Operations Management and the Storm Response Dilemma April 17, 2008 Peter Clarke, VP Shared Services Northeast Utilities
One of the most difficult challenges in Utility Operations Management is maintaining service levels in the face of extreme demand for service.
Anticipation and Preparation Preparation is the key to effective response Estimation of the input variables is key to preparation Anticipation based on available forecasts is a critical success factor Matching anticipation and preparation is the critical balance (optimization)
Service Recovery Queuing Equation Input Variables Weather Forecasts and Severity Time of Day Day of Week Holiday/Non-holiday Season of Year Responsiveness of Personnel Customer Behaviors Condition of System
Forecasting Dilemma Forecasts are inherently risky Multiple variables Complex simulations Linear and non-linear extrapolations Modeling and chance variables Over forecast – waste resources Under forecast – slow response Media Hype
Business Risk Stakes are high ($6M to $68M/yr) Over prepare – drive costs and waste resources (opportunity costs as well) Under prepare – service recovery can be difficult, if not impossible Risk damage to reputation, long recovery period Customer service expectations unknown Crying Wolf – employee burnout
Basic Capacity Planning and Queuing Theory Quantify demand (how much work) Estimate average time per unit (high variation) Estimate resource availability over time Estimate probable yield (rest, eating, etc.) Estimate waiting time (time to restore) Restoration estimates Monitor metrics of performance Supplement capacity as needed
Understand Risk and Variables Know underlying assumptions Sensitivity analysis around assumptions Expect variation in predicted outcome Estimate variables impacting personnel response (human factors) Monitor variables and adapt plans to new information Monitor performance metrics and adjust response resources accordingly
Personnel Safety More than one (restoration) objective Human factors must be considered Hazards of the work and fatigue are a dangerous mix Balance of customer and employee needs Yield is never what you think it might (should) be Human element is part of the equation
Questions and Discussion