In recent years, observers of the utility industry have noticed the various impacts solar panels and wind turbines have made contributed to the sector. While it's true the large and ongoing influx of intermittent renewable generation is the most obvious manifestation of a rapidly evolving industry, it is by no means the only one.
In reality, utilities and energy companies are transforming in many, many ways. One significant example: the increasing use of cloud-based, mobile inventory tracking that provides real-time visibility into location and availability of equipment and materials, which utilities and developers need to build and service critical infrastructure projects on time and on budget.
The limits of traditional, paper-based systems
Inventory tracking plays a key role in site productivity, cost containment, compliance, and revenue generation. "If you look at the value chain for engineering, procurement, and construction (EPC) companies, the materials and equipment portion represents a significant percent of the costs incurred," said Hazen Burford, who leads EPC company AECOM's energy-consulting business. AECOM works to complete projects for utilities and independent power producers in the western United States. "Whether it's a building or power plant, the visibility and delivery of the equipment and materials are of paramount importance."
Unfortunately, traditional inventory tracking tends to be paper-based and siloed, which makes it slow, difficult, and expensive to track materials and equipment once they leave a warehouse for a job site. "These traditional approaches lack the capacity for real-time visibility and can result in lost inventory, carrying costs, idle equipment and crews, equipment-recovery problems, and lower customer satisfaction," said Deborah Walther, Regional Sales Director for DSI, who has worked extensively with electric and water utilities to improve their inventory tracking.
The implications of maintaining paper-based inventory tracking aren't just lost productivity and revenue; that kind of tracking is also especially problematic for heavily regulated utilities. "Each entity has a variety of regulatory, statutory, and business rules requiring compliance," Burford said. "Materials must meet minimum code and regulation requirements of the AHJ (authority having jurisdiction) and appropriate design, engineering, and building standards ensuring, to the extent practicable, a safe, cost-effective, and compliant product."
Why a cloud-based, centralized platform is so important
A major benefit of cloud-based, mobile inventory tracking is that it allows individual mobile device users to feed information to a common platform. "If you're talking about logistics on materials specifically, like where in the process are we relative to getting equipment to the site and installed, it used to be people picking up the phone and asking, which is inefficient and subject to a lot of potential miscommunication," Burford stated. "Today, it's more about putting in place platforms that enable a consistent assessment of progress."
A centralized platform is especially important for utilities and energy developers because they routinely manage numerous complex projects simultaneously, including many in remote locations. Complete visibility into materials and equipment from the warehouse through the last mile of delivery — where 30% of inventory costs occur — ensures that the right combination of materials and equipment is available when it's needed. Ultimately, this means more inventory control.
In an industry where cost containment is so important, the traceability and accountability of cloud-based, mobile inventory tracking prevent crews from being idle because they lack the resources to do their work. Importantly, it also reduces inventory costs. "It's the difference between just-in-time delivery and carrying a lot of inventory," said DSI's Walther.
Improved visibility, improved revenue, more control
There is a direct connection between inventory visibility and financial performance. Take the case of TETRA Technologies, an oil and gas services company with operations both offshore and in remote onshore locations. "If we know what the mechanics are doing, what parts they need, what issues they have, all in real time, we can manage our parts warehouses and our suppliers, we can distribute workloads accordingly, and we can accelerate our cash flow cycle to more quickly generate cash," said Elijio Serrano, senior vice president and chief financial officer of TETRA.
By shifting away from multiple homegrown systems that lacked integration to a cloud-based, mobile inventory system, TETRA provided field mechanics and other decision-makers with complete visibility into inventory availability across the company's wide network of trucks and warehouses. The effect to one of TETRA's divisions has been particularly noticeable, Serrano said. "[The division] has been able to leverage supply chain technology to improve shareholder value by generating more earnings, improving cash flows, and having the data to make quicker management decisions."