supply chain innovation - quest events antonace.pdf · an integrated supply chain moving from a 3pl...
TRANSCRIPT
Supply Chain Integration Opportunity
Major project supply chain costs can exceed 50% of total project
cost
Logistics costs can exceed 10% of total project cost
Focus on these costs can result in substantial savings
An integrated supply chain moving from a 3PL to using a 4PL
model is one such approach deserving of serious consideration
Advanced planning of alternative solutions must be
performed at project startup to lock in savings
A Target Rich Environment- Defining the 4PL
Model
First Party Logistics
• – Get it yourself
Second Party Logistics
• – Your supplier is responsible for delivery
Third Party Logistics
• – Consolidation and Delivery Service
This model is familiar and embedded across
the transport and resources industries
4PL
3PL
2PL1PL
4th Party Logistics
With the introduction of 4PL we see
• Process focus
• Centralised and coordinated management
• Consolidated systems
• Enhanced service delivery
• Cost Management
4PL
3PL
2PL1PL
4PL
Current large projects incur over 8-10%
of project costs through logistics.
This is a target rich environment of multiple millions of dollars
Why a 4PL
Separation of project and operations flows as desired
Focus turns to Demand Planning
Consolidated spend and rationalisation
Track and Trace across systems
A single management team
The complexities and differing priorities of project
logistics can and will add costs to ongoing operations if
not managed properly
Examples of potential 4PL environments
Chemical Company (USA)
$5B in sales
Project Spend of $800MAustralian Mega Project
Logistics Costs in excess of $1B
Savings potential of $20M - $50MAustralian Operator
$10B in sales
Project spend of $5B
Creation of 2 separate logistics streams
Well managed SCM teams can add overall value and
productivity in the 5-10% of total project spend while
protecting Business As Usual operations
Typical 4PL Implementation Model
Start-upEarly
works
Logistics
Build
Joint
Accountability
Delivery – one
stop operations
centre
» Early
engagement with
client and chosen
EPC provider
» High level
planning and
timeline –
2 year look
ahead
» Early works
commences; civil
and fabrication:
• Materials
• Structural steel
fabrication
• Accommodation
pioneering
works
• Laydown yards
• Supply Base
Network
Chosen
» Systems design
and build
» One step
command centre
establishment
» Service
providers
contracted
» Supply Base
providers
selected
» Monthly and weekly
operations planning
and execution
services with client
and EPC
» Lessons learned /
opportunity discovery
» Integration of
logistics; Freight
Forwarders, Custom
Clearance, Marine
Operations and
Supply Base
» Quarantine
management
services defined and
planned
» Track and Trace
systems up and
running
» Execution team of
experts on boarded
and jointly
collocated with
client and EPC
planning teams
» Personnel
deployment centre
operational
Using innovative strategies to unlock value and efficiencies in
your supply chain
SCM costs across Major and Brownfields Projects can rise to
over 50% of total project spend
• Materials Direct 11%
• Consumables 3%
• Plant & Equipment 5%
• Sub-Contracts 20%
• Logistics 9%
• People & Systems 3%
51%
Planning & startup of alternative solutions to pocket
savings is a must
Key Considerations
Examine your end-to-end supply chain for value opportunities
• Optimise the links but manage the total supply chain
• Mindful of on time price decrease vs. total landed costs
Alternate procurement process for Direct, Indirect and
Consumables may be a source of productive savings
Plant & Equipment is generally a high risk / high reward target
Process & systems must be aligned for strong compliance and
use of new innovative alternatives
Think outside your square
Look across your projects for opportunities to rationalise and
consolidate and save.
Track your results
The Pathway Forward
Be thoughtful of project start-up – monitor the early phases
Don’t assume you have nothing to learn
• Look to your partners to add value
Outsource the pieces that do not fit your competencies and
experience
Establish regular review of your top 3-6 KPI
You can reduce costs with focus on cash flow, service, quality
and safety. All will reduce rework
Payback comes with understanding results and the
integration of Lessons Learned into standard process
Supply Chain Value at Clough
$50M SCM Cost Reduction
Procurement
Equipment
Consumables
Logistics
Standards
Systems
People
Project ATotal Cost $365M
Project B
Total Cost $135M
Project C
Total Cost $100M
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25
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6
5935
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6225
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12
Opportunities Efficient Process Results
Moving to Efficient Processes
Application of Lessons Learnt
Case Study – Project C CraneCrane sourced from Queensland was delivered non-operational
-3 weeks productive time lost
Clough Equipment Sourcing Tool located a number of WA vendors for the same crane
• Vendor A – 14 cranes within 200km
• Vendor B – 10 cranes within 90km
• Vendor C – 8 cranes within 1000km
Had Clough Equipment Sourcing Tool been in place at the time of incident we
would have been able to confirm the above availability by automated supplier
email response within hours of enquiry
Moving to Efficient Processes
Application of Lessons Learnt
Case Study – Project B ConsumablesConsumables spend of $1,000,000.00 per month
Supply chain introduced a vendor managed inventory bar code track and trace
system, reducing project spend by $700,000.00 per month
Strategy captured in the SCM Operating Standard and communicated
via SCM inductions and CMS
Moving to Efficient Processes
Application of Lessons Learnt
Case Study – Project A Logistics11 Logistics service providers engaged
- Spend diffused rather than concentrated
- Little to no leverage
Multiple suppliers and INCO terms usedStevedoring services Container Services Freight Forwarding Services Engineering Suppliers
Manufacturers (DAP) Fabricators Local Transport Services Long Haul Transport Services
MSA now in place to permit spend concentration and leverage
Moving to Efficient Processes
Application of Lessons Learnt
Case Study – Plant Hire Management
- Unmanaged hire equipment
As at 15 Dec 2014 - 60% of plant and equipment on hire
across all projects were past agreed hire date.
Cost impact is $40k – $50k per day
Vendor provided monitoring systems are now in use to
highlight potential savings and improve control
335
3810
2
140
31 Days+
<31 Days
Due within 7days
No Dehire Date
Current Hire
Current State Future State
Siloed sourcing and procurement on
projects
• Corporate sourcing perspective using
MSA vendors across commodity
groups
• Corporate spend visibility
• Aggregation of spend
• Corporate Supplier Relationship Mgt
No cross-project visibility
Ineffective consumables management • Outsourced consumables management
• Outsourced ad hoc minor procurement
Inconsistent asset and hired equipment
management
• Controlled and monitored hire
• Regular hire equipment reporting to
PM
Inconsistent method of purchasing within
Clough approved systems
• Training and application of CMS across
all projects through SPMat, Oracle, etc.
Focus On Effective Service Delivery
Corporate / Project Supply Chain Status
Project 1 Project 2 Project 3 Project 4
Procurement
Logistics
Sub-Contracts
AIP / Local Content
Materials Management
Indigenous Engagement