Background
The client is a well-known municipal utility in the German energy sector. In the past, company management has undertaken various activities to meet the needs of the changing energy market and to increase profitability. Considerable cost savings have already been successfully realised in the past.
When the Federal Network Agency announced its intention to implement the Incentive Regulation in 2009, company management decided to commission T.A. Cook Consultants to perform an analysis with the aim of identifying further opportunities to reduce costs. The company chose T.A. Cook because of the consultancy's proven track record in similar projects and indepth knowledge gained from regular market studies on the energy supply sector.
The Challenge
As management believed that the greatest potential for improvement lay in the technical division, this area was to be the major focus of the analysis. T.A. Cook's task was to analyse internal technical processes as well as services provided by third parties and to recommend improvement measures in order to determine the potential for sustainable productivity gains. The first step of the analysis was to ascertain how the efficiency and effectiveness of internal processes could be improved. A further goal was to find out how the productivity of the utility's own resources could be optimised to free up internal capacities. In this way, outsourced tasks could be integrated internally and further cost savings achieved.
To systematically and sustainably manage, exploit and evaluate all identified improvement opportunities, the second step of the analysis was to identify possibilities to optimise the Management Control and Reporting system. Improvements to the system were crucial as the company would otherwise experience increasing difficulties in the future to fully exploit competitive advantages and objectively manage operation processes due to greater restrictions of the energy market.
A further goal of the analysis was to investigate whether and to what extent the insourcing of external services could reduce costs and help to secure jobs for company employees.
The solution
T.A. Cook first of all examined the company's internal maintenance processes to identify unproductive time and superfluous activities. By monitoring the processes it was possible to detect and assess the causes.
Outsourced jobs and the skills, in particular, the technical competence required to carry out these activities were also analysed and tasks suitable for subsequent integration were identified.
Within the framework of the analysis, T.A. Cook determined approaches to optimise organisation structures. Processes were analysed, for example, using the brown paper methodology and gaps in the processes were highlighted. The results were aligned and compared with a series of benchmarks so that realistic recommendations on how to improve organisational structures could be formulated.
Moreover, T.A. Cook observed selected processes closely linked to technical operations and compiled an extensive list of possible improvements and recommended solutions. This made it possible to eliminate detected obstructions to work flows such as duplication of effort, wasted time, imprecise or indeed the complete lack of clear allocations of tasks.
The project was completed within three months, on time and on budget.
The analysis concluded with a comprehensive implementation plan, which maps out in detail how all of the identified improvement opportunities can be realised, corresponding measures defined and new technical processes installed over a period of six to eight months.
Client benefits
The analysis provided the potential to achieve immediate technical improvements in the shortterm. However, it also promised longterm benefits, acting as a catalyst for fundamental discussion highlighting future developments in the changing market.
In concrete terms, the analysis revealed opportunities to achieve productivity gains of 14% and estimated the cost savings potential at about 1.5 million euros. In total, the benefit to the client could be valued at about 2.5 million euros.
The analysis also delivered suggestions for optimising organisation structures and provided the utility with the fundamentals to successfully meet the demands of the new incentive regulation, which will come into effect in 2009.
For more information contact:
Rupert Clark
Marketing Manager
Direct: +44 (0) 1183 260 229
Mobile: +44 (0) 7792 926 696
r.clark@tacook.com |
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