All along the asset life cycle: Research opportunities for operations and supply chain management

Abstract

Without well-functioning public utilities, our society breaks down. They are the organizations that facilitate or provide infrastructure-based services, such as basic amenities (power, water, and sanitation), public transportation, and communication. They are either state-owned or at least tightly regulated, due to their natural monopoly character: there are substantial economies of scale and large capital requirements involved, and given their typical network-based operations, having multiple parallel systems is inefficient (McNabb, 2016). Managing the operations of public utilities is vital for safe, reliable, affordable, and sustainable functioning of the physical assets, the infrastructure, through which key services are provided (De Bruijn & Dicke, 2006; Wilkeshuis, 2010) and, thus, for the security, economic prosperity, and social well-being of all citizens (Rinaldi et al., 2001). Furthermore, effective management of public utilities is—either directly or indirectly—imperative for meeting the United Nations' Sustainable Development Goals. Consider, for example, the centrality of water and energy networks for access to clean water (SDG 6) and energy (SDG 7) as well as for good health and well-being (SDG 3) and sustainable cities and communities (SDG 11). In light of the efforts to transition to a socially just and sustainable society, one would expect the operations of utilities to feature prominently in state-of-the-art operations and supply chain management (OSCM) research. So far, this is only partly the case. For example, Joglekar et al. (2016) found that of all the industry-specific studies in OSCM, only a small proportion covered public utilities, such as the energy sector and transportation. As we will elaborate, review of the literature for the purpose of this special issue still reveals only a limited number of contributions.

The operational and supply chain aspects of public utilities manifest in different but highly related sets of processes. The first and probably most visible set of processes relates to how the services facilitated by the public utility assets are being designed and delivered. Literature within the operations management and operations research domains has addressed this topic in diverse areas, such as public transport services (Dollevoet et al., 2014), drinking water access (Zhai et al., 2023), and electric vehicle (EV) charging services (Guillet & Schiffer, 2023). The second set of processes pertains to asset operations and the life cycle of the physical assets that the utilities own—that is, how these assets are acquired, operated, maintained, and ultimately disposed or refurbished/recycled. Compared with the literature on service operations for utilities, the literature on asset operations for utilities is rather scant. Such studies of asset management, including utility assets, are traditionally more prevalent in the fields of (civil) engineering and public policy.

Studying asset management for utilities from an operations perspective brings several benefits that society desperately needs, because the functioning of these public assets is increasingly under threat. This threat is significant for both old and new assets. The most visible category, and a significant share of all utility assets, are the old assets that were built in the postwar growth decades. Many, if not most, of these are in need of replacement, now that the end of their technical lifetimes is approaching. The United States, for example, has more than 610,000 bridges of which one in four is more than 65 years old. US infrastructure in general is rated by the American Society of Civil Engineers (2021) to be “mostly below standard.” Similar problems with road transportation network maintenance are present throughout the world. For example, in France, an assessment of 45,000 bridges shows that 10% of the structures surveyed required immediate attention to ensure public safety (Koeppel, 2024). The same holds for water transportation networks, rail networks, and the like. Infrastructure that is much older than post-World War II, but which remains in use today, is of course also often at risk. Take, for instance, the often-centuries-old, but crumbling, bridges and canal walls of Amsterdam (Erdbrink, 2021).

Sure enough, appropriate levels of maintenance can help raise the condition of these “aging assets” and extend their technical lifetimes. However, there is not only a shortage of public budgets for this but also an acute and growing shortage of skilled and experienced workers in most economies. Appropriate levels of maintenance are not achievable without drastic increases in labor productivity, which is one area where the OSCM community excels and thus could lend an experienced hand. Moreover, asset owners and regulators are typically reluctant to close down important infrastructure for long periods because these assets are used so intensively. As such, time windows for renovations and replacements are short. This calls for the planning of operations under time constraints, which is another strong area of expertise of the OSCM community.

