RENOIR - Best Practice - Improving Efficiency and Profitabil

8/9/2019 RENOIR - Best Practice - Improving Efficiency and Profitabil

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Renoir Consulting Limited

December 2003

Improving Efficiency And Profitability

In Distribution

POWER SECTOR


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2003 Renoir Consulting Limited

Estimated level of billing efficiency of 55%

Estimated collection efficiency of 41%

Estimated total cost of inefficiency of Rs 57000 crores 2001-2002 SEB losses of Rs 33000 = 1.5% GDP

SEB lose 110 paise for every unit of electricity sold(SOURCE: MINISTRY OF POWER APDRP OVERVIEW)

Current Indian Scenario Distribution


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Since 1994-95 _SEB has claimed that it has carried out regular auditsof Express Feeders (Go_1996).

_SEB re-iterated this claim in its tariff proposal submitted in March

2000.

It repeated this claim again in the proposal submitted August 2001.

August 2001 _SEB made available six months of data for 220

Express Feeders.

Out of a total of 1320 data points (ie six months multiplied by 220

feeders) nearly 45% of these data points indicate loss figures that are

either less than 0.5% or greater than +5%! (Prayas 2001).



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This is striking because, usually, the technical losses on such type offeeders is usually 1% to 2%.

This implies either ineffective metering, commercial losses or

excessive technical losses.

This is a clear indication of _SEB failure to carry out effective metering

even for these 220 Express Feeders.

It is worthwhile to note that these 220 Express Feeders account for

nearly 20% of _SEBs yearly revenue (considering a HT industrial tariff

of Rs 4.2 unit).

(Prayas 2001)



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There is a lack of accountability in distribution,

outdated rules, regulations, management structures,

and practices..unless you establish accountability at

all levels, you can never improve performance.Mr Suresh Prabhu Union Minister

Source: Financial Express 18 March 2002



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The Issues Illustrated Non-Technical

Custom

ers

Not in

CIBS

Unbi lled

Under-b

illed

Debtors

BadDebt

s

Opportu

nity

Non-Technical Loses Cash flow

?

LostinC IB

S

T

heft/Fa

ultyMeter

Outstand

ing

Recordsdonote x

ist

Notfollo

wedup

Opportu

nity


7/522003 Renoir Consulting Limited

Definition

6 stage process

Development Installation ChangeManagement Results SustainingResults

Technology of Change



Definition Development InstallationChange

Management ResultsSustaining

Results

Training

Creative Tension

4 Stages

Minds Path Measurement

Time Frame

Behaviour

6 stage process


Process

System

Structure

The Issues





Results

Process

System

Structure Training

Creative Tension

4 Stages


Time Frame

Behaviour

6 stage process


The Issues


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Meter readers had stopped completing Irregularity Reports

(IRs) for faulty and tampered meters because they were notbeing used to take action.

Meter readers were often seen as solely responsible for

customer billing. There were many customer contact points that

the MRs did not control where customer billing should have

happened. No-one else was being held accountable.

In Shops, tellers used to ask how much do you want to pay

providing the customer with the opportunity not to pay the full

bill.

There was a substantial debtors problem across all customertypes. The enforcement mechanisms laid down by the

Electricity Acts were not being followed and this was resulting in

customers building up debts sometimes in excess of 1 year and

millions of dollars.

Public Sector Customer Service Issues


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There was generally a lack of accountability for restoration

performance unnecessarily increasing customer outages. Organisations had a substantial number of projects in progress

at the same time and needed to reduce these numbers to

improve lead times for improving supply reliability and reduce

cash flow requirements.

There was normally no established discipline of carrying out

root cause analysis of re-occurring problems.

A general lack of co-ordination across departments.

There was a general culture of lack of accountability and

performance orientation.

Public Sector Network Service Issues





Results

Training Creative Tension

4 Stages


Time Frame

Behaviour

6 stage process


Process

System

Structure

The Issues



Doing what you have always done andDoing what you have always done and

thinking somehow magically performancethinking somehow magically performancewill improvewill improve

Behaviour Change

What is the definition of madness?What is the definition of madness?



