electric Utilities) allows more oversight and insight into the energy supply chain. As Sempra Energy interacts with costumers as well as energy creation, the bullwhip effect is reduced as information can be shared internally amongst the various companies rather than if the various companies were not united under one brand.
Yet, even though Sempra has keen insight into its energy supply chain, it also uses many outside suppliers to accomplish its goals. Rather than only using major suppliers, Sempra makes a point to incorporate supplier diversity to achieve security and reliability. Reliance on one major supplier of a particular service is dangerous as that one supplier may fail to operate under certain circumstances. By incorporating supplier diversity, known as “Diverse Business Enterprises” Sempra provides customers with more reliable service; a characteristic demanded by Southern California energy consumers. Sempra’s percentage of Diverse Business Enterprise spending is depicted in Figure 2 [2].
Figure 2

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