We caught up with Miles Clark, Supply Chain Director at Meter Provida (MPL), to find out more about the supply chain challenges emerging from the smart meter roll out programme, and the many opportunities it presents for the energy industry. Speaking with Miles, we uncovered some great insights into the logistical network behind a government scheme that affects everyone in the UK.
What do you see as the main supply chain challenges you’re currently facing?
I think it’s important to consider that the challenge we’re facing with the smart meter roll out is quite different to your standard supply chain challenge in both scale and complexity.
Given the government is pushing for every commercial and residential property to have a smart gas and electric meter installed by 2020, the UK will see some 54 million meters replaced in this time. This is around a million meters per month, and it presents a significant logistical challenge for any parties involved in the installation, transportation, removal and processing of meter assets.
I believe it is this great scale of the operation that is at the crux of the challenge we are facing as a nation. There is also the matter of meter reverse logistics of course – an area MPL have noticed is often not considered.
What exactly is reverse meter logistics?
Well, with 54 million meters needing to be replaced, the obvious, yet overlooked, question is what happens to the meters that come off the wall – what do we then do with the redundant meters? What do we do with the legacy meters that have reuse potential? Meter reverse logistics describes everything that must take place in order to effectively and compliantly remove, dispose of, transport, refurbish, and otherwise process these old assets.
Even for those that are not interested in triage or reuse, it’s not as simple as scrapping old meters at landfill. There are countless stringent regulations governing the disposal of meters and the steps organisations must take to monitor their condition and location at any given time. As you can imagine, for those conducting triage on meters to generate new income streams, things get even more demanding and complex.
While consumers will get their power from an energy company, the meter itself will be owned by a separate meter asset company that rents the meter to the energy provider. The meters will therefore need to be returned and repatriated back to their owners once removed – a heavily regulated process that can lead to considerable punitive measures for non-compliance.
Magnified across large quantities of meter assets of varying conditions, reverse logistics can be overwhelmingly difficult to handle in-house.
The process of sorting these gas meters and associated pipes means they have to be moved around the country, assessed, read, scrapped or redeployed if necessary. Magnified across large quantities of meter assets of varying conditions, reverse logistics can be overwhelmingly difficult to handle in-house.
Because of this, we created Asset Management Solutions (AMS), our specialist division dedicated to handling the demands of the meter reverse logistics process.
With the rollout picking up its pace this sounds like a welcome service. We’d love to hear more about it at ESCDF17. Do you currently face any supply chain challenges when delivering these services?
I do actually plan to present my supply chain insights from a UK perspective at ESCDF17. I’m sure there are countries in Europe that are running their own smart meter replacement programmes so I’m excited to hear other perspectives. As for challenges – I’d say the main challenges we’re facing are more questions than anything else. How do we deploy the right level of support? How do we get the short-term assets, people, equipment and facilities in place in the most economical way? This is something we’ve began to consider from a wider-industry perspective.
This is another reason I think ESCDF17 will be extremely beneficial. It will offer an opportunity to collaborate with experienced supply chain leaders, especially those who have operated in an industry that has had a massive peak of activity in a short period of time.
This is another reason I think ESCDF17 will be extremely beneficial. It will offer an opportunity to collaborate with experienced supply chain leaders, especially those who have operated in an industry that has had a massive peak of activity in a short period of time. I’m looking forward to discussing how they dealt with activity on this scale and this compares to MPL’s approach. Was there any fall out afterwards, if so, how did they deal with that? These are the important discussions.
I definitely agree Miles. Regarding the rollout, what would you say are the main benefits of the programme?
Well, while I’m sure programme will spark growth in the UK economy and will help us reach 2050 carbon targets, I also think there are many, more immediately relevant benefits for the consumers and the businesses involved.
For consumers, home display units will clearly show their energy consumption and trends in real time, empowering them to make better informed decisions about their consumption habits.
The new smart meters will be in constant communication via a government network, feeding usage information back to utility companies. Removing the need to go out and read meters, the meters will be hugely beneficial to energy companies: energy readings will be automatic.
For consumers, home display units will clearly show their energy consumption and trends in real time, empowering them to make better informed decisions about their consumption habits. This is important to note as savings to the customer will not be huge by default: the meters are more than a fundamental step towards government targets for long term greener energy and reduced energy consumption, they’re allowing the consumer to take back control of their energy usage.
What impacts do you think the rollout will have on the supply chain?
The use of smart meters is going to revolutionise the communications model across the whole energy industry. Where current displays only show usage, smart meters will send a constant stream of information back to energy companies. The result is instant accurate billing as opposed to estimated billing or a model where consumers pay for energy a couple of months down the line. Smart power companies won’t need to supply meter readings, it will be done automatically. This digital system will mean the industry will be able to manage its power grid more effectively.
Instant information feedback will mean smartphones will be able to tell consumers when electricity is half price, prompting them to turn on their washing machines and tumble-driers. With all smart meters and associated technology provided by the government communicating via a central DCC system, the result is a wealth of information that will be used in ways we haven’t even thought of.
The whole programme is based on data and creating more information about energy use.
We could identify on the spot if someone is not using electricity in their house. If an elderly person has electricity anomalies, social services can be alerted. We could tell when there has been uncharacteristic activity on the meter. This big data will allow for much more detailed user profiling.
The whole programme is based on data and creating more information about energy use. Every smart gas and electric meter will come with a home display unit showing current usage. Consumers will be able to monitor their own power usage more effectively. If the dial indicates the gas bill is going up as the heating is on, they can turn it down a bit – it will have green consequences too.
Speaking of green consequences, are you currently involved in any sustainability, efficiency or lean culture initiatives?
MPL are proud of our sustainability credentials and we’re happy the industry as a whole is working towards providing and using energy more efficiently. However, the 54 million meters that will be removed out will mostly be scrapped as they’re not reusable.
Our primary supply chain challenge is identifying and sending meters back to the original owners. This must be done in three years, presenting a massive logistical challenge for those without the resources we have access to.
Because of this, our primary supply chain challenge is identifying and sending meters back to the original owners. This must be done in three years, presenting a massive logistical challenge for those without the resources we have access to. At MPL we work with the big six energy companies, National Grid, meter asset owners, and the companies that maintain the meters. It’s still a highly competitive industry with many companies contending for contracts. This is probably why I find it so interesting, it’s not just any supply chain challenge: it affects everyone in the country.
Lean is an initiative that all businesses are striving towards to transform supply chains.
We’re also implementing a leaner culture. We have our own internal lean programme at our distribution centre in Derbyshire focussed on waste. As for warehousing, I don’t think lean and warehousing go together too well: lean is about keeping things moving and warehouses are stationary by definition. I am however glad that lean is an initiative that all businesses are striving towards to transform supply chains.
Initiatives aside, I believe the UK’s biggest challenge is how we can manage volume and retrench capacities in the next few years to respond to changes in the industry. We need to deploy resources, equipment and meters economically – and of course, we need to dispose of those 54 million meters in environmentally friendly way. It will be a great challenge for many organisations, but it is one I feel MPL are more than prepared to help them overcome.