To Main Proceedings Document
"Managing the Strategic Resources to Sustainably Achieve the
Global G oal of the Mexican Light and Power Company"
Conrado Garcia Madrid cong@ sdsg.com
Annabel Membrillo annam@ sdsg.com
The Strategic Decision Simulation Group
http://www.sdsg.com
Abstract: Historically, the Mexican Light and Power Company has faced a great challenge:
how to decrease the huge number of failures in the generation, transmission, distribution
and commercialization processes of electric power. There is an emerging need to find new
methodologies to help the company design their strategy for the maintenance group, using
the same resources they have being using so far.
During this continuous search, the reliability and quality of the service has improved due to
several new ideas incorporated from different approaches. However, the fundamental
objective is still very far from being accomplished. In a new attempt, a modified system
dynamics approach, the “Managing from Clarity” framework, has been applied to the
distribution and commercialization process, by creating a model that simulates maintenance
decisions and analyses the impacts on the rest of the company. This framework has shed
light on the global goal, the strategic resources and the action points to accumulate and
maintain these resources, as well as the structure and the people’s incentives that determine
the overall maintenance group’s performance.
Introduction
The Mexican Light and Power Company is responsible for the generation, transmission,
distribution and commercialization of the electric power. During its century of existence
since they obtained the concession to distribute electric power to the central area of the
country, the company has faced a continuous problem; frequent service interruptions. These
breaks in service have serious consequences for the many affected users. The service breaks
are monitored by end-user’s complaints. These complaints have increased steadily over
time despite the improvements in reliability and quality mentioned above. This is even
more critical given that 84% of the total electric power sold is purchased by the
competition. This means that the company is basically a distribution firm. As such the main
interest of the company, is to avoid the service failures, specifically failures from the
substations to the end users.
How to Manage from Clarity?
To better understand how to manage the strategic resources of the Mexican Light and
Power Company, the strategy needs to be “G.R.A.S.P.ed” in a new way. To do this we will
focus on understanding the Goal, Resources, Actions, Structure and People by answering
the following 5 questions of the “Managing from Clarity” framework throughout the
article:
Global Goal: Why do the Mexican Light and Power Company exists?
Resources: What resources do we need to achieve the global goal of the organization?
Actions: What actions can I take to leverage and maintain these resources?
Structure: How do the goal, resources and actions interrelate?
People: How do we bring to life the Mexican Light and Power Company?
Orie Oo hols
G.R.A.S.P.ing Y our Strategy: the 5 Questions to Manage from Clarity
1. Global Goal: Why do the Mexican Light and Power Company exist?
The Global Goal of the CEO of the Mexican Light and Power Company is to offer a
reliable service to the users. The best indicator to monitor if the goal is being achieved is
the Interruption Time to the User (ITU), which reflects the time the clients are not receiving
the service due to system failures.
In the following graph, we can see the actual behavior pattern of the global goal through
time, and the desired behavior we would like to see in the future. In this case, the number of
failures in distribution has an oscillatory behavior. That is what drives the ITU
accumulation. We will go into this explanation in more detail later.
Accumulated ITU
sc Failures per distribution components
desired
desired
‘ They
Figure 1. Global Goal behavior
'
Tdday
2. Resources: What resources do we need to achieve the global goal of the company?
Making the global goal explicit helps us to identify what resources need to be managed by
the person in charge of the maintenance sector. The following are the resources for this
case: failures, distribution infrastructure (components, lines), work teams, complaints,
budget, workers with relevant skills and vehicles.
3. Actions: What actions can I take to leverage and maintain these resources?
The resources can be accumulating through several actions. As maintenance manager, you
need to decide which actions to implement in order to maintain and accumulate the
strategic resources in a balanced manner to achieve the global goal. In the model, the
actions are: executing preventive maintenance, executing corrective maintenance, hiring
and training people, buying, repairing and discarding vehicles, installing or removing
distribution infrastructure components.
4. Structure: How do the goal, resources and actions interrelate?
To define the final model, the different dynamics of the model were analyzed with the
experts to identify which ones better explained the general behavior of the structure. The
diagram is arranged to present the actions on the bottom, the resources in the middle and
the global goal on top.
wu
GLOBAL GOAL
ring failures Correcting failures STRATEGIC
@ ad RESOURCES
Reporting
ACTIONS me ies
Need for staf and vehicles
Fiing cost
Figure 2. Structure for the Mexican Light and Power Company
Recapping the leaning of the model Symipiomatic Solution
dynamics, we can see the archetype “Shifting Comective maintenanc
the Burden”. Most of the resources are used to f
implement the symptomatic solution Need oh CM:.—
(corrective maintenance), rather than the NO we oA Shae
fundamental solution attacking the causes of pals workteams Side
the problem (preventive maintenance). In —gigaishbution —-Noldod RS a
consequence, there are increasingly recurring compeaenies: 5 BM
failures in the older infrastructure, which see
pressures management even more to apply the Potteries
symptomatic solution. Figure 3, Archetype
It is necessary to implement both solutions in parallel. Though the components of the
infrastructure are in bad shape, there is a high demand for their use and not enough budget
for replacing them. It is important to be aware of the following, by doing preventive
maintenance, the organization avoids service failure which eliminates the need for
corrective maintenance. However, while focusing mostly on corrective maintenance, the
failures have already occurred and the problem is just being solved faster-but the problem is
still there.
