Everyone on the supply side of the offshore container business are facing the incredible price pressure from clients these days. We are fighting for cents per day while we hear stories that the same equipment had to be airfreighted to site to meet a deadline due to miscalculation in logistic planning. How can we as suppliers take a more active role in our clients cost reduction programs?
My first job after graduation was with the Norwegian Trade Council in Stockholm. One of our major projects was to develop industrial relationships between Norwegian suppliers and Swedish industrial super majors like ABB, Volvo, Ericsson and Scania. Swedish industry had been defending their market position against Asian competitors for more than 20 years at that time. Prices were falling and their market environment was not so different from what we experience in the oil industry in the current downturn.
The supply chain directors I met in Swedish industry had an analytical approach to total cost reductions, and I believe we can apply the same models in the offshore service industry. To move more risk to suppliers is not how the total value chain becomes more efficient or competitive. We have to analyse the business relationship along two axes.
X-axis: How critical is the supplier to our operation or Production?
Y-axis: How high is the relative total spending on the supplier?
I believe partnerships with a closer integration of operations and operation planning is key to major cost reductions. By doing joint product development, planning and optimisation, we can reduce cost and improve efficiency through the whole logistic chain and it will benefit all parties rather than a zero sum game where two parties are not increasing total value, but only fighting for a share of limited value.
Modex uses various types of tracking solutions and advanced database fleet management systems which we integrate with our clients planning and management systems. Automated solutions increase control and reduce risk of human errors. We achieve substantial savings on both sides of the table as equipment arrives in time to get the job done. Operations have full control on location of parts during transport and any disruption can be handled immediately.
Contact us if you want to know more about how we can improve your offshore supply operations.
Per Ingar Amlie – Regional Director, Asia Pacific