DTE Energy Corporate Strategy

DTE Energy Introduction In the contemporary business world, there is very little success that a business entity can find or make without having a formidable strategy. Company heads and managers spend a lot of time trying to come up with a business plan or strategy that will give them the edge over their competitors in the market. The sole objective of any business is to make as much profits as possible, and this can only be achieved if the business enjoys considerable market share.

However, markets can only be won if goods and services produced by the company fully satisfy the needs and specifications of the customers. It is therefore upon the management to understand clearly what the market expects of a product or service before undertaking to produce or manufacture the same. This is the essence of strategy in business. This paper will analyze business strategy with particular reference to DTE Energy, an electricity and gas company based in Detroit, Michigan, U.S.

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LOB strategy at DTE’s Electricity division DTE has resorted to efficient and effective production of electricity through the adoption of a strategy where electricity production is done on site. The company has acquired fuel cells, mini-turbines, as well as internal combustion engines which only produce the required amount of energy relative to the market demand. This is opposed to power production from centralized power plants and utility substations which tend to be a bit wasteful. Thus, it is easier to attend to customer needs and changes from an onsite location than would be the case if such operations were being carried out from a centralized location. It is also a cost effective strategy because very little resources in terms of the length of power lines will be used for connections between the on-site production units and the client location. A centralized location would mean connecting long wires from very far locations, thus adding up to increased costs.

DTE Energy corporate strategy DTE targets to improve its customer’s satisfaction in two major ways: Firstly, it has developed cost reduction mechanisms which aim at passing the eventual benefits to the consumers. Among the initiatives undertaken to reduce costs include on-site manufacture and distribution of electricity. This reduces costs in the essence that the company will have shorter distances of connection between the source of production and the client’s locations.

The company has further adopted a lean system of operation in order to improve on its overall efficiency. Through the system, the company has successfully reorganized its operations towards achieving high efficiency standards through the use of such tools as 5 S’s, use of visual control, as well as the adoption of an error proofing method on particular operations. This system, which has come to be known as DTE Energy Operating System combines critical

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thinking, action, as well as seeing; all of which has been based on a comprehensive cycle referred to as plan-do-check-act. The cycle’s major principles are careful goal and objectiveoriented planning, standardized action, careful measurement and analysis of results and finally taking of corrective action, where necessary, which brings back the cycle to its starting point of planning and setting of goals. All these efforts focus towards improving on customer satisfaction thus establishing a strong market share owing to repeat buying.

Key takeaways from the readings Businesses need to put efforts in place that will eventually help them differentiate their services from their competitors. Customers are looking for goods and services in the market which gives them maximum return for their money value. In other words, customers look for goods and services that effectively and almost wholesomely satisfy their needs, desires and wants. Therefore, business strategists and marketers must take their time to understand clearly what the consumers want and then produce goods and services that effectively satisfy these needs. The marketers must ensure they do it in a unique way such that their products and services can edge out stiff competition from rival firms operating in the same industry. One way of achieving this is by remaining proactive and continuously studying the highly dynamic market trends and climate so as to establish early developments in time.

Businesses must also devise strategies that are purely and strictly customer-oriented. The main reason and target of business is making maximum profits and this can only be tenable if companies and enterprises attract more customers and also maintain them for longer periods of time. Customers stick to particular goods and services when it becomes apparent to them that the manufacturer or producer fully values them. This results in customer loyalty which is very vital for the growth of any business. The managers must therefore ensure that such strategies as

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achieving high efficiency in production are important because they eventually cut down on production costs. Other vital strategies should be on quality improvement as well as a formidable distribution network which will avail the products to the market in good time. Put together, these customer-oriented strategies are what eventually afford a company the much needed competitive advantage.

Companies must also take full advantage of technology and adopt automation of systems as a way of improving their general performance. With full automation, companies are set to develop from a number of benefits, chief among them being the cutting down of costs.

Automation means more products will be manufactured within a very short period of time thus eliminating the need to pay high costs for keeping and material inventory. Products will also be ready within a short period of time thus being able to match market demands without experiencing periodic shortfalls. Since automation improves on efficiency, very few losses in terms of defective products will be realized because reliability of such systems is often almost 100 percent effective. Automation also reduces reliability on human labor which, apart from being costly due to salaries and wages paid to the workers, is also error-prone and relative slow.

One major advantage of un-manned operations is that they are not bound to suffer during such times when workers engage in industrial actions. Thus, the company will continue with its operations even at a time when workers down their tools for labor-related issues.

Companies are also targeting flexible manufacturing systems in their operations as a way of building on their competency and improving on their productivity. A flexible system implies that the company can easily and effectively adjust its activities so as to conform to the changes in the market environment. Such a system will take very little time to adjust to the market specifications and the transformation will also be cost effective. Where the economy endures

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poor times, a flexible manufacturing system can be readjusted such that the company undertakes other activities which will be more cost effective and profitable to the company at the time.

How DTE Energy is creating corporate advantage DTE has managed to save its operation costs by a figure exceeding $150,000,000 in about 38 months of its operations since adopting the lean operating system. This has particularly been achieved through the standardization of its procedures which has resulted in a streamlined process reducing the duration of time between the times invoice is received to the time it is checked to only 6 days. Previously, the exercise took a whole 45 to 60 days thus delaying on payments. Today, however, the practice is reliable as payments are promptly done. The accounts payable at DTE Energy remains one of the most efficient in its performance.

The introduction of lean thinking as a strategy has enabled DTE Energy to cut down considerably on the amount of time it used to take to carry out repairs on broken down transformers. Previously, the whole exercise took 31 days but the practice has now changed with only 2 days taken to cover such repairs. The resultant increased throughput has enabled the company to manage additional repair work within its structures and assets to a tune of $3 million. Examples of repair works include improvements on accuracy of warehouse inventory where at present the figures stand at 96% from a previous low of only 80%. This efficiency was achieved within two months since adoption of the lean thinking and its benefit has been valued at $400,000 (Lean Learning Center, 2012, para 1).

Identification and articulation of DTE’s vision, resources and organizational capabilities DTE Energy, like any other business company, intends to conduct its service delivery in a more efficient way by building on customer satisfaction and cutting down on its operation costs as much as possible. The lean thinking strategy adopted by the company has been very

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instrumental in achieving very high efficiency standards. The company has been able to improve tremendously on its cost effectiveness and has cut down on the duration of time it takes to respond to issues and concerns affecting their customers.

Conclusion Efficiency in performance by companies depends on how effective they structure their overall business strategy. A strategy is a comprehensive plan which positions the company in a central and strategic position within the market relative to other market players and competitors.

Strategy therefore aims at achieving competitive advantage and the more elaborate it is designed, the more effective the company becomes in performance. Among some of the most common strategies employed by companies include adopting mechanisms that cut down on operation costs, such as automation, and employing other lean mechanisms that reduce the amount of time a company takes to address concerns raised by the customers. The more a strategy adds value to customer satisfaction, the easier it becomes for the company to retain such customers and thus benefit from return buying. Strategies must be very flexible to accommodate changes in the business environment because the future is always uncertain. In order to avoid a scenario where the company gets stuck because of such market dynamics, strategists must allow room for maneuver when conditions become unfavorable.

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Lean Learning Center. (2012). Lean and DTE. Retrieved 05 April 2012 from http://www.leanlearningcenter.com/aboutus/our_experience_dte_energy.cfm