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Collaborative Logistics: Exploring new frontiers
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Copyrights © 2009 by IBS software services (P) Ltd
The concept provides a framework which can be leveraged by O&G operating companies and their service providers to work towards optimizing logistics operational costs and to implement innovative services.15-Feb-09 Collaborative Logistics Abstract This article aims to explore how the concept of Collaborative Logistics can be applied to the Oil & Gas (O&G) industry and attempts to discover the potential value that can thus be realized. Further information on this whitepaper please mail to email@example.com Page 2 of 2 Copyrights © 2009 by IBS software services (P) Ltd .
since logistics contributes to 15 to 25 % of total operational costs. Logistics Challenges faced by O & G companies Oil and gas companies are responsible for multiple operations. Safety in logistics operations and optimisation of costs are prime considerations in logistics. management of waste Discontinuous information management across the total supply chain Logistics operations are carried out as per safe operations guidelines The above factors have a direct impact on the costs and efficiency of O & G operations.How can O & G companies manage their critical yet wavering logistic demands in a more cost effective way? How can a framework be set to coordinate the effort/resources of the various stakeholders involved in their logistics. cost effective resource management. One would thus be justified in asking . to ensure smooth movement of people and materials? Page 3 of 3 Copyrights © 2009 by IBS software services (P) Ltd . equipments and materials in line project / work order schedules Multiplicity of stakeholders involved Requirement to comply with a host of environmental regulations. which normally involve considerable logistics and supply chain activities. providing information to expedite safe.15-Feb-09 Collaborative Logistics Introduction Collaborative Logistics supports the processes involved in the movement of people / material. across all the participants in the supply chain. Some of the major challenges faced are • • • • • • • • Movement of people and material to multiple remote locations ( 100 nautical miles or more offshore ) Adverse/harsh environmental/working conditions Tracking of materials and personnel Availability of contractor personnel. seamlessly.
publish. improved resource utilisation and enable smooth communication between participating entities. Page 4 of 4 Copyrights © 2009 by IBS software services (P) Ltd .1. suppliers and vendors. Collaboration also requires having a common communication framework between other O&G companies operating in the same area. An example of a collaborative logistics framework involves sharing and pooling of resources and services using an integrated common portal to manage logistics requests/work orders. Context of Collaborative logistics Collaborative Logistics is an innovative working model between logistics service providers. and generate reports to gain visibility into logistics operations. 2). alliances aimed at improving the process efficiency and reducing cost (Fig. consume and track services. 1). and extending it to involve suppliers / vendors / contractors (Fig. partnerships. O&G companies. This will optimise the high costs incurred due to logistics. by better management of supply and demand. This involves sharing of resources.15-Feb-09 Collaborative Logistics Solution: Collaborative Logistics Fluctuating Demand Increasing Operational Costs Sustaining operations Collaborative Logistics • Sharing Resources • Alliances • Community based solutions • • • • • • Attracts lesser investments Optimised utilisation Increasing ROI Benefit from synergies Sustainable in long run Benefits in mid to long term Fig.
15-Feb-09 Collaborative Logistics Collaborative logistics efforts can also benefit business operations indirectly by lowering inventory holdings. The operations in these areas can be made more efficient. improved environmental management and increased safety assurance. and stock-outs that impact customer service. safe and cost effective when the information that supports them is managed collaboratively / uniformly along the entire chain. collaboration already exists in areas identified below. Page 5 of 5 Copyrights © 2009 by IBS software services (P) Ltd . With rig rentals crossing 1 million USD per day the relevance of sharing rigs is undisputed. This approach is proving beneficial by improving efficiencies. Rig Sharing Collaborating companies participate to align their drilling programs and plan an overall common discontinuous drilling plan to allow sharing of rig services. Fig 2: Collaboration at Work Collaboration in practice In the O & G industry. Flight Sharing Sharing flights servicing offshore locations is proving to be a great strategy in reducing logistics costs. detentions and demurrages causing operational delays. Gulfshare. a consortium which jointly operates over 4000 offshore rigs in the Mexican gulf operates its flights optimally using collaborative logistics.
