Switching to smart metering presents the largest industry upheaval since the move to natural gas in the 1960s, according to Glyn Williams, British Gas head of supply chain, speaking at the Logistics and Supply Chain Conference.
The organisation’s response to the supply chain challenge made it overall winner in the European Supply Chain Excellence Awards 2015.
Under a UK government requirement for smart meters to be made available to the British consumer, the utilities company is to install over 50 million meters across 16 million properties by 2020. In total, the government initiative will lead to the installation of 60 million meters across 34 million premises nationwide.
To date, the firm has installed 1.3 million of the 1.6 million meters installed across the country.
Collaborating with suppliers – DHL, Royal Mail and Tata Consultancy Services – British Gas has re-engineered its supply chain to support a dramatic up-scaling of its capabilities, from 1,200 engineers to 3,500 by 2016.
The project has driven significant cost avoidance by automating manual processes, which reduces the need to recruit significant warehouse resource to support the scale up plans, and providing them with a simple ordering catalogue has reduced manual processing for engineers.
“The engineer effort has, however, become enormously complicated,” said Williams. A lot of time is spent dealing with old meters – assets not owned by British Gas.
These assets are owned by one of 70 suppliers used by British Gas, and following collection by engineers, they are sent back to the manufacturer who subsequently scraps them. Williams believes the firm needs to improve trust with the suppliers to remove a hurdle in the rollout.
“Rather than shipping assets back and forth, if we can gain that level of supplier trust, we could scrap it at source,” he says. “This increases efficiencies for all parties involved.”
One of the problems of success for British Gas is the risk of losing staff that it has trained to its competitors.
“It was important British Gas take the lead on this,” said Williams. “As the company with the largest share, there would be too many risks in holding back. So we opted to be proactive and try to gain competitive advantage.”
This, of course, required the firm to not only bring on board new staff, but to train them as well.
“Being first to market, we have had to commit to training, now some of our engineers are being lured away,” said Williams. “We need to be inventive about how we keep our staff, offering them opportunities and lifetime career prospects is just one way of doing this.”
With other firms lagging behind, Williams now believes that the government may push back the deadline to 2022 rather than impose the severe penalties laid out for failing to get the switch completed on time.
“Our competitors may want an extension to 2022,” he said. “We’ve been first in the market and ideally we’d like the deadline to be held at 2020 because of competitive advantage.”
