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Changing paradigms in the energy arena

image credit: Just in time x just i case
Rafael Herzberg's picture
Consultant energy affairs Self employed

Rafael Herzberg- is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil* Focus on C level, VPs and upper managers associated to energy related info, analysis...

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  • May 5, 2020

Changing paradigms in the energy arena

The business world has gotten used to the "lean and mean" posture. Companies and institutions were always encouraged to operate at a condition of "nothing more than necessary". For competitive reasons, of course.

The pandemic brought a new challenge. From the emblematic "just in time" widely used as a management tool to a "just in case" most probably will emerge. It is a conduct aimed at mitigating unforeseen circumstances.

For a "premium" (of costs), the value of "insurance" will deal with risks that until now were outside the agenda of managers and board members.

My assessment is that suppliers and their clients who work in the energy area, will gradually include mechanisms to bring the much desired security in their solutions.

Do you feel the need to search for "value added" items that should be explored?

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Larry Farmer's picture
Larry Farmer on May 8, 2020

Agreed however I would frame this as more of resilience discussion than insurance. "Just in time" does work but it has always been a brittle model. 

Roger Arnold's picture
Roger Arnold on May 8, 2020

The natural tension between "just in time" and "just in case" paradigms runs deep. (Neat turn of phrase, BTW. It's short and catchy enough to stick in one's memory, but captures the essence of an important issue.) It pivots on a critical flaw in our market-driven "cheapest wins" economic system. The market is driven by price; it doesn't value resiliance or even non-obvious "quality". A company that spends money to address the "just in case" side of operations will be be undercut in the market by a leaner competitor that doesn't concern itself with contingencies that are unlikely to arise in the current business year. 

Ironically, under the old regulated utility model, that tension did not exist. A regulated monopoly did not have competitors, and contingency planning was integral to the regulatory environment. 

Bob Meinetz's picture
Bob Meinetz on May 8, 2020

"Ironically, under the old regulated utility model, that tension did not exist. A regulated monopoly did not have competitors, and contingency planning was integral to the regulatory environment."

Roger, I'd argue it's not even ironic. For irony, look to when new "disruptive" technologies actual disrupt the energy landscape and we can't turn on the lights.

Mark Silverstone's picture
Mark Silverstone on May 8, 2020

I have been a participant in more than a few multi-discipline risk assessment workshops with respect to Oil&Gas operations and projects.  We thought we covered "everything" and assigned relative severity and consequences to them all, and put in place mitigation measures where there was a perception of need to reduce the risks to "acceptable levels".  When data were available,  quantitative risks were calculated.   On more than one occasion, when an unacceptable risk was identified which could not be mitigated to an acceptable level in a standard risk matrix, plans and projects were scrapped.  

A pandemic has never been mentioned. I do not know what would have happened if it were.

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