The construction and commissioning of new assets also present significant challenges. For example, the Dutch government aims to build more than 800 new offshore wind turbines in the North Sea by 2030. To date, there are some 300 turbines in that area, the oldest dating back to 2007. With conventional work methods and against historical labor productivity, building and commissioning these new and complex assets will be impossible. These wind farms are much farther from the coast, on a rough sea. Cargo traffic in these regions is intense and challenging to work around, and the availability of skilled technicians is again extremely limited. Meanwhile, that same North Sea is still littered with some 600 increasingly outdated oil platforms (Pearce, 2018), which must still be decommissioned in the coming years or refurbished for other purposes. Under current work methods, the associated costs are great. In sum, this presents yet another challenge for which an application of OSCM insights would be highly beneficial.

These collective societal and managerial challenges, and the hitherto limited application of OSCM insights, has motivated us to organize a special issue on “Operational Excellence for Utilities.” In the remainder of this editorial, we first take stock of what the literature in our field has contributed thus far. We then reflect on the objectives of this special issue and results from our call for articles. We close by providing suggestions for promising OSCM research topics in this field.

Despite its importance, operations, and asset management for utilities has not attracted substantial empirical research interest in the OSCM literature. Contemporary evidence to this point emerges from a review of utilities-focused research studies appearing between 2020 and 2024 in empirically-focused OSCM journals, being JOM, Production & Operations Management, Manufacturing & Service Operations Management, Management Science, International Journal of Operations & Production Management, and Journal of Supply Chain Management. In our own review of this literature, we considered both abstracts content as well as the full text of articles, in cases where orientation to the topic of utility asset management could not be discerned by abstract alone. Quite a few of the articles we at first identified focus more on the management of services rendered through utility assets, rather than on the management of the assets themselves (see, e.g., Li et al., 2023; Shen et al., 2021; Thirumalai & Devaraj, 2024). Consequently, we dropped these articles from our set. We also removed articles for which utilities were mere context (e.g., Amaya & Holweg, 2024; Bhardwaj & Ketokivi, 2021). Some articles focus on pricing schemes, such as for charging in the context of electric vehicle adoption (Valogianni et al., 2020), subsidy policy design for electric vehicle adoption (Zhang & Dou, 2022), or consumer policy impact on solar panel production costs (Gerarden, 2023). Again, such articles were also not included in our final set. Eventually, this process resulted in the identification of 20 articles: 5 in Production and Operations Management, 5 in Manufacturing & Service Operations Management, 7 in Management Science, and 3 in JOM.

Of these 20 articles that remained, the vast majority pertain to the planning phase of the overall public utility asset life cycle in the energy, mobility and drinking water sectors. These studies primarily use various types of modeling approaches. Using a dynamic programming approach, Wu et al. (2023) compare centralized versus distributed energy storage, Wu et al. (2022) study smart charging business models. Kaps et al. (2023) find optimal capacity levels for renewable generation and storage, while Fischetti and Fischetti (2023) study the combined optimization of turbine location and connection cables for offshore wind parks. Wang and He (2023) analyze capacity of park-and-ride lots and Liu et al. (2022) plan bike lane infrastructure. Yu et al. (2022) use game-theory for EV charging stations and Qi et al. (2023) look at battery swapping services for EVs. In the water sector, Zhai et al. (2023) study location decisions for drinking water projects. Sošić (2023) analyze the possibilities for desalination plants to coproduce salt and fresh water, while Mun et al. (2021) assess the development of hydro systems that can deal with interconnected issues pertaining to water, energy, food, and flooding in developing countries.

A small number of studies specifically address the operations and maintenance stages of the asset life cycle. Zhang et al. (2024) draw on a single case study for the transition from projects to regular operations at Beijing Dax International Airport. Drawing on field experiments, Uppari et al. (2024) study consumer behavior and operational inefficiencies under an off-grid lighting model. Other studies address research questions more unique to utilities, specifically the energy sector. Agrawal and Yücel (2022) study electricity demand-response programs, particularly the role of baselines and baseline adjustment and corresponding rebates. Qi et al. (2022) use linear programming to determine how shared autonomous EVs could help reinforce solar-powered urban microgrids. Feng and Menezes (2022) examine a combined wind-grid hydrogen system to power manufacturing processes. Bensoussan et al. (2022) develop a real-options model in the context of renewable energy while Sunar and Swaminathan (2021) conduct numerical analysis to the impact of net-metered distributable renewable energy policies.

