Page 3: Strategic decisions
Strategic decisions are those which affect the long term performance of the business and which relate directly to its aims and objectives. They are usually taken at the highest levels of management and carry higher levels of risk. However, effective strategic decisions bring high levels of reward.
The strategic decision to undertake the 'Strategic Spare Parts Project' was taken by directors at the highest level in RWE npower in order to support its objective of reliable supply. The expected rewards from the project were fewer availability losses leading to reduced costs and improved customer satisfaction.
The decision to give this project to Jay to project manage illustrates the way that RWE npower's culture supports the delegation of decision-making powers to staff at all levels, using their known skills and competencies. Jay is a graduate engineer and has worked with Engineering and Maintenance staff across RWE npower's portfolio. This experience meant he understood how equipment and the work of other engineers helped operations. He communicated with relevant staff, using his knowledge and experience, and obtained the necessary information to assess the project. A wide range of staff were involved in the project:
- Jay consulted with the Senior Asset Manager and his team to obtain financial data relating to insurance costs should they fail to meet their contractual obligations.
- Site Managers and engineers gave information on what spares were stored on different sites and at what cost. They also shared the availability losses arising from past problems with not having necessary spares.
- The Operations Procurement Manager negotiated the most cost effective deal for the company.
- Jay found that for 75% of spare parts, there was sufficiently low risk to allow time for normal ordering, purchase and installation and that 25% of spare parts were essential for effective energy supply.
Jay concluded that the majority of spares for npower Cogen could be sourced as and when needed without greatly affecting the power supply. However, if the essential spares were not available, heat and power supplies could be affected for a long period of time. These items were confirmed as 'critical'. With this information, Jay concluded that it was possible to find an alternative way of managing the spares process and make improvements. He went on to investigate the best ways to achieve these improvements.