Project Supply Chain

ABOUT PROJECT SUPPLY CHAIN

Introduction

Subcontracting has increased in today's project business due to the trend of companies specialising and focusing on their core competencies. Supply chains become thus longer and longer. In order to manage the chain and achieve the chain's major objective, the final customer's satisfaction, it is essential to understand the concept of project supply chain as a whole.

Definition of "project supply chain"

Project supply chain is the global network used to deliver a project from raw materials to the final project customer through an engineered flow of information and physical distribution.

Points to be highlighted in this definition are the global network and flow of information. Stressing the importance of the global network is necessary because most often the other companies in the project supply chain are not located locally but on another continent. Most companies in the oil and gas industry work in global markets and also have global networks of suppliers involved in the projects. Also, pointing out that the supply chain is not only for the distribution of the physical products, but also for the distribution of all the related information, is necessary.

Most of the problems in project supply chains are caused by communication problems. The interfaces of successive phases in the supply chains have not been clearly defined, which has lead to disruptions, cost over-runs and dissatisfied end customers.

These are not the only symptoms that results from the problems in the project supply chain, but it gives a hint of the underlying troubles.

Based on LOGIC's engagement with a number of companies working on different projects, a summary of the typical problems in the design to build project supply chains is illustrated in the figure below. Problems are divided along the project delivery process line to emphasis that they exist at the interfaces between different units, and what is more important, at every interface.

The conventional approach in the offshore industry has been to use project management. The management of time, cost and quality drives this function.

However, consideration of these factors alone is not considered adequate to ensure the satisfactory performance. The design and build of offshore facilities poses difficult management problems to which the models and techniques based on the traditional project management view have proven inadequate. Trade-offs between competing design criteria must be made through the design process, often with incomplete information and under intense budget and schedule pressure. The use of project management alone has not proven capable of solving these difficult problems as illustrated by the number of offshore projects delivered late.

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The traditional way of thinking about and managing offshore projects was formed in the 'good old days' when each phase was performed sequentially. The designer produced the design, including equipment and material specifications. Equipment and materials were purchased and delivered to the fabrication site. The fabrication contractor assembled the equipment and materials into the desired facility in accordance with the drawings and specifications from the designer. This non-overlapping sequence encouraged the misconception that each phase could be considered separately, without regards to interdependencies and trade-offs. The shift to concurrent design, procurement and construction strains the assumptions of independence, especially because of the obvious need to integrate the processes of each phase within a single unified supply chain.

The model for understanding the interdependency of these processes is what LOGIC calls "project supply chain". At its essence, an integrated project supply chain ensures that the right information and materials are, sent to the right parties at the right time. Projects participants share one guiding objective, to finish the work on time and on budget. Whether they build complex topside or subsea facilities, customers and project teams demand predictability and accountability first and foremost. How you manage the project supply chain can make or break a project.

By focusing on your project supply chains, you can minimise your organisation's total cost while growing business profitability and customer satisfaction. Enhancing supply chain performance through speed, focus and customer intensity will enable your company to realise your vision and business strategies ahead of your competition.

LOGIC knows how to help you link your "project supply chain" internally and with your customers and suppliers. We have the experience and knowledge of the strategies, processes, technology and organisational issues that you need to address in order to use your project supply chain to gain strategic advantage.

The only relevant question in a project supply chain is how the participants in the supply chain can unite to create greater value for the end consumer and do it at lower total costs."

To find out how LOGIC can help your project then visit the links at the top of this page or contact us at projects@logic-oil.com.

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