Opportunity #04

Lost Supply Chain Merger Synergy Savings Opportunity

Revamped for PEP Process

Savings Potential $16,000,000.00

 

   In 2000/2001, during the merger, one of the Supply Chain synergy savings initiatives was the reduction of FTE's in the Stores Group, at an annual savings of approximately 2.2 million dollars. ($60, 000 per FTE in 1999/2000, loaded times 38)

 

   At the time this initiative was looked at by the Supply Chain Merger Team, the Supply Chain itself consisted of the Power Plant Supply Stores group, the MichCon Stores Group, the Trombly Cable Group, Wixom Pole Yard, the Salvage Group (Investment Recovery), the Material Transport Group and the Operations group which consisted of all the Electric Side Secondary warehouses as well as the Electric Side Primary Warehouse, W-100 at WSC.

 

  The primary focus of the reductions were at W-100, Salvage, the 15 Electric side secondary warehouses, MichCon's Allen Road, and it's 5 secondary warehouses.

 

   The initial objective was to reduce by 38 T-Grades if possible. After review and much discussion, the Supply Chain Merger Team decided such a reduction would seriously compromise Stores ability to maintain functionality and effectively serve it's customers, so we looked at alternatives to get the same savings without crippling any individual groups ability to function, thus the final analysis had a slightly different look than when we first looked at it.

 

   One of the main considerations was Stores T-Grades jobs are labor intensive, making significant FTE reductions difficult without compromising the quality of the product. Another important factor is the close relationship of the Stores jobs and the Lines crews who have high public visibility. This is significant when a crew is in the field and needs tools, equipment or supplies. It's much easier and cost effective to call and have a single Stores employee deliver the needed materials rather than have an entire crew idle for both the trip into the Service Center and the return trip to the field.

 

   There are several factors to consider.

1. Stores employee make $7-$10? less an hour than linemen, which makes the material delivery by Stores cost effective.

2. If a lineman were to return to the warehouse for the material, mileage and idle time for him and his crew will be doubled.  (travel both ways)

3. Most Linemen do not work alone, thus if any one of them were to return to pick up the material you're not only doubling the costs but also multiplying the costs by the number of people in his crew.

4. By having a Lineman go after the material, he's also doubling the time the customer may be out of service.

5. Stores vehicles are pickup trucks which are considerably more fuel efficient.

6. The large Lines trucks are slower which further impacts factors 2, 3, and 4 above.

7. The Linemen are well trained and fully capable of handling large line trucks without a problem. Even though there isn’t an inordinate amount of accidents with them, they still pose a greater threat to the public and are more difficult and dangerous to maneuver in traffic. Why put the Linemen and the public at additional risk?

 

   To come up with a workable solution and capture the desired savings without compromising basic needs, we looked to the past. At one time there were Warehouse Clusters managed with 2 Superintendents, one for the North Area, one for the South Area, each with about 7 or 8 warehouses. The General Foremen had Stores responsibilities for 3 to 5 warehouses each.

 

   A large proportion of current FM&S Supervisors/Area Leaders work, revolves around paying bills generated by Stores, Mechanics and occasionally other groups. The Merger Team felt we could utilize the Cluster concept to accomplish the Merger related financial objective by reducing by 34 by employees instead of 38, by spreading the initiative over 3 groups instead of one. The affected groups would be Stores T-Grades, FM&S Supervisors and Office personnel.

 

   At the time the Cluster was in use, there were about 5 General Foremen for about 15 to 16 warehouses. Currently there are 15 Electric side secondary warehouses, 1 Electric side primary-WSC, 5 Gas side secondary warehouses & Allen Road. Under the proposal, Allen Road would become a large secondary and no longer a primary, WSC would become the primary for both the Electric & Gas leaving a total of 21 secondary warehouses.

 

   There are 13 FM&S Supervisors, and 3 equivalents on the Gas side, 1 for Allen Rd. & Coolidge, 1 for Lynch Rd. & Noble, and 1 for Broadway & Michigan Avenue for a total of 16 supervisors.

 

   An issue will be in determining how the FM&S Supervisor’s duties and responsibilities will be covered, and what the role of the remaining FM&S Supervisors would be. Obviously it would require people in other groups to share and shoulder many of the FM&S Supervisors duties. Detailed below is how, in part, this can be accomplished.

 

   All known potential stumbling blocks were placed on the table and resolutions considered. One question was who would issue disciplines in the absence of an FM&S Supervisor? At the time of the merger, DTE, disciplines were minimal. The primary responsibility for Stores & Motor Trans disciplines would still be that of the FM&S Supervisor. Should the FM&S Supervisor not be available, Overhead, Underground, Substation Supervisors, Service Center Managers or other specifically assigned Supervisory Staff could be utilized to handle disciplinary issues if needed.