Finally, only two very recent articles, both in JOM, address multiple stages of the asset life cycle. Fang et al. (2024) combine longitudinal case analyses and system dynamics modeling to investigate the contracting by public Dutch Water Authorities of the design, construction, operations, and maintenance of wastewater treatment plants by private contractors. In the area of satellite-based navigation in Europe, Rouyre et al. (2024) conduct a single longitudinal case study on how governance can help manage competition in the public–private collaborative delivery of the system.

These studies provide us with three main insights. First is the ample opportunity for studies focusing on the acquisition of utility assets and their disposal, as well as their operations and maintenance. The field would benefit from adopting a system's perspective, so as to allow for the integral and careful study of interconnected asset life-cycle stages. Second is the opportunity for more qualitative research and, more generally, the adoption of a wider range of research methodologies. Systems-oriented research questions are well suited for studies using longitudinal perspectives, whether in the form of case studies or other types of longitudinal research designs. Third, the sectors and utility assets previously studied can be further diversified. That is, while emphasis on the energy sector is understandable in light of the major transition society is facing there, considerable potential remains to address OSCM questions pertaining to more traditional critical infrastructural networks and associated assets, such as bridges, sluices, airports, and pipelines.

OSCM has from its origins adopted a systems perspective. Such a perspective is sorely missing in asset management for public utilities, particularly given that infrastructure assets tend to have such long life cycles. In theory, therefore, an OSCM perspective could offer substantial opportunity for integrated insights across all across the asset life cycle of public utilities (Browning & Honour, 2008): planning, acquisition, operations, maintenance, and disposal. How can we make such a systemic life cycle approach work for assets? Potentially, technology can perform an enabling role. From internet of things (IOT)- enabled sensors and big data analytics to virtual (VR) and augmented reality (AR) and drones, information technology provides many new techniques to manage technical assets as a system (Akkermans et al., 2024). Digitalization facilitates integration, which improves sustainability by, for instance, making maintenance activities more targeted. It also poses significant challenges on how to access and meaningfully use data, especially across utilities (Aben et al., 2021; Rijksoverheid, 2020). Digitalization and integration are areas where the field of OSCM has developed useful insights and where it can add value to purely technical asset management (Angelopoulos et al., 2023). The objectives of this special issue therefore are to stimulate OSCM research on utilities, and the infrastructures they use to provide services, which contributes to operational excellence in this domain and advances OSCM theory by applying an OSCM focus to it.

In total, we received 15 submissions following our special issue call. The first authors for each of these submissions were employed at universities in Europe (8 submissions), Asia (6 submissions), and North America (1 submission). Given the wide societal relevance of infrastructure asset management, we had expected more submissions, especially from North America. This modest number of submissions suggests that for scholars in the OSCM domain, infrastructure asset management and operational excellence for utilities are not yet major topics of investigation. This is also underscored by the significant share of submissions coming from engineering schools. Of the 15 original submissions, 2 were ultimately accepted for publication. The main reasons for rejection of the others were a lack of fit with the special issue, a lack of rigorous and transparent empirical research, and an insufficient level of detail in the empirical study to support the theoretical claims made. Lack of fit occurred when articles were merely using infrastructure asset management as a backdrop and did not substantially leverage this context.

The first article accepted for this special issue, by Roehrich, Taubeneder, Tyler, Squire, and Gnyawali (2024), deals with multiparty alliance formation in a large utility asset construction project. Asset management for utilities often involves many different actors, and managing the tension between collaboration and competition is a typical major challenge. This article is based on a case study of the design, construction, and commissioning of a new nuclear power station in the United Kingdom and investigates the relationships between the operator and five of its suppliers. The study relies on extensive, longitudinal real-time data collection, in which the lead researcher was embedded in an operator organization over a multiyear period. The main contributions of the study are its temporal perspective on the unique dynamics and challenges during the transition from dyadic contracts to a multiparty alliance contract and its focus on measures to maintain the balance between competition and cooperation in the supplier alliance.

