DEA analysis separates most-efficient from least-efficient gas companies
✍ Scribed by Thomas Taylor, D. ;Thompson, Russell G.
- Book ID
- 102842946
- Publisher
- John Wiley and Sons
- Year
- 2007
- Weight
- 867 KB
- Volume
- 12
- Category
- Article
- ISSN
- 0743-5665
No coin nor oath required. For personal study only.
✦ Synopsis
enchmarking today is an operational B dimension of the American Gas Association (AGA). S m t y companies participated in its 1994 Best-Practice Benchmarking effort, and 95 companies participated in its 1995 effort. Notably, the AGA benchmarking effort' is regarded as a "process ... utilized in the search for industries' best-practices." The effects of this process on the companies' labor, capital, and profit tradeoffs have not yet been addressed. However, as emphasized below, this extension may be made.
Addressing this point is fundamental in today's marketplace, because rate-of-return regulation is being phased out in related industries (e.g., electric utilities and gas pipeline companies). Adjustment to competitive market positions is changing the whole economic environment of some of the largest demanders and suppliers in the natural gas market. This new environment will significantly affect gas distribution companies. Thus, benchmarking efforts must be advanced to show the bottom-line consequences of recommended changes, before action is taken.
Fundamental Questions
Several fundamental questions must be faced by the top managers of gas distribution companies:
How do we stand, relative to our marker peers? How do we move from where we are to where we need to be? D. Thomas Taylor Is principal of Palladian Analysis and Consulting, of Houston. Russell G. Thompson is professor of operations research, statistics, and economic systems modeling at the University of Houston, in Houston. Thompson is also president of the OPCON Corporation, of Houston.