 

   Grievances were the second stumbling block. During the 80's, the Stores Division averaged nearly 90 grievances per year. After Interest Based Bargaining became a part of the grievance process, there were less than a dozen Stores grievances total between 1994 and 2001. One FM&S Supervisor should be able to easily handle the grievances for all the warehouses, considering the IBB modifications to the grievance process.

 

   Paying ERS123 bills, or their subsequent replacements through DTE2, would become the responsibility of the Supplyperson, Supplyperson Leaders, Mechanics & Sr. District Mechanics. Currently these classifications pay essentially all bills except for ERS123's, which they sometimes do anyway.

 

   Arranging for Facilities to perform maintenance around the warehouse would still be the responsibility of the FM&S Supervisor. However in the Supervisors absence, the Supplyperson, Supplyperson Leader, Mechanics & Sr. District Mechanics could arrange for Facilities to do minor routine maintenance. The Manager and other Supervisors could arrange or authorize other maintenance. Bidding contracts for Facilities is no longer the responsibility of the FM&S Supervisor, thus no longer a factor.

 

   Any remaining FM&S Supervisor responsibilities could be communally shared with the other Supervisors, the Manager and warehouse personnel by need and/or fit. Splitting up the responsibilities will have minimal impact on the affected groups and will help ensure the success of the initiative, because it doesn't overburden any of the classifications.

 

   The Office and T-Grade reductions proceeded per the original Merger Initiative. Actually the T-Grades were reduced by more than the original merger proposal. The Area Leader/Supervisor portion of the Merger Initiative stagnated however.

 

   Parity between Gas and Electric Stores personnel after the merger further justifies the adding responsibilities to Stores, which further lends credence and support to pursuing the the lost portions of the merger initiative.

 

   As of now there are 13 (electric) FM&S Supervisors and 3 (Gas) Supervisors. The loaded costs of these 2 classifications in 2000/2001 was 90-100 thousand loaded each. The current annual loaded costs are undetermined at this point, but can be no less than in 2001. Reducing the current 16 Supervisors to 5 Supervisors would save about $1.1 million annually using 2000/2001 rates. The other option is to continue paying $1.1 million a year for these supervisory positions The difference between paying 5.5 million over the next 5 years vs. cost avoidance of 5.5 million over the next 5 years would amount to a bottom line difference to the company of $11,000,000.00 million dollars. These figures are grossly underestimated and likely considerably higher now, 5 years after the merger.

 

   This is a grand opportunity to revive this initiative and capture the savings. As with any initiative of this sort, there is always resistance, especially from those most affected, so you can expect there will be challenges to the veracity of the initiative. I mention this only because this is one of few positions where the affected employees may have the capacity to effectively influence the outcome or ability to implement. Because of this inherent danger someone will likely have to regulate and police results. Knowing people in these positions, I'm well aware of some of the tactics that is likely to be employed to circumvent the initiative.

 

1. One push back might be to simply go off course and not follow the game plan.

2. Another might be to influence the projected timetable and not allow time to let things develop properly, thus demonstrating the initiative won't work.

3. Another would be to give assignments to people that's strictly prohibited by their CBA, knowing the Union will push back, again skewing appearances affecting success.

4. Another might be to assign work across boundaries to different groups creating internal conflicts to show their presence is needed to keep tempers etc. in check.

5. Another might be to assign tasks to people who are not properly trained or perhaps have difficulty performing certain tasks. As a side to this, withholding training would further skew results to prove the initiatives will not work.

6.  Any weaknesses in the plan will be exploited to the fullest.
    

These are just some of the tactics, not all, that might be employed to try to invalidate the Initiative.
NOTE: One of the proposals I heard in regard to the 4 Super Service Center concept was the other warehouses that become pullouts may have DTE linemen and contractor linemen pulling out of the same yard. Further the contractor Stores employee would be making the deliveries and doing other work traditionally done by Local 223 employees. Should the Company's desire to contract Stores work through Local 17 become a reality, it's a situation with potential to set in motion major issues between Local 17 and Local 223. Hopefully both Locals and National Unions will be monitoring this situation to make sure the Company and their consultants aren't manipulating the situation to the detriment of one or both Unions. Go to the following web address and view some of the union busting tactics addressed there. http://en.wikipedia.org/wiki/Union_busting



If the Super Service Center concept doesn't go away, these savings and more could be enjoyed by the company. Most Supplypersons and Supplyperson Leaders, and some Mechanics, are familiar with most of the duties routinely performed by the FM&S Supervisor. By training Supplypersons, Supplyperson Leaders, Mechanics & Sr. District Mechanics in all the FM&S Supervisors duties they're not familiar with, those duties could be divided up by them, thus relieving the FM&S Supervisors of their most time consuming functions. This would open the door to the opportunity to reduce FM&S positions even further, creating the possibility of only having 2, one for the North, one for the South.

This page originally uploaded 05/03/06. Last revised on 07/08/06