5. People: How do we bring to life the Mexican Light and Power Company?
In any group, people involved with the performance of the organization have different
perspectives about what to do and when to do it. Usually the perspectives pull in different
directions. In the following, we will make explicit and analyze the incentives and
perspectives of the main participants involved with the maintenance of the Mexican Light
and Power Company. In the diagram below the perspectives about the strategic resources of
each participant is made explicit. The bold lines reflect the frontiers where the management
and responsibility of the resources change.
‘Almost all the time the work teams are comrecting the
existing failures, so I do not have enough teams to
take care of the maintenance of all the distribution
infrastructure, The vehicles I have are old and in a
very bad shape. Why don’t they give us the work
teams and equipment that we need to do our job? We
already know what to do to avoid failures, why don’t
they listen to us?
Sector
‘Maintain the distribution
infrastructure in good shape
Take care of the complains as
fastas possible
reat
eneig
O
If there is a black out I will need to
stop doing what I was doing in that
‘moment. I do not understand why
there are so many blackouts and
why it take so long to fix them.
Client
Obtain the service the moment
Ineed it
‘To be treated well in case of a
failure
AY) reset tocar tte
Bust Woes vets
Taning \_Retig
We make the best decisions we
can with the resources we have
to fi the failures as fast as
possible, but we do not have
enough work teams to do it.
We cannot do it alone!
Operations
‘Minimize the response time to high voltage complains
“Monitoring the low voltage complains,
Tallocate the budget as good as I can, and I invest
wherever is necessary. I am trying to make better
decisions about how to manage the maintenance
‘group. Someone has to help me!
Management Staff
“General management of the sector
*Adequate budget management
nepaieg
Wedo not have enough
staff and materials to
fix all the broken
vehicles every month.
Weedo what we can
with what we have.
‘They should be more
careful with the
vehicles.
Workshop
«Maintain the vehicles in good shape
‘*Minimize the fixing time
Figure 4. Systemic View of the Organization Map
In the diagram, we can see that everyone is responsible for the failures and ITU, and the
authority to make important decisions is just in the hands of a few. Due to this situation,
continual conflicts arise about how to manage strategic resources. Each group has valuable
information that the others need to be aware of. Effective channels of communication
should exist regarding each perspective’s approach to solving this problem. In turn, each
one should then be analyzed to see if it helps or inhibits the maintenance group from
achieving the global goal in a sustainable manner in the long term.
For example, looking at the diagram the resource Vehicles, the responsible of managing and
maintaining the resource is the service station, but the authority to buy new pieces, spare
parts or new units is on the hands of the Management staff. Having the authority separate
from the responsibility provokes conflicts for resource management. Another example is
team management; Sector analyzes and plans the essential actions to perform preventive
maintenance on the infrastructure components. Sector is looking for achieving their local
goal: “Maintain in good condition the distribution infrastructure components”. However,
the pressure to attend failures and customer complaints is so high that Operations, looking
for achieving their local goal, put a lot of pressure on the Staff to allocate the resources that
fixes the failures, disregarding preventive maintenance. In this case, we can see that more
than one participant has authority and is responsible for the resource, deepening the conflict
mention before.
Conclusions
The Mexican Light and Power Company
By using the resources for the distribution components with a higher failure rate
occurrence, the other less conflicting or even with zero failures components are overlooked.
Through time, the distribution components that were not conflicting start presenting a
considerably increment of failures. Then is when the managers allocated the resources to
correct that problem and ignored the others that
have been already corrected. As a result of this,
there is always a part of the distribution
infrastructure presenting failures and the ITU
accumulates along the year because the
available resources are generally allocated to
make corrective maintenance for the conflicting
infrastructure components, instead of give
preventive maintenance to the ones that are not
presenting failures.
Failures per distribution component 1
Failures per distribution component 2
Figure 5. Failures per component
This behavior has two main reasons:
1. The pressure to correct failures is high.
2. The scarcity of the strategic resources (budget, skilled workers, vehicles). The limited
budget and the pressure to correct failures obstruct the allocation of resources to
preventive maintenance interfering with the Sector local goal and the global goal.
The different perspectives regarding what needs to be done and when affects considerably
the decisions that are made along the way. These decisions directly affect the strategic
direction of the organization. Making explicit the individual objectives of each participant
helps to focus the efforts of the maintenance group in the same direction. This coherence
leads to the alignment of the individual objectives with the global goal. Making everyone
responsible for their contribution to the infrastructure components’ condition, the capital
investment and operating actions to take will be more focused on preventing failures
instead of correcting failures and attending to complaints.
The Framework
Focusing on the five elements of the “Managing from Clarity” framework the maintenance
decision makers of the Mexican Light and Power Company were able to identified the
overall goal (G), identified the strategic resources (R), understand the actions points (A),
make the structure explicit (S), and understand people issues that drive results over time
(P). This understanding enables the decision makers to G.R.A.S.P. the strategy, to achieve a
shared vision, to move the organization in the desired direction and to clearly communicate
why they choose a particular strategic path.
Bibliography
Garcia Madrid, C. “Pensamiento Sistémico Aplicado al Mantenimiento de las Redes de
Distribucion de Luz y Fuerza del Centro”. Undécima Reunién de Verano de Potencia y
Exposicion Industrial, IEEE, Acapulco, México, Julio 1998.
Ritchie-Dunham, J and Rabbino, H. Managing from Clarity: The Art and Practice of
Identify, Aligning and Leveraging Strategic Resources. Publishing by 2000.