The second article, by Huo, Jiang, He, and Liu (2024), investigates the extent to which obstacles related to public utility assets—specifically, power outages and transportation obstacles—affect labor productivity growth across a range of sectors and the extent to which national culture moderates these effects. Using data from the World Bank encompassing 17,227 firm-year observations covering 28 industries in 41 economies from 2003 to 2020, Huo and colleagues find that power outages and transportation obstacles are both negatively associated with labor productivity growth. The detrimental impact of power outages on labor productivity growth is more pronounced in countries characterized by high power distance and uncertainty avoidance and less pronounced in countries with high levels of long-term orientation. High power distance and uncertainty avoidance may lead to rigidity and less innovation, hampering an adequate response to power outages, in contrast with long-term orientation that may facilitate such preparedness and resilience.

Between them, these two studies are illustrative of the potential of utility asset management topics—from the “micro” topic of within-project governance to the “macro” topic of infrastructure disruptions.

As argued, the study of operational excellence for utilities would benefit from a systems perspective that accounts for the overall life cycle of the assets and therefore will include aspects pertaining to planning, acquisition, construction, operations, maintenance, and disposal. In this section, we provide various examples of what we consider relevant opportunities for research on operational excellence for utilities. We emphasize that these are examples only, not a limiting set of questions. Moving all along the asset life cycle, we begin with research opportunities in acquisition and construction, then move to operations and maintenance, and conclude with the EOL and circularity phases.

The purpose of this special issue is to help researchers to study asset management for public utilities from an OSCM perspective. What are the key steps to be followed, and what are the main questions to be answered? We conclude this editorial by formulating answers to what the English novelist and poet Rudyard Kipling called his “six serving men” who taught him all he knew: “What and Why and When and How and Where and Who” (Kipling, 1902). Regarding the why, this should be clear—public utilities and infrastructure assets are crucial for society, and they face growing serious problems, which OSCM research could and should address. Regarding the who, we, as special issue editors, uncovered two distinct communities that need to be addressed. The first is OSCM researchers who read and write for JOM, but not on public utilities/infrastructure topics. The second is researchers, often from an engineering background, who study utilities and infrastructure, but not so much from an OSCM perspective and thus do not build on or target journals such as JOM. For the first group, the problems are not the what and the how, but the where and the when. For the second group, it is precisely the other way around.

The group of aspiring OSCM public utilities researchers knows what the research challenges are and can add value to those. As Bendoly and Oliva (2024) point out, OM concerns “the management of any process which transforms some input into a useful output” (Krajewski, 1980, p. v, as in Bendoly & Oliva, 2024). All along the asset life cycle there are such management issues. OSCM researchers also know how to conduct empirical research that meets the standards of the JOM community. As our evaluation of both the existing OSCM literature and the submissions received for this special issue reveals, the where that is being recognized is still quite narrow. We already noted that the where has many more empirical settings that are important to study than what people have been focusing on to date. We speculate that this may have to do with the when, which is quite different from most OSCM settings. Because of the long lifetimes involved, OSCM transformational processes in utilities may appear slow or nonexistent. The “takt time” of factories, of restaurants, of hospitals is usually in minutes, hours, days. The takt time of utilities is sometimes months, more often years, quite often decades. However, although the time constants may be very different, all settings exhibit process dynamics.

The group of public utilities researchers aspiring to contribute to the OSCM community possesses opposite characteristics. They are used to life cycles of decades (when), and they know the wide variety of infrastructure settings where an OSCM perspective would add value. What they do not know, however, is what such an OSCM perspective entails and what empirical work has already been conducted in other industries and published in OSCM journals, such as JOM. We hope that the research challenges we propose herein will help this group in that respect. Getting accustomed to the how—that is, to the research methodologies JOM finds valid—may be more complex. For JOM, empirical operations-focused studies in utilities need to move beyond prescriptive reviews of the technical possibilities. JOM's focus on theoretical contributions suggests building such prescriptive guidelines on a sound descriptive understanding of transformation challenges and benefits, firmly grounded in the literature. As we have argued throughout this editorial, opportunities for such work exist all along the asset life cycle. In good OSCM tradition, this will require that all Kipling's six honest serving men work together seamlessly.