Serbia: Reconstructing Power utility company EPS, Network organization as alternative

, News Serbia Energy

Previous structural and organizational changes brought effects in terms of business rationalization, but they produced new costs and problems in performing certain tasks. The restructuring process of “Serbia Power Utility Company” started in 2003rd, with an orientation to the “core business” and extract and outsourcing of side activities series, which, together with other measures, resulting in reducing the employees number at less than 30.000 at the end of 2006th.

Previous structural and organizational changes brought effects in terms of business rationalization, but they produced new costs and problems in performing certain tasks, which reduces or cancels the acquired advantages. The narrowing of capacities of their own organizations has increased the dependence of external partners, in circumstances where there are serious limitations in terms of execution of business engagement with them. It imposes the search for a more flexible organizational form, which will improve the efficiency functioning of the narrowed organization.

The concept of the outsourcing has been conducted largely in the middle of last decade, according to a study on the EPS efficiency improving from 2002nd. Consultants assessed that in the EPS there were many companies that were not of crucial importance to the system functioning. It was recommended that these ancillary activities be separated if possible, in order to determine the company transparency, to eliminate the cross-financing and organize the firm control of the primary business activities. The consultants recommended the separation of these entities, in order to prepare them for privatization. Privatization did not have a greater extent, but the EPS foundation rights and its subsidiaries companies were transferred to the Government of the Republic of Serbia still by 2005th.

The problem of EPS rationalization and restructuring for 2010th and the following year, is one of the priority activities within the process of material and human resources allocation that are not part of its core activities.

The modest effects and severe shortcomings of the applied model of EPS disintegration produced beginning of opposite trend: in the mid of 2013th  started the process of “Kolubara-metal” return in MB “Kolubara”, and similar expectations are visible in other parts of the EPS.

Abandoning the vertical integration concept, instead of going to the other extreme, it can be carried out with orientation on alliances with independent suppliers that perform specific activities in support of core operations.
These jobs are the basis for the establishment of stable long-term contractual relationship in the form of network organization. They can have characteristics of modular network model, in which the core company builds the market-based relationships with a limited number of selected partners, but retain strategic control over the activities related to the joint venture.

Announced EPS corporatization can create conditions that network organizations meet the criteria of efficiency business. Extracting an activities range from EPS also would mean the outflow of part of specific knowledge and experience. Establishing a network organization would contribute to these resources preservation and their development so that it would enable long-term commitment of all parties to the process that it involves.

Source; Serbia Energy