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1997-08-28 08:35:27


Y2K Dependent Areas of a Utilities Company That Could Tank It



Rick Cowles lists key areas that are vulnerable. The point is, just because a utility says it is y2k compliant is no assured reason to believe that it really is. His Web site is filled with suggestions of potential y2k land mines for the power generation industry.

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Human Resources: The obvious -- payroll. But how about mundane systems such as Resumix? How about your benefits systems, pensions systems, job posting systems, etc? . . .

Financial Control: The biggie. The SEC, Moody’s, Barron’s, and a host of other financial risk organizations are going to be looking to see if your FI systems are Y2K compliant. Your company’s bond rating depends on an agressive Y2K compliance effort (and not just the fact that you’re "implementing SAP"). Can you pay your bills? Can you process your receiveables? Can you do such routine things such as track the market and park your free cash wherever it’s going to make the most ROI [return on investment]? Can you budget? . . .

Plant Maintenance: Can your maintenance control and administrative systems, both at the plant level and corporate level, cut simple workorders to repair your in-house equipment? Can the systems track and schedule, into the future, preventive maintenance and surveillance testing? Will maintenance demand and timetables for spare parts appropriately drive MRP in your purchasing systems? Will your workorder system and HR systems work in tandem to schedule resources for maintenance? (Remember, it’s the interdependencies in Y2K that are going to be the killer.)

Purchasing: Can you interact with your suppliers? This means, simply, cutting purchase orders, tracking and expediting orders, and paying the bills. EDI. Petty cash purchases. Procurement cards (will your cards work with local vendor POS systems?). MRP driven orders. Ayei, carumba. There’s a lot of systems and inter-relationships to check here. Also, have you included Y2K compliance clauses in all of your current day purchasing documents??

Inventory Control and Warehousing: Here’s something to consider, and it relates back to the earlier Financial Control discussions. Many companies are not only reviewing in-house computer systems, applications, and hardware, but are also considering contingencies should a supplier not weather Y2K too well, and not be able to supply needed material or services because THEIR systems crashed. One of the Y2K contingencies that most ‘material intensive’ organizations are considering is to increase stocking levels of consumable and safety stock commodities prior to 01/01/2000. How is this going to impact your bottom line? If you increase safety stock on $100 million inventory (typical for a major US utility) just 20 percent, well, you do the math. That’s $20 million of extra inventory sitting on the shelf and not working for your organization or generating revenue in some other manner. Just in case, not "just in time".


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