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Operations Center Location Model

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Companies with distributed field operations have a complicated challenge in trying to balance the costs of their facilities and their business travel. Modeling the combination of travel and property allows optimization of an entire set of service territories with respect to cost, response time, and/or CO2 footprint.

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Operations Center Location Model

  1. 1. Operations Center Location Model Analysis Tool For Optimizing Field Operation Headquarter Locations 1
  2. 2. Introduction Operations Centers • Also called Service Centers, District Offices, Crew Headquarters, etc. • A base or HQ to assemble, prepare, and support work done in the field (on the network, at customer’s premise…). • Main functional group are field crews (various type). • Typically include administrative, technical, and logistic support functions. • Might Include Other “Local” Functions. Location Strategy (Strategic Plan) • Determine strategic locations and “template” for each site: • Where Should Operations Centers be Located to Provide Best Business Value? • What Comprises Each Operations Center? How Large? © PRES Location Strategies (800) Page 2
  3. 3. Operations Center Location Objectives Develop the strategic direction that identifies the “best balanced” potential configurations of operations centers: • Position real estate assets to better serve the business. • Quantify financial implications of a plan to support informed decision- making Use analytical model to evaluate sets of scenarios with different criteria to evaluate alternative Consolidated centers Dispersed offer lower facility cost, centers provide configurations of operations less material inventory, the ability to centers so the benefits of one ability to share equipment, and crew quickly get to work locations in over another can be quantified. assignment flexibility. the field. Optimize operations center locations: • To provide satisfactory response times. • To provide the best balance between travel costs and property costs. Goal is to find the appropriate balance. © PRES Location Strategies (800) Page 3
  4. 4. Value of Using Model for Location Analysis Historically Operations Center Sites Are Individually Selected Based on (Good) Knowledge of Local Management. • New sites often built on regular basis so “lag” in system was modest. • Changes in technology and operations were modest. Modeling Allows Better System-wide Re-alignment Analysis, Particularly With Multiple Site Changes: • Quantified implications for travel time due to multiple changes in complex network of sites. • Can forecast changes vs. reacting, Scenario Comparison easing capital program development. Criteria of Multiple • Can relatively quickly evaluate changes Individual Scenario Scenarios in location and nature of operations centers Results due to work practices, facility consolidations, or operational constraints to identify best value opportunities. • Can use available data, then identify issues sensitive to data quality or assumptions to minimize up-front costs. © PRES Location Strategies (800) Page 4
  5. 5. Model Inputs Crew Type/Composition • This data is a “given”; model allocates 100% of staff based on workload. • Each distinct type of crew can be analyzed – can use “sequenced” approach where primary type(s) determine locations then secondary types allocated among the locations. Geography • Study Area is a “given” (Data needs to be setup for entire area but sub-areas can be used in specific analyses). • Can Incorporate district boundaries (say union areas, existing districts, etc.). Work Projections* • Variable – can have as many data sets as desired (Typically have 1-3). • Can be based on anything that business believes “drives” field work but needs to be able to be mapped at desired granularity (zip code, street, arbitrary grid, municipality, etc.). Property Data* • Variable - can be as specific as available information and range from “points on a map” to site-specific size and cost data. • Travel times can be reviewed and adjusted for normal traffic conditions. Business “Rules” • Crew deployment (Min/Max per site). • Max response time (by geographic unit). • Can hold specific districts, hold specific locations, set Min/Max # locations. Supplemental Models – Based on Crew Distribution • Fleet (repair bay distribution). • Material Support (“retail” and “wholesale” storage areas). © PRES Location Strategies (800) Page 5
