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The Topic: Smart metering UTILITY WEEK | 27TH JANUARY - 2ND FEBRUARY 2017 | 13 represents considerable commercial leak- age, with capital tied up in the supply chain, rather than generating interest in the bank, to help pay for the programme. Energy retailers and their subcontractors would benefit by operating a tightly con- trolled reverse logistics network (covering both dumb and smart meter returns), with all parties from the field engineer backwards focused on the prompt return, processing and disposal of assets to maximise cash flow as volumes ramp up. Timely reclaims for rejections from suppliers and robust warranty management are also critical to minimising commercial leakage. The sup- ply chain, procurement and finance need to work in tandem to achieve this outcome. 5. Making your supply chain smarter Leading class sectors such as consumer goods, retail and automotive have achieved a more flexible, visible and responsive supply chain by using a "control tower" model. This dedicated team with oversight of the end-to- end operations (across all parties) is armed with data to serve as the brain of the supply chain, with the key focus on demand and supply planning capability, inventory optimi- sation and logistics management. Recently, more industrial sectors have started turning to this model to drive significant cost savings and improve service in their field force sup- ply chain. Whether managed internally or via a third party, this concept better integrates the sup- ply chain with the procurement, finance and field force operations. It will ensure energy retailers can deliver on their rollout obliga- tions while offering significant savings in the form of inventory optimisation, reduced logistics costs, more effective supplier man- agement and increased field force time on tools. The control tower model is the energy industry's best chance of bringing oversight and control to the smart meter supply chain, as volumes escalate in 2017. With this supply chain brain in place, the energy retail supply chain could get a whole lot smarter. John Calder, Partner, Supply Chain & Procurement at Baringa Partners Rob Gilbert, Smart Meter Supply Chain Lead at Baringa Partners The key to the smart meter pro- gramme is the Data Communica- tion Company (DCC) network, which will link the smart meters in homes and small businesses with the systems of energy sup- pliers, network operators and energy service companies. The DCC has split the UK into three regions – southern, central, and northern – and tendered for the communica- tion service provider to provide the network. Arrive won the southern and central contracts, while Telefonica won the tender for the northern region. Getting these networks up and running faultlessly is essen- tial for the rollout, because they are necessary for the rollout of SMETS2 meters, the advanced smart meters that allow smart customer to switch supplier and retain their smart functionality. However, this programme has been beset by delays. It was originally set to go live in December 2015, but all three regions were finally live by November last year – later than event the contingency planing. Before the northern region DCC The infrastructure behind the meters went live, which was the last one to do so, KPMG power and utilities director Amy Marshall said: "Once the DCC, which will deliver the infrastructure to support the mass rollout, goes live we expect to see installation rates increase rapidly. "This is a huge challenge for the industry, with an average of less than 200,000 meters cur- rently being installed per month by large suppliers in 2016." This delay has sparked debate about the 2020 end date for the programme, by which the government has promised every household in the UK will at least have been offered a smart meter. Shadow energy minister Alan Whitehead has called for a pause to the programme while it gears itself up to hit the target, but this call has been ignored by the government. Energy minister Nick Hurd told MPs the date stands for now because changing the plan would send the message that the rollout can slow down. However, now that the DCC has gone live, and the Depart- ment for Business, Environment and Industrial Strategy still wholeheartedly backs the pro- gramme, the mass rollout can begin in earnest, with SMETS2 meters being installed and data flowing over the DCC networks. Installation type Cost per installation Smart meter Electricity only £67 Gas only £67 Dual fuel £107 Dual fuel saving £27 Traditional meter Electricity (credit meter) £52 Electricity (prepay meter) £57 Gas (credit meter) £52 Gas (prepay meter) £57 SMART AND TRADITIONAL METER INSTALLATION COSTS SMART METER TREND REPORTS Utility Week Intelligence members are able to download the latest in the series of smart meter trend reports. The most recent report assesses the impact the vote to leave the EU has had on the pro- gramme, as well as the sluggish progress toward the 2020 deadline. For information on Utility Week Intelligence, including a free trial promotion, contact Peter Bissell, Utility Week Membership, on: +44 (0)1342 332057 or email peterbissell@utilityweek.co.uk. UtilityWeekIntelligence "Trying to install 53 million smart meters by 2020 is cloud cuckoo land – unless there is a massive government- led programme starting now to ensure adequate staff to do the work, alongside proper funding." • Justin Bowden, GMB national secretary Source: BEIS