SystemsSystems

EducationEducation

Behavioural

Change

Behavioural

Change

ProcessesProcesses

Information

Activities

Training

ResultsResults

StructuresStructuresPeople

Internal Business Framework

Stage 2 - Development


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Process Planning



Management Control Systems Development



Performance Measurement

KPI Format (Weekly Report)


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Standard Operating Procedures


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Stage 3- Installation

Training Tools - Skills Matrix

% SKILL ATTAINED BY INDIVIDUAL 100.0 0.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

% TRAINED

PEOPLE BY

SKILLMULTI-SKILL

JagdishAnne

PrashantNagle

SanjeevSingh

RajeshJadhav

90.0 Influencing SkillsT UT TR TR TR TR TR TR TR TR

90.0 Team BuildingT UT TR TR TR TR TR TR TR TR

90.0 Team MotivationT UT TR TR TR TR TR TR TR TR

90.0 Change ManagementT UT TR TR TR TR TR TR TR TR

90.0% Multi-Skill attained by area

Skill Matrix for TSSL

Figure indicates the %Multiskill attained by a

area/ division/ region.

Figure indicates

the %skillattained by

individual.

The individual

to be trained

The skill required

by individual

% people

trained for

particular skill


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Training Modules


Active Supervision

Managing with numbers

Training Skills

Communication Skills

Time Management

Team Building

Management Systems


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InformationInformation

TransparencyTransparency

ProceduresProcedures

AccountabilityAccountability

ConfrontationPositive Confrontation

To provide accountability

To change behaviour

ConfrontationPositive Confrontation

To provide accountability

To change behaviour

Effective MeetingsStructure and set up

Action solving root causes

Individuals responsible

Effective MeetingsStructure and set up

Action solving root causes

Individuals responsible

Problem AnalysisRoot Cause, not symptoms

5 Why analysis

Determination, not deferral

Problem AnalysisRoot Cause, not symptoms

5 Why analysis

Determination, not deferral

Systems

Creative Tension



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Definition

Change - Stage 4

Development Installation

Change

Management Results

Sustaining

Results


4 Stages


Time Frame

Behaviour

Process

System

Structure

The Issues



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The lack of awareness and understanding that a successful change

process has to go through four changes in mindset is a common

reason why many strategic change programmes fail

We also make false assumptions about peoples ability to adhere to new

ways of working, and to manage and accept change.

Where Most Things Go Wrong!

Change Assessment Management System (CAMS)


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Consc

iou

s

Unconsc

ious

Incompetent Competent

Direct Delegate

Support Coach

The Four States of Mind!

Consc

iou

s

Unconsc

ious

Incompetent Competent

Compliance Culture

Understanding Usage

Renoir Minds Path Matrix

No shortcuts possible...No shortcuts possible...

The Four States of Mind!



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Audit questionnaires are developed to assess the mindset levels using a

structured approach:

1. Closed ended questions for compliance.

2. Open ended questions for understanding.3. Demonstrative questions for usage.

Measuring the Four Mindsets

The audit questionnaire answers get converted into a scoring scheme

0 for wrong or not done.

1 for partially right or partly done.

3 for correct or demonstrated.

The percentages of each system performance category are plotted

The target is 100%.



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Installation Status

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-5 -4 -3 -2 -1 0 Current

Period

Ac

hie

vemen

t

Installed Partially Installed Not Installed System Utilization Status

0%

20%

40%

60%

80%

100%

-5 -4 -3 -2 -1 Current

Period

Ac

hie

vemen

t

Mechanical Understanding Usage

Installation Status



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Definition

Change - Stage 5


Change

Management Results

Sustaining

Results


4 Stages


Time Frame

Behaviour

Process

System

Structure

The Issues



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Section 1

System Performance


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System Performance LV Breakdowns

Project Headlines As At End October 2000

Reduction In Breakdowns (No. LV Breakdowns). (25% improvement).

Base (Date) Current Target Imp

270 (03/99) 115 135 57.4%

366 (12/99) 253 170 30.9%

64 (03/00) 53 11 17.2%

46 (03/00) 47 14 -0.1%

218 (03/00) 71 54 67.4%


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LV Breakdowns

328

143

79

0

50

100

150

200

250

300

350

Base 4wkavg Target

LVBreakdown(Johor)

0

50

100

150

200

250

300

09/04/

23/04/

07/05/

21/05/

04/06/

16/06/

30/06/

14/07/

28/07/

08/11/

25/08/

09/08/

22/09/

10/06/

20/10/

03/11/

17/11/

01/12/

15/08/

29/12/

12/01/

% Improvement over

base

56%


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Section 3

Projects


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Reduction in WIP Value


Reduction in WIP (WIP Value). (15% improvement).

