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Smart Meter Lessons for a Smarter Supply Chain

IBM Corp. says it wants to help manufacturers build smarter supply chains.

It's a worthy goal and one the company is pursuing with zeal as it expands its non-hardware offerings in continuation of a reorganization program that has seen the company exit the PC manufacturing market. To achieve this objective, manufacturers can also glean some lessons from the mini-revolution of smart meters occurring in the power market.

The concept of smart metering has been around for years but the product is finally arriving at customer and within years I believe they will dramatically alter the relationship between users and producers of electricity and gas. Power companies in the United States are replacing old electricity meters with the first-generation of smart meters, reproducing what has been going on in Europe for quite awhile.

The main difference between smart meters and traditional products is that the new ones offer two-way communications between the consumer and the power authority in addition to a slate of easily accessible information that can help the user modulate consumption, track wastage, and avoid sticker shock when the bill arrives.

Brilliant: Accuracy, early conflict resolution, and cost savings come with smart meters.  Isn't this what we want in the manufacturing supply chain?

Brilliant: Accuracy, early conflict resolution, and cost savings come with smart meters.
Isn't this what we want in the manufacturing supply chain?

For the purpose of this blog, let me restate some of the advantages of the smart meters as highlighted by Consumer Focus, an industry and consumer association in the United Kingdom:

Accurate bills: The smart meter sends information to the energy supplier on usage.

Standard, in-home energy display: A small screen shows how much energy is being used at any one time.

Cost savings: Knowing what you're using, and having an idea of which appliances use the most energy, you may be able to reduce your energy usage and save money.

Reduced theft of energy: From being able to prevent and detect theft of energy more easily.

Faster problem resolution: Technical problems and faults with the supply of energy are easier and quicker to identify and fix, translating into less inconvenience and time without energy supply.

The above advantages are in sync with the goals for the Smarter Supply Chain of the Future that IBM identified in a major study in which it polled more than 400 companies. The smarter supply chain of the future, IBM said, must meet five key goals: increased visibility, satisfy customer demands, control costs, manage and reduce risks, and address opportunities in emerging markets.

The five key challenges facing supply chains as identified by IBM in the document discussed above in some ways remind me of the advantages advocates of smart meters believe their product will help customers and power generators achieve. The challenges are as follows:

Cost containment: Rapid, constant change is outstripping supply chain executives' ability to adapt.

Visibility: Flooded with more information than ever, supply chain executives still struggle to “see” and act on the right information.

Risk: CFOs are not the only senior executives urgently concerned about risk; risk management ranks remarkably high on the supply chain agenda as well.

Customer intimacy: Despite demand-driven mantras, companies are better connected to their suppliers than their customers.

Globalization: Contrary to initial rationale, globalization has proven to be more about revenue growth than cost savings.

I realize many in the technology and manufacturing sectors would rather focus on opportunities in software, services, and consulting because these — unlike hardware — promise higher margins, but as the power industry has shown with the introduction of smart meters, the merger of hardware, software, and the latest technology innovations can help companies achieve the same goals.

Electricity and gas companies, perhaps because they are not really in the hardware business, harnessed the strengths of their suppliers to come up with solutions (smart meters) that are helping them solve a myriad of problems while offering customers palpable advantages. That's a strategy for success that could easily be copied by the manufacturing industry if it wants to create cost-efficient systems and the smarter supply chain for the future.

15 comments on “Smart Meter Lessons for a Smarter Supply Chain

  1. The Source
    February 27, 2013

    Anna,

    As you know, the smart meter market is growing and IBM is showing that it's planning ahead in a very thoughtful and innovative way.  Three cheers for IBM!  

     

  2. _hm
    February 27, 2013

    Along with supply chain, there is acute shortage of trained people for installation and service. IBM should also provide solution for this aspect.

  3. Taimoor Zubar
    February 28, 2013

    I think the smart meters can be really useful in the third world countries. These countries are faced with high amounts of theft related to utilities and smart meters can help in reducing that by accurately monitoring the usage and transmitting the information on real-time basis. The only hurdle in this case would be the cost of these meters and their maintenance cost.

  4. Taimoor Zubar
    February 28, 2013

    Along with supply chain, there is acute shortage of trained people for installation and service. IBM should also provide solution for this aspect.”

    @_hm: If you're talking about trained people with regards to installing these meters, I don't think you'd require many. I think these meters would be available in plug-and-play format which can be installed easily at consumer's homes.

  5. Anna Young
    February 28, 2013

    Thanks for your contribution Nicole.

    Indeed three cheers to IBM and partners! Using digital sensors and advanced communications networks to the way electricity is generated, transmitted, distributed and managed is indeed thoughtful and innovative. What's more yes it is a growing market with promising profits margins. It is a success here in the UK. I hope it will be a success in the US too. What do you think?

  6. FLYINGSCOT
    February 28, 2013

    Judging by how often the utility company contacts me to ask for an up to date reading I can only imagine it would be in their interest to install a smart meter at some time.  It would then mean they could make all the real humans redundant and let the machines take control.  Wasn't there a movie about that 😉

  7. Anna Young
    February 28, 2013

    _hm, with new innovations and developments various technical issues will always rear its head. The company is not only innovating smart meters, its creating jobs. I am certain IBM and Partners would have undoubtedly envisaged these problems and include staffing and training related issues in the planning. Do you not think so?

  8. Anna Young
    February 28, 2013

    Taimoorz, I'm sure Smart meters will be beneficial in developing countries and profitable to the manufacturers and electricity powers companies. It is a fast growing market and I foresee this technology reaching the shores of developing countries. I agree it would not be without various challenges. What's your thought?

  9. Anna Young
    February 28, 2013

     @ FlyingScot, I agree it will remove meter readers. It will also create further jobs too; i.e. Supplier, installation technicians, customers services to handle your queries and so on. It will eliminate unnecessary inconveniences. It saves time. You no longer have to wait in for a meter reader to turn up at odd times. Don't you agree? What's your thought?

  10. Houngbo_Hospice
    February 28, 2013

    By monitoring energy consumption with smart devices, the supply chain industry will certainly reduce energy loss and optimize productivity.

  11. Houngbo_Hospice
    February 28, 2013

    @FLYINSCOT,

    ” It would then mean they could make all the real humans redundant”

    I suppose, some jobs will be lost with the adoption of smart meters as human reading will no longer be necessary. Somebody will have to pay the price. 

  12. The Source
    February 28, 2013

    Anna,

    Smart meters are catching on in the US.  In fact according to figures from the US Energy Information Administration, at the end of 2011 more than 33 million U.S. customers had smart meters. EIA numbers in 2012 showed continued progress in smart meter adoption with nearly 3 million additional smart meter installations between January and August. This is a very lucrative market for IBM, Cisco and others.  Thanks for your wonderful article on this topic.

     

  13. Anna Young
    February 28, 2013

    HH, you're correct. Smart metering device is advantageous to both consumers and electronics Supply chain.

  14. Anna Young
    February 28, 2013

    Nicole, thanks again for your contribution. I agree this is a strategic innovation.

  15. _hm
    February 28, 2013

    @TaimoorZ: This is high risk item to install. One needs license to do this work and service provider may not allow other to do it. It also seals to prevent theft from power line.

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