Lead Session Chair:
Stephan Barth, Managing Director, ForWind - Center for Wind Energy Research, Germany
(1) HB Rentals, Houston, United States (2) HB Rentals, Aberdeen, United Kingdom
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Presenter's biographyBiographies are supplied directly by presenters at OFFSHORE 2015 and are published here unedited
Peter S. Armstrong is Vice President of Global Business Development for HB Rentals, a leading supplier of onsite accommodation and operating essential systems. Mr. Armstrong joined HB in 2013 and is responsible for new market development and global marketing. Mr. Armstrong joined HB Rentals, a Superior Energy Company, from Technip, a global EPC company where he served as Director of Business Development with a focus on CSP Solar and SCR emission reduction technologies. He has over 25 years’ experience in driving product innovation in energy and telecommunications, with a BSBA degree from Rockhurst University and an MBA from Washington University.
Supply chain management (scm)
maximizing cost competitiveness through trusted partnerships
Given the economic challenges that made global headlines in implementing the Renewable Energies Act in the North Sea, now is an opportune time to assess lessons learned and apply new thinking to a traditional supply chain and procurement model. Case in point, temporary onsite accommodation in performing construction or maintenance of wind turbines is frequently the last procurement decision to be made. Not surprisingly, it can have disproportionate impact on project profitability if suppliers can’t deliver or incur inordinate expense to move inventory with an expedited schedule. Simply put, it is a costly, risky and an inefficient procurement model.
The typical procurement model of competitive bidding, still the most common approach to contracting, is not the most efficient, cost effective or lowest risk approach to the procurement of services or equipment. The competitive bidding model is transactional in nature and based on selecting the lowest cost or highest scored bid among pre-approved suppliers. While this process prequalifies suppliers before approving them to bid, it has limitations as competitive bidding by default requires both buyer and seller to withhold information that might otherwise be of value in achieving breakthrough innovation.
Main body of abstract
There is greater value to be gained in trusted partnerships than arms-length contracts
Contractual relationships are just that; a one off relationship for the duration of a contract. They are a zero sum game. At contract signing, the supplier shifts focus to maintaining projected margins while delivering on their obligation. They are not incentivized to innovate or expend extra effort. This type of buyer / seller relationship is simply transactional in nature.
In the supply of temporary onsite accommodation and operating essentials (water, sewage, power, communications, lighting), there are a number of factors that can lead to innovation or increased cost effectiveness if the buyer / seller had more opportunity to advance plan. First and foremost is schedule planning, especially for installation on vessels or barges which might be in port for a limited window. This effort requires significant coordination. Second is the process of mobilizing rental equipment to ensure it is shipped to port and ready to install – exactly when you need it. Transportation cost in shipping modules to site, perhaps from multiple service locations, can be mitigated with sufficient advance planning A third cost is simply the inefficiency (otherwise described as waste) inherent in a rushed schedule. Eliminating waste (extra man hours, rushed deliveries, expediting sub-suppliers) is worth the effort if the goal is to deliver the highest quality product at the lowest total cost. Fourth is not to underestimate the importance of regulatory approval and permitting. Without the correct certifications, approvals and permits, projects do not ship.
Why a trusted supplier / partner relationship makes sense
The traditional model of transactional contracting will not lead to breakthrough innovation when we are reliant on suppliers to achieve project objectives. There is significant efficiency to be gained and savings to be achieved, through advance planning with a trusted supply chain partner. The common expression is we are only as strong as our weakest link and our links extend through our supply chain. If meeting schedule, quality, safety and cost competitiveness is critical, and if being innovative is strategically important, then your priority should be innovation through trusted suppliers.
Learn more about how building trusted relationships with critical suppliers such as temporary offshore accommodation suppliers in the German North Sea wind market can help achieve schedule, reduce cost and mitigate waste (time and money) in the execution of a wind construction or maintenance project. Leverage this knowledge to challenge your supply chain partners to risk share with your organization by investing in innovative technologies and processes to further your competitive edge and organizational goals.