by Robert Glenn Sims, ASW Global
Dominion East Ohio, a subsidiary of one of the largest U.S. energy producers and transporters, is in the fourth year of a five-year program to install automated meter reading equipment on 1.2 million customer meters.
The project involves replacing older meters or updating them with Encoder Receiver Transmitter devices, which transmit meter information via radio signals.
Dominion will complete installations by the end of 2011. The technology will enable Dominion to obtain as many as 10,000 reads in a single route, compared with the 400-600 reads recorded per daily walking route.
The new automated meter technology provides many consumer benefits—eliminating estimated meter reads, improving meter reading accuracy and reducing Dominion’s need to enter customers’ property—the company was looking for in a more efficient logistics plan. There were challenges keeping sufficient inventory, efficiently delivering inventory to installers and discarding outdated equipment.
Jeff Angeletti, Dominion operations manager, viewed the challenges as an opportunity to first optimize end-to-end logistics distribution of gas meters and supporting products, and second to increase the company’s sustainability efforts by recycling and remanufacturing the old equipment. Dominion couldn’t achieve this alone, however, so it turned to ASW Global, a minority-owned supply chain solutions company.
AndrÃ© Thornton, ASW Global president and CEO, was excited to take on the challenge.
“It was a natural fit for our core competencies and also our business strategy,” Thornton said.
ASW recognized that Dominion’s strategy included recycling material and strengthening the local economic enterprise. It engaged another local partner, Slesnick Steel & Recycling. The objective was to create a collaborative solution among Dominion, ASW and Slesnick Steel & Recycling that would extend beyond traditional partnership exchange to benefit stakeholders and the environment.
ASW led the logistics distribution design approach using its Supply Chain Optimization Model. Ed Slesnick, president of Slesnick Steel & Recycling, focused on assisting Dominion and ASW in executing the reverse logistics process to maximize the material recovery solution and improve environmental impact.
The collaboration among the three companies resulted in a streamlined solution. Materials are shipped to Ohio and installed in consumers’ homes; replaced units are recovered and recycled in the state and used by local companies to manufacture such items as bearings.
Specifically, the team established an Origin Distribution Center at ASW’s Mogadore, Ohio, facility that receives less-than-truckload (LTL) and truckload (TL) to consolidate and delivers in milk runs (TLs) to the operating facilities at a planned replenishment frequency.
It also was necessary to adjust distribution process elements, including order releases’ data systems and safety stock requirements, delivery frequencies, network minimum and maximum levels and transportation planning. This optimized the supply chain network and provided the best total cost value, operating efficiency and environmental sustainability.
The collaborative solution is on track to yield the following annual savings:
- Reduce the cost of inbound transportation by 24.3 percent,
- Produce a 52.3 percent savings on outbound transportation to and from local operation shops, and
- Deliver an 80 percent improvement in the value gained from reversed logistics and material recovery.
Other results include reduced traffic congestion, reduced fuel usage, reduced air pollution and wood pallet recycling.
The results impressed Angeletti.
“The team delivered outstanding outcomes resulting in an efficient and sustainable process that set the stage for continuous improvement,” he said. “We found substantial cost savings in warehousing, transportation and material recovery, drastically reduced the energy involved with shipping, and recycled the replaced units. Best of all, the project is keeping the work in northeast Ohio.”
Similar to the Dominion story, companies across the country can be successful collaborating to develop solutions that benefit local economies and help sustain the environment by following five key steps:
- Define a start point. In the case of Dominion, the starting point was to streamline shipping and logistics. The old metering equipment process began with material shipped from a Nebraska vendor to a logistics management company based in Pennsylvania, passing through Dominion East Ohio’s service territory. The equipment eventually shipped to 11 utility local shops upon request with little coordination of shipments. Once the material reached the local shops, individual employees loaded equipment into their service vehicles for installation at homes and businesses. Once the replacement equipment was installed, the same employees returned the old equipment to the local shops for disposal.
- Define the required changes. The Dominion project required a complete review and re-design of logistics management. A critical review of the distribution and disposal and recycling process also was warranted.
- Be clear about what success looks like. A one-time project plan was not sufficient. Success had to be more than on time and budget. The partners needed to help design a logistics management process that would improve inventory control, reduce cost and improve customer satisfaction.
- Identify the right strategic partners. Sometimes existing suppliers cannot or do not want to change their processes to adapt to new approaches. In the case of the Dominion challenge, ASW and Slesnick Steel & Recycling adjusted to ensure an effective solution. For example, Slesnick Steel & Recycling invested substantially in high-tech equipment for managing collection and processing material for domestic and overseas mills.
- Establish a baseline to measure collective results. The baseline for the Dominion project was to achieve substantial cost savings in warehousing, transportation and material recovery, as well as reduce the energy involved in shipping and recycle the replaced units. Collaboration among companies with similar values and interests will improve local economies and help sustain the environment. In this example, the companies supported and retained local businesses, protected the environment and improved stakeholder value. The project success can be measured by managing the many variables to achieve an inclusive solution that supports the community engine: people, environment and business profitability.
ASW Global Supply Chain Optimization Model
At least four major functions play a role in affecting supply chain costs: material procurement, supply chain distribution, facilities management and operations management. Within these functions, there are departments whose work can affect or upset the balancing act required when designing solutions with a lean management approach.
In the Supply Chain Optimization Model approach, ASW leads client team members through a comprehensive program in which ASW and client departments work together across functional lines to understand the essential components that must be in balance. By managing these components, the model consistently achieves the best value for clients and clients’ end customers.
Robert Glenn Sims is the chief operating officer at ASW Global, where he leads the strategic development of all supply chain services for client customization including outsourcing services, emerging market sourcing and enterprise cost modeling. He has more than 30 years in the supply chain industry.