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The Topic: Smart metering SMART METERING THE TOPIC 12 | 27TH JANUARY - 2ND FEBRUARY 2017 | UTILITY WEEK T he government has a commitment to "ensure every home and business in the country is offered a smart meter by 2020, delivered as cost-effectively as possi- ble". The pledge represents 53 million smart meters and 26 million properties, with only around four million smart meters installed to date. Install activity is seeing a major ramp up, with most major suppliers expecting annual installations to exceed one million per year to achieve the target. The foundation phase has provided inval- uable lessons as operators seek to drive up right-first-time installations. Most have iden- tified the supply chain as one of the areas that could be put under stress as volumes increase. SMETS2 also brings additional challenges in the form of an expanded range of materials and equipment to manage. Right-first-time installation requires the right materials and equipment to be deliv- ered at the right time to the right person. Ensuring this is managed smoothly and at the right cost is achievable by honing in on five key areas of the supply chain. 1. Right-sized inventory Typically, energy retailers handle more than 100 different stock codes. These need to be forecasted, tracked and replenished to ensure the right kit is available to support successful first-time installations. Overstock, and a company will build up unnecessary working capital. Run too lean, and stock outs will occur, meaning field teams will not have the equipment and devices they need to fulfil an installation first time – a costly headache. The delicate balancing act is oen fur- ther complicated by collective responsibility Get control of the supply chain John Calder and Rob Gilbert outline five ways to deliver more than 50 million smart meters to the right place, at the right time, for the right cost. for inventory. Procurement, supply chain, field operations and finance all need to work together to optimise inventory. Clear owner- ship, communication and use of accurate supporting data increases the chances of right-sizing the inventory. Doing so will increase right-first-time installations, with- out inflating the program cost. 2. Third-party and subcontractor relationships Relationships with third parties can take time to settle and are oen most strained when activity levels increase. To take the heat out of this, good governance, clear inde- pendent metrics and a fair and equitable commercial model are paramount. We are currently enjoying the relative calm before the storm. The next few months could serve as the perfect opportunity to rebalance relationships and ways of work- ing to ensure they are set up for success. This should include subcontractor relationships for final mile logistics; historically this is where the "wheels have come off " and cost has escalated. 3. KPI overhaul While a number of useful key performance indicators (KPIs) were put in place dur- ing the work to date, managing effectively against them has been challenging. Data has oen been unavailable for up to six weeks aer the event and operators have struggled to find the balance between lack of data and being lost in too many metrics. This is eminently fixable. KPIs should be accurate, impartial (self-reporting without automation should be kept to a minimum), timely (so decisions can be made on the front foot) and comprehensive. KPIs should relate to the full supply chain and act as a connec- tion point for procurement, field operations and final collection partners. Turning opera- tional performance numbers into commer- cial values can also help sharpen the focus on driving continuous improvement. 4. Cracking down on commercial leakage For every smart meter that is installed, an old dumb meter needs to be disposed of. Dumb meters are oen being le to idle in the supply chain in excess of ten days. This 31% The increase in domestic installations between Q2 and Q3 in 2016 "We're currently enjoying the relative calm before the storm" NUMBER OF SMART AND ADVANCED METERS INSTALLED BY LARGE SUPPLIES IN SMALLER NON-DOMESTIC SITES The sector is in agreement; low levels of confidence in all the phases of the rollout Source: Utility Week Transforming Relationships Study April/May 2016 3.8 3.7 4.0 How would you rate your confidence that the smart meter rollout will begin and/or be delivered on time?? Overall Networks Suppliers Full coverage will be achieved by 2020 Average rating out of 10, where 10 = extremely confident Q3 Q4 2012 2013 2014 2015 2016 Source: BEIS Q1 Q2 Q3 Q4 Number of meters installed 10,000 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 2012 2013 2014 2015 2016 Q1 Q2 Q3 Q4 Number of meters installed 40,000 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Gas Advanced meters Smart gas meters Electricity Advanced meters Smart electricity meters