Customized dashboards deliver operational efficiencies
When oil and gas prices began falling in 2014, energy companies looked first to lower their freight costs and generate additional working capital by stretching out payment terms. Only after that, did most start to focus on operational efficiencies.
That’s where technology is making a difference. Agility is working with customers to create customized dashboards that allow them to manage vendors, carriers and other suppliers more efficiently, measure performance, identify worrisome trends, and respond to problems.
For one energy major, Agility has created a dashboard with more than 40 critical milestones in the supply chain, says Franziska Inman, SVP of Global Business Development for Agility Project Logistics. “We’re able to tell them, hey, the supplier you buy this part from in the UK is late delivering nine times out of 10, you might want to talk to them about their KPIs,” she says. “If you can get to a point where you’re helping them improve their suppliers’ performance, that’s very powerful.”
By tracking and comparing estimated and actual arrival dates, companies can evaluate carrier performance and gain leverage in negotiations with their carriers. By configuring the dashboard to track unique serial numbers and RFID identifiers, they can follow individual parts from manufacturer to port of departure, port of destination, then to installation.
“It’s better to focus on a strategy rather than tactics. There’s only so much you can cut by pressuring your carrier or freight forwarder for cost cuts,” Inman says. “You don’t want a forwarder shifting your cargo to lowcost carriers with older vessels, older trucks, an inferior maintenance plan. You run the risk of accidents, cargo left behind, not finding suitable conveyance to get goods out on time.”
Agility is able to model different scenarios that allow energy companies to compare costs and performance of different project options. That means looking at every single leg of transport and at variables in transport modes, vessel types, routes, sequences, and load sizes.
The fabricator closest to a new refinery site in Alberta, Canada might be in Mexico, but overall shipping costs might be lower for modules ordered from South Korean fabricators because the bulk of the trip is by ocean carrier rather than over roads. Shipping costs could change if the size of individual modules can be reduced.
Similarly, customers save by working with providers who have engineering, transport and marine expertise, particularly in chartering ocean freight, who take care to guard against unfavorable terms from carriers and bring an expert eye to lashing and securing plans and safety.
An international oil major working in southern Iraq asked Agility to scrutinize its supply chain and look for savings. Agility looked at the company’s purchase orders from all over the world. It found separate airfreight shipments from 25 different vendors.
Agility worked with the customer to establish a consolidation schedule and hub in the Netherlands, dramatically reducing the number of shipments bound for the Middle East.
One of the world’s largest oil and gas services companies recently purchased a competitor. One of the companies managed its supply chain in a centralized fashion; the other was decentralized with freight moves made by local decision makers.
Both were Agility customers, so Agility began examining their freight streams, then approached the customer to suggest savings through combined streams where possible.