Lack or delay in the availability of information can result in huge losses due to delays in mobilisation of resources. Why Collaborate? Some of the factors that should drive enterprises to collaborative logistics are • • • • • • • • • Economical management of supply and demand gaps Increasing pressure on timely delivery to demand Responsible information communication on material safe handling Smoothing people transportation between transition points Clear location of equipment / personnel at points along the movement chain More efficient relationship management between supply chain stakeholders Increasing costs of transportation Governmental regulations on transportation Turning non-utilised cost into shared opportunity Page 6 of 6 Copyrights © 2009 by IBS software services (P) Ltd . Voyage Sharing The principles which are applied to flight sharing can be extended to sharing other transportation means to further reduce operating costs. Collaboration with vessel service providers and other O&G companies ensures optimal utilisation during times of surplus capacity and mobilization of extra deck space during periods of high demand. the participating entities can utilize logistics services optimally. This common communication channel can also be leveraged to provide unique services which are a product of synergies established between participating companies in this collaborative environment. Warehouse Sharing Collaboration can be extended to sharing warehouse resources to make efficient utilisation of contracted space. Common Communication Channel Logistics requires the coordination between various stakeholders such as end user departments (consumer). service providers. material suppliers which involves the exchange of essential information between the participating stakeholders. International People Tracking Tracking the movement of people arriving in country to work at work locations can ensure smooth movement of people and improve operational efficiency. tracking of work orders etc which do not adequately meet demand.15-Feb-09 Collaborative Logistics High Cost Rental Tracking Equipment with high rental costs can be tracked effectively so that it can be used efficiently during work schedules. Using effective integrated communications.
The parties discuss and agree on the proposed plan and work on the agreements and contracts that need to be in place to support the initiative. iLogistics: Collaboration ready logistics solution Collaborative logistics models can be achieved by advanced integrated enterprise systems that allow companies to expand collaborative logistic networks within the stake-holders on a large scale. Page 7 of 7 Copyrights © 2009 by IBS software services (P) Ltd . to react to the marketplace demands. Agree and Implement Analyze This phase involves the analysis of the operating logistics environment to identify potential areas of collaboration. Implement The implementation of a collaborative framework involves analysis of potential systems and solutions that need to be in place to support the agreed processes. The potential collaborative areas are analysed in detail on the following Processes and existing agreements in operation between the parties involved Analysis on the expected savings in costs Potential new services that can benefit participants Quantitative analysis on the benefits (savings) that might be achieved Agree The next step is to invite all parties identified in the analysis phase and communicating the possible synergy and associated benefits that could be derived out of collaborating in the identified areas. Analysis proves that this model will be adopted by more companies over time because of the increasing costs of transportation and the evolution of the supply chain from the conventional system. The processes that will support the agreement is defined and agreed. Before embarking on the implementation of the collaborative framework the existence of the following are to be verified • • • • Agreement / Memorandum of Understanding (MoU) between participating entities outlined in the collaborative framework Contracts to support the agreements Systems to support the collaborative framework Project implementation team who will carry out the implementation of the proposed collaborative framework The above phases are to be carried out iteratively on new areas to move the enterprise to operate in a truly collaborative environment.15-Feb-09 Collaborative Logistics Achieving Collaboration in business processes The path towards collaborative logistics involves three basic steps – Analyze. The potential areas are identified and justified by evaluating the benefits that are expected.
IBS has not only kept up-to-date with changes in business processes. This product is currently being successfully used by a number of O & G majors at diverse locations around the world Constraints to Logistics Collaboration Logistics collaboration promises significant benefits in increased operational efficiency and saved costs. logistics is a mission-critical function. but also shown the way forward by providing customers innovative solutions that redefine business processes. iLogistics completely supports a collaborative environment which enables companies to share their logistics resources. production and construction projects in onshore. inefficient logistics support. to achieve logistics collaboration. IBS has over 4500 person years of experience in developing new-generation business solutions for Travel. lagging logistics capabilities hamstring operational execution. cutting edge technology without investigating the leverage that can be achieved by collaborative logistics. deep water and shelf locations.com). catering to exploration. drilling. for the upstream oil and gas industry.. personnel on board (POB) tracking & management.15-Feb-09 Collaborative Logistics Among the very few companies that currently offer software products that support the concept of collaborative logistics in the O & G industry is IBS Software Services Group (IBS). However. Unfortunately. end-to-end multi-modal Logistics Management System. It supports logistics planning and operations for the movement of people and material. companies are investing in more resources. Managing depreciating assets might provide a temporary respite. Investments in resources are a huge drain on the logistics budget. Leveraging on its domain competence in Oil and Gas Logistics. for many companies.( visit www. but this is not sustainable in the long run. Page 8 of 8 Copyrights © 2009 by IBS software services (P) Ltd . an integrated. O&G companies and material suppliers. using a communication channel between logistics service providers. This can result in huge savings and formation of new synergies which will enable the existing Oil and Gas customers to get a better deal from the totally integrated services of a collaborating logistics community. Exploration and Production (E&P) operations cannot be effective without disconnected. companies have to address the following constraints • • • • • Unwillingness to share critical information relating to operations Challenges of multiple disparate systems already in use Agreement on standardization of processes Conflicts of interests Agreement on risk sharing Summary For O&G operations today. IBS has developed iLogistics. Transportation and Logistics industries. Collaborative Logistics is a shift in the fundamental way that the O & G industry traditionally operates.ibsplc. To tide over these bottlenecks. Having worked closely with industry experts.
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