Supply Chain Strategies Of Ergon Energy: Analysis And Relevance Of Resource Based Theory

Overview of the selected business

Discuss about the Supply Chain Strategies of Ergon.

Electricity is the utmost need of common people and the different other architectural bodies. Numerous state or centre owned companies are engaged in the business of supplying the required electricity. It appears quite simpler in its mentioned objective; however, the operation is complex. The complexity is because of many reasons such as the production of power and energy, local & state government policies, the supply chain operations etc. The production of power & electricity happens through either renewable or non-renewable resource of energy. Majority of production have its resource in non-renewable form of energy, which is itself associated with sustainability issues. Furthermore, non-renewable resources produce CO2 emission in high numbers, which has already threatened the peacefulness of environment (Francey et al., 2013). Various local and state government rules & policies also play a very important role in the electricity supply system. They set the pricing for per unit of electricity, which is compulsory for different electricity supplying companies. Despite all the challenges, the supply chain operation in particular is challenging for companies of any industry (Expósito et al., 2016). The chosen organisation for this assignment is the Ergon Energy, which is a subsidiary company of Energy Queensland Limited (EQL). The particular company is responsible for supplying electricity to entire Queensland except the South East part of the state. They are conducting a giant business, which is evident in a fact that they supply electricity to approximately 700,000 customers across the state. Australian Energy Regulator (AER) governs the distribution network that it uses to supply the electricity (Ergon Energy, 2017). The main purpose of this assignment is to analyse in brief that how Ergon Energy supplies electricity to a large numbers of customers across Queensland. This would also find the relevance of resource based theory with the business operation of the chosen company. Moreover, sustainability of the business would also be checked in the light of the chosen model. 

Ergon Energy is a subsidiary company of Energy Queensland Limited (EQL), which is now operating business in two formats such as in distributing the electricity and retailing it to various consumers. Ergon Energy Corporation Limited conducts the distribution of electricity whereas Ergon Energy Queensland Pty Ltd. carries the retailing business. The retailing is done in the pricing standard set by the Queensland’s government. They have integrated 150,000 kilometres of power lines and a million of power poles. This is the way they transfer electricity to their customer’s home. It has also owned 33 standalone power stations across the state to supply electricity to communities those are disconnected from the main electricity grid. Ergon Energy is an innovative company that believe in collaborating with different specialist to introduce various new services. Some of those innovations are popularising use of more solar PV systems, managing both commercial & residential energy and enriching the benefits of EVs. Moreover, they are trying to popularise the presence of Electric Vehicles in Queensland with their innovative thoughts such as providing healthy network coverage to ensure hassle free charging of batteries (Ergon Energy, 2017).

Value chain operation

Value chain operation of Ergon Energy

Figure 1: Value Chain Operation of Ergon Energy

(Source: Lucas, Silva & Neto, 2012)

Value chain operation is one of the most complex tasks, which very few companies have made this easier with the use of their strategic planning (Gereffi & Fernandez-Stark, 2016). Ergon Energy operates its business in two formats such as retail and network. The first part of the value chain is the inbound logistic, which in this regard is the reception and production of electricity. They are providing Solar Power energy to their customers. Like many other companies, they are also responsible for polluting the environment. The resource of producing the solar energy is non-renewable energy resources. It causes the emission of green house gases. It also pollutes the environment with the diesel that they import (Liu et al., 2012). To enhance their business sustainability and to enhance their efficiency in supply chain, Ergon has started building up many solar power stations at different locations. Some of those solar stations are such as Doomadgee, Windorah, Birdsville and Thursday Island. They supply the solar PVs to their customers through retailing. They are also supplying batteries for EVs. The distribution of the product or service happens through two modes such as through retailing and through online portal. Ergon does not only provide solutions to their requirements but they also install the Solar PVs on the customer’s premise (Abeygunawardana & Ledwich, 2013). The human resource department of the company is very efficient as well. It has identified the requirement of innovative things for a sustained business. This is why they welcome partnership working to adopt various new innovative thoughts and produce something new to their end users. The efficient thinking of the company’s HRM has encouraged them to adopt the highest standard of technology to produce advanced solar PVs that emits less CO2. Additionally, the dynamic workforce of the company has used the technology to the perfection to provide a friendly environment for EVs. Electric Vehicles itself are a friendly aspect for the environment (Yu & Halog, 2015).

Linkages between business operations and chosen model

Figure 2: Resource Based Theory

(Source: Barney, 2012)

Resource based theory is a very effective theoretical model that helps in identifying the firm’s capabilities for a sustained business in future. It constructs the identification process in four steps such as available resources, capabilities, competitive advantage and strategy. The resources that are available to Ergon Energy have placed them in the list of few companies, which have connected their relationship well with the customers. They are one of the leading suppliers of Solar PVs in the Queensland state. As far as capabilities are concerned, they have already proved this with their innovative strategies. The resources that they have, can help them add new chapters in their success history. They started with Solar PVs; however, they have now reached to supplying batteries and recharge network coverage to EVs. Electric Vehicles, which are the future of car industry lacked in recharging related issue. The recharge points are usually available in city areas; however, it lacked in its presence in the rural areas. The use of technology has encouraged the company for innovative thoughts and they have planned to support the EVs by setting up maximum numbers of recharge points across the Queensland state. They have enhanced their competitiveness by touching the EVs as their future prospect. The last stage of the resource-based theory is the identification of strategy, which the Ergon Energy uses. The existing strategy has enabled them reach to thousands of customers. It has also helped them innovate with new concepts such as setting up recharge stations at numerous locations for EVs. However, they have a challenge to prove their worth in attaining the state of sustainability. The diesel imported to them produces CO2 after combustion. Moreover, CO2 has become a challenging task ahead of the entire business. They need some strategies for filling up the gaps identified in their existing strategies. Sustainability can only be proved if they control the emission of CO2 (Hitt, Xu & Carnes, 2016).

Sustainability within the selected business model

Resource Based Theory and Ergon Energy

Figure 3: CO2 Emission from Different Energy Resources

(Source: Shao et al., 2014)

The selected business model is Resource Based Theory, which helped to identify the gaps in the existing strategy of Ergon Energy. However, sustainability is a challenge to Ergon Energy Company. The electricity is still produced in large numbers from coal and gas. It is difficult to imagine the reduction of CO2 in such case. Use of natural resources can only help in reduce the emission of CO2. Natural resources such as water, solar, ocean wave, air wind and biogas are some resources that can produce electricity. Ergon Energy should look for the most feasible ways as shifting to these resources would require huge investment. These are productive resources to reduce the increasing ratio of carbon emission. Recommendations can only prove their worth for the company if the company has also identified the importance of natural resources. Electric Cars, which according to the company is a good prospect for reducing the content of CO2 from air. However, it is itself associated with carbon emission. The charging socket use coal as a resource to generate the required electricity in it, which itself is highly responsible for the incrementing emission of CO2 (Sen & Bhattacharyya, 2014). Strategy has been identified for the company. They must invest high in generating powers from natural resources.  

Conclusion

Ergon Energy is one of few names in the energy industry in Australia, which has continued the use of innovative ideas to produce something new to the community. They have already left a resonant impact of their name by offering the Solar PVs. They further advanced by committing the installation of recharge points for EVs. However, the commitment would require some serious steps taken from the management, which would be in the form of making a huge investment on generating electricity from renewable energy resources. They have proven track in the HRM practice as well as in technological advancement. However, it needs more than this to prove their strategy a worth for the company

Reference

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Ergon Energy. (2017). Ergon Energy. [online] Available at: https://www.ergon.com.au/ [Accessed 26 Aug. 2017].

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