Supply and Demand Meet in Red Oak, TX
Data center developers are placing significant investments in long-lead equipment to support the leasing and new development activities needed to meet the rising customer demand from the AI boom. Placing significant investment can be challenging as the entire data center industry at large is in a major battle between supply and demand across all resource segments, driving up costs and lead times. One segment with high demand is integrated mechanical and electrical modular equipment, where many customers have unique design needs all with challenging delivery schedules. Compass has a huge presence in Texas, with years’ worth of integration capacity demand due to their custom-designed electrical Power Center units from Schneider Electric.
In response to this supply and demand battle, developers are seeking greater certainty and predictability in their supply chains, leading to deeper partnerships and innovative deal structures. One such example that was announced last year was the $3 billion deal partnership between Compass Datacenters and Schneider Electric. At Data Center World last week, Nancy Novak, CIO at Compass Datacenters, and Phanney Kim Brevard, CSO & CIO at ETAP discussed how to truly integrate the supply chain through the lens of this unique partnership, where they are opening an integration and testing facility adjacent to Compass’s Red Oak, TX campus. Chris Crosby, CEO of Compass Datacenters shared in the data center frontier announcement article that “this first-of-its-kind industry collaboration reflects the changing dynamics of data center supply chains and the competitive need for more tightly integrated vendor/supplier partnerships.” This new facility will be opening soon, after only roughly a year in design and construction, and will play a huge part in Compass’s speed to market for their customers and their efforts in increased supply chain reliability and sustainability.
Supply Chain Reliability and Sustainability
From a supply chain perspective, this new facility is a win for all parties collectively. This unique partnership opens Power Center integration supply for Compass facilities and provides Schneider Electric with a Texas and centralized hub for other customers. In the supply chain and logistics world, this is a massive competitive advantage for both parties and supports the local economy by opening over 200 local skilled trades jobs.
These Power Center units are oversized and overweight in the logistics world, traveling hundreds of miles over the road from the original integration facility. Oftentimes these modules are stored in a regional buffering warehouses to be rehandled for last-mile haul delivery to the site for installation. Nancy shared that “Compass now has ‘onsite’ storage for these modules, lowering risk, as they are one of the larger modules, and allowing for just-in-time delivery and removal of over-the-road delivery issues.” This new facility in Texas will reduce the number of miles on the road for the hundreds of integrated Power Center units coming to Compass campuses and all other integrated modular customers for local Schneider customers. This will reduce scope 3 indirect emissions and achieve a more sustainable supply chain by reducing labor, eliminating waste, and driving faster delivery. Chris Crosby put it this way in the announcement article “This integration facility will assemble and deliver Power Centers for Compass facilities and will enhance our supply chain reliability, speed to market, and delivery schedule integrity.”
Collaboration Built on Trust and The Golden Rule
The key to why this partnership is so successful is their collaborative open book approach and the deep trust both parties have for one another. On the open book approach, Phanney shared that “from the very beginning of this process it was extremely open book” and Nancy emphasized that “the open book part is what supply chain partnerships need.” Nancy went on to share that “for the partnership to be able to deliver faster and more efficiently, we have to be able to have those conversations for us to be able to do more with less, especially with all the constraints today.” Both parties brought their strengths, curious mindsets, and resources to the table to make this all happen in a quick turnaround.
As Patrick Lencioni aptly states, “It is teamwork that remains the ultimate competitive advantage.” By embodying this principle, Compass and Schneider set a precedent for effective collaboration in the data center industry. Through transparent communication, vulnerability, and empathy, they have made a guide for us to follow. Aamir Paul, North America President, of Schneider Electric, said in the announcement article: “This modern approach we’re pursuing supports both organizations’ goals and serves as a guidepost for vendor and industry partnerships others can follow.”
In other words, the central success of this partnership and all successful supply chain partnerships is a commitment to the golden rule: treating others as you would like to be treated or as Matthew 7:12 puts it, “In everything, do to others what you would have them do to you.” During the talk, Nancy shared the importance of the golden rule by saying “If I ask this person to take these kinds of risk, would I take it myself? Be sensible. It is the golden rule.” The partnership between Compass Datacenters and Schneider Electric showcases the power of collaboration built on trust and following the golden rule in overcoming supply chain challenges. By embracing the golden rule and prioritizing transparency and trust, companies can navigate the complexities of the modern supply chain while creating lasting value for their stakeholders.