  6. 6. Model Inputs: Work Projections Field Work is Typically Either Customer Oriented or Asset Oriented, and Planned or Unplanned (as shown in figure to the right). Any Type of Estimate of Work Distribution that Can be Made Can be Used in the Model Analysis of Past Work Can Provide Proportion by Type to Allow Projection Based on Work “Driver”, for Example: • Recurring work → historical patterns • Randomly occurring work → historical pattern x customer distribution • Capacity related work → system condition • Planned work → capital plan Alternative Growth Projections and Work “Mixes” Can be Used in Alternative Scenario to Determine Sensitivity to Variations. © PRES Location Strategies (800) Page 6
  7. 7. Model Inputs: Property DataFacility Design & Composition Data That Can be Used in Model Influences cost of facility (as part  Property Capacity (size) of total business operation)  Property Development Costs Can consider spectrum of “standard” facilities: (new/expansions) • Regional Hub / Full Service  Property Renovation Costs Operations Center (based on condition, current • Satellite Operations Center capital plan, or estimates) • Job Site Reporting Center /  Property Operating Costs Emergency Operations Center  Related Operating Costs Will need to define type of space required and functions desired • Material Carry Cost/Site (materials storage, fleet • IS Infrastructure Cost maintenance, design coordination, • Other/custom and supervision) at each “standard” facility.  Market Value (net value if sold, typically based on: Opinion of Value, less transaction, less Net Book, less estimated environmental, less relocation costs) © PRES Location Strategies (800) Page 7
  8. 8. Model Outputs The Model Identifies the Optimum Solution For Each Scenario. • Locations to Use. • # Crews per Location. • Coverage Area per Location. Individual Scenario Results Can be Shown in Tables and Maps: • Travel Times & Costs. Each scenario can be mapped to show the coverage area by location (left) and travel time from location (right). • Property Sizes & Costs (to the degree data is input). Multiple Scenario Comparisons Provide: • Metrics on Change from Existing to Proposed Configuration. • Quantification of Trade-offs Between Options. Multiple scenarios can be compared (cost, travel time,Specific information of interest can include areas with changes in travel crew deployment) to identify the relative benefits of each.time (left), system-wide travel time (center) and ideal locations forsupporting functions such as warehousing (right). © PRES Location Strategies (800) Page 8
  9. 9. An Iterative Approach Is Recommended Run 1 – Assessment of Potential Opportunity • Use Readily Available Data. • Consider “Standard” Scenarios. • GOAL: Determine if Enough Value to Continue with Run 2. Run 2 – Analysis of Selected Field Operations and Regions • Engage Business Unit. • Alternative work projections. • Alternative business rules & scenarios. • Assemble/Refine Property Data. • Site-specific renovation/expansion capability and costs. • Market values. • O&M costs. • Facility “templates”. • Include Reviews and Revisions with Stakeholders. • Optional: Supplemental Analysis of Smaller Field Operations and Support Functions (Fleet, Materials) • GOAL: Draft Proposed Strategic Plan(s). Run 3 – Quantification of Refined Strategic Plan • Compare Baseline and Proposed Plan(s). • GOAL: Quantify Value and Issues for Final Decision. © PRES Location Strategies (800) Page 9
  10. 10. Getting Started Can do quick assessment (Run 1) to let you determine if there is enough of a value opportunity to pursue with further data collection, discussion, analysis. All that is needed for Run 1 is: (preferably electronic) 1. Map of service area (existing districts good but optional). 2. Available work projection (typically use # of customers by zip code as proxy, can use sample year historical work or other). 3. Total number of crew FTE (by existing location good but optional). 4. Loaded cost/hour of crew FTE with equipment (can use estimate). 5. List of existing properties (with addresses or coordinates). “Next Steps” discussion items (next slide) will need to be engaged before proceeding past Run 1. © PRES Location Strategies (800) Page 10
  11. 11. Discussion: Next Steps Are there established standards for “response time”? (i.e. % of customers or work trips within “x” minutes or “x” miles)?  Do you know how you currently stand on this by region ?  Do you know how much of this is driven by HQ locations? Is there a consistent philosophy of what is an operations center?  Are the types of operations centers clearly defined? (central vs. regional, hubs, satellites, etc.)  Are there variations by Line of Business or region?  Are Fleet and Material support operations integrated? What data is readily available, or can reasonably be obtained?  Crew information?  Existing service area and sub-territories?  Work projections?  Existing/potential property locations and data?  Existing property “templates” or variations?  Current strategic plans and common business “rules”? Is the Business Unit ready to participate? © PRES Location Strategies (800) Page 11

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