In today’s edition, I will talk about what happened to the solar farm builder how decide to makes bigger investment .

Some details, such as the name of the CEO and the name of the company, where and when the solar farm was built, will not be shared for privacy.

Quick history

A few years ago, the founder of a solar farm construction company decided to make a larger investment than usually.

Instead of investing $2–3 million, he decided to invest $30–40 million to build a solar farm much larger than those he was used to build (10x jump isnt the smartest idea).

Investing $2–3 million requires a certain amount of experience and responsibility, but investing 10 times that amount is totally different, even if it doesn’t seem like it.

In this case, with such large investments, there are new variables that had not been considered before.

One of these variables is the availability of photovoltaic panels.

For small projects, we always take them for granted and don’t worry about them, but for projects worth $30–40 million, is different. You will need 60–70 thousand panels, and finding them is not always easy.

• It is not easy to store them in warehouses.
• It is not easy to transport them (probably you gonna need more shippers, in different state)

I cannot explaine all processes and checks we would have carried out if this company had asked us to stress test its supply chain. Some company pay me between $5,000 to $100,000 for helping them with risk management

But I will offer one piece of advice to avoid a simple but potentially fatal mistake.

Let’s continue.

When you build a $2 million solar park, you always assume that you will find the panels you need at your nearest supplier (this is not always the case), but to buy 60,000 panels, you have to go deep.

First

You have to find several different suppliers to get the same product.

You don’t have to depend on a single supplier, and you don’t have to depend on a single country or company.

Many believe that having a single supplier for all the goods you need, is the easiest choice becouse you save mental effort.

In reality, there are hidden costs that you should not underestimate.

Second

The panels you buy should not be kept in the nearest warehouse just because it is closer and easier to transport them.

You need to check the warehouse, the company that offers the storage service, and the CEO who manages the warehouse.

You need to do your due diligence before deciding on warehouses, because many do not comply with the regulations they should, and this slows you down when the state subjects them to inspections.

This is why you should not store in the same warehouse

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The entrepreneur who invested $30 million made both of these mistakes.

Tardigrade-SCRM (our risk management software) would have immediately flagged the potential problem.

It would have outlined the various risks and scenarios that this choice would have led to.

Our software would have provided at least 2–3 alternative solutions.

Essence

Now you know what happens when you don’t stress test the supply chain of your solar farm before you start.

Don’t think that stories like these are rare

Your next step

Based on what you have just read, your next step should be to immediately start stress testing the supply chains behind the projects you are working on or investing in.

I’m sure the story I just told you sounds familiar, so don’t wait for something to happen that will slow down your work.

Opportunity

The hidden opportunity is to immediately start setting standards and guidelines that all projects you invest in, before start working in it. Managing risk well means knowing exactly what to do in every possible situation.

One day, the insurance company will ask you to do a stress test before signing an contract with them.

Even the bank will ask you to do this, otherwise they won’t finance you.