Base (Date) Current Imp

1,123m (03/99) 770m 31.4%

127m (03/00) 62m 51.1%

160m (03/00) 89m 44.4%

114m (03/00) 62m 45.6%


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Project Average Closing Duration - Days

% Improvement72 %

326

92

60

0

50

100

150

200

250

300

350

No.ofDays

Base 4 Wk Avg Target


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Section 2

Non Technical Losses


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AT&Cs


Reduction In Losses: (Total losses % measurement). (15% improvement).


15.5% (03/99) 6.06% 5.00% 60.9%

8.85% (03/00) 5.40% 5.00% 38.9%

13.% (03/00) 8.55% 5.00% 34.3%

12.8% (03/00) 8.60% 5.00% 32.65%


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Unbilled Customers

% Improvement

93%

52457

35741000

0

1 0 0 0 0

2 0 0 0 0

3 0 0 0 0

4 0 0 0 0

5 0 0 0 0

6 0 0 0 0

No.ofUnbilledC

ustomer

B as e 4 Mth. Avg . Target


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Tampered Meters

9000000

9200000

9400000

9600000

9800000

10000000

10200000

09-10-00

24/09/00 10-08-00

22/10/00 11-05-00

19/11/00 12-03-00

17/12/0031/12/0014/01/01

WEEK

BACKBILLED

0

2000000

4000000

6000000

8000000

10000000

COLLE

CTION

Backbil led(Cumulative) Col lect ion (Cumulat ive)

3.45mil

10.12mil

Total Recovery To Date : RM 3.45 m

9000000

9200000

9400000

9600000

9800000

10000000

10200000

09-10-00

24/09/00 10-08-00

22/10/00 11-05-00

19/11/00 12-03-00

17/12/0031/12/0014/01/01

WEEK

BACKBILLED

0

2000000

4000000

6000000

8000000

10000000

COLLE

CTION

Backbil led(Cumulative) Col lect ion (Cumulat ive)

3.45mil

10.12mil

Total Recovery To Date : RM 3.45 m


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Section 4

Cash Flow Management


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Cash Flow Management


Reduction Debtors/ACP: (ACP days measurement). (15% improvement).


47.5 (03/99) 38.1 27 19.8%

39.0 (12/99) 33.2 27 14.9%

39.4 (03/00) 35.4 27 10.1%

36.8 (03/00) 30.5 27 17.1%

33.3 (03/00) 29.9 27 10.1%


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Definition

Change - Stage 6


Change

Management Results

Sustaining

Results

Training

Creative Tension

4 Stages


Time Frame

Behaviour

Process

System

Structure

The Issues



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Project Results

I appreciate the discipline that you have put into the workforce, as it was

severely lacking in our culture . . . .Everyone used to promise to do things, but

rarely delivered. . . . Now people promise, and they deliver. . . People dont

like to loose face, so if they have promised and everyone knows they have

promised, they will deliver. Everyones job is now very transparent, so

everyone else knows what you should be doing as well.

I used to be concerned that my people spent too much time in meetings, as I did

not think that the meetings were of any real benefit. Now I realize that they were

not of benefit. Now with a KPI and action focused meetings at all levels, Iknow that the meeting is at least a focused one. As a result, meetings

conducted are generally a lot shorter and more focused, so on the whole,

meeting time is reduced, but more effective.


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Conclusions

India has an estimated level of billing efficiency of

55% and collection efficiency of 41%

Estimated cost of inefficiency of Rs 57000 crores

(SOURCE MINISTRY OF POWER APDRP OVERVIEW).

The Power Sector can never be financially viableuntil these issues are addressed.

Precedent suggests that privatization with help

address these issues, but it is not a precondition.

The only precondition is addressing the issues wehave illustrated.

Failure to do so will put the viability of the

government initiative into question.


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Queries

Danny Carroll,Head of Operations - India,

Renoir Consulting (India) Limited

2nd

. Floor, Raheja Chambers,213 Nariman Point,

Mumbai, India

Tel : 022 - 2282 1923Mobile : (0) 98218 92000

Email : [email protected]

Website: www.renoirgroup.com

Documents

RENOIR - Best Practice - Improving Efficiency and Profitabil