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© LOGIC 2002Page 1
The Impact of e-Commerce on Supply Chain
Management in EPC
Gouri Kulkarni, Sanjeev Singh, Sanjay Kumar, Shiva Bhaskar and
Dr. Binay Anand
MGT 6352 – Dr. June Lu
© LOGIC 2002Page 2
AgendaAgenda
• IntroductionIntroduction
• The ChallengeThe Challenge
• Industry engagementIndustry engagement
• SolutionSolution
• epc-business.comepc-business.com
© LOGIC 2002Page 3
•EPC – Engineering Procurement & Construction.
•Technip – A company working on onshore & offshore EPC.
Introduction
© LOGIC 2002Page 4
• A supply chain is a network of activities through which services, products, money, information etc are moved all the way across a single process.
• A single process is anything that starts with the identification of a need for the product or service, followed by planning, procurement and fabrication if required, installation or provision, operation or consumption and eventually decommissioning.
• Supply Chain Management (SCM) is the effective management of information, relationships, products and services flowing across the breadth of your supply chain.
• It is about asking yourself, your customers and suppliers:
How can we cut waste? Where can we add value?
What is a Supply Chain ?
© LOGIC 2002Page 5
Supply Chain Objectives
To increase the awareness level of the industry with regards to Supply Chain Management and its strategic role in continuous business improvement
To provide a link between best business practice theory and real, pragmatic tools
To allow individual players to realise their potential to increase their profitability via reduction in waste, NOT supplier prices
To offer a duplicatable blueprint for continuous business improvement
© LOGIC 2002Page 6
The value of Supply Chain Management
Effective Supply Chain Management delivers :-
• Improved customer/supplier relationships
• Alignment of objectives along the supply chain
• Reduction of waste
• Identification of value added activities
• Response to market changes and strategic repositioning A
B
C
D
E
G F
HL O I
K
J
M
0
2
4
6
8
10
12
14
16
A B C D E F G H I J K L M N O P Q R S T U V
Goods/services
Sp
end
0
10
20
30
40
50
60
No
su
pp
liers
© LOGIC 2002Page 7
Core Competencies in Supply Chain Management:
• Professional procurement staff• Proactive procurement approach
• Team approach
• Use of frame and cooperative agreements
• Total Cost of Ownership analysis
© LOGIC 2002Page 9
Head OfficeHead Office
The project is overrunning and behind schedule – the client is complaining. You guys are not in control, and you
haven’t issued a single change order.
CustomerCustomer
I want a cost report in our own work breakdown structure – one for our
partners by AFEs, and one for our accountants by
taxation category.
What is the cash-flow requirement for next month?
© LOGIC 2002Page 10
SupplierSupplier
It has been sixty days since we invoiced you. Has our invoice been processed?
Can you tell me when we will receive payment?
© LOGIC 2002Page 11
ConstructionConstruction
Sorry, we can’t tell you when we’ll complete fabrication
since you can’t tell us when you’re sending drawings and
material!
What’s the status of pressure control valve PVC-101?… We
are going to start the compressed air system in
five days!
How come nobody noticed this was missing? And still no
one knows where it is?
© LOGIC 2002Page 12
EngineeringEngineering
Do you mind emailing the 2000 piping items bill of
material with quantity and description so we don’t have
to retype them?
Have you done the technical
evaluation yet?
Is Revision 1 of PO #700 issued? I need to add
something…
© LOGIC 2002Page 13
PlanningPlanning
Do you know what was received, issued, expedited, and completed yesterday on
this project?
Item 1 of PO #Q-1001 was only partially received. How are you
going to deal with it on your schedule?
Why don’t you keep your schedule up to
date?
© LOGIC 2002Page 14
Project ManagerProject Manager
How come nobody told me PCV #101 is missing? I want to
know the status of every nut and bolt on this site!
I want to know the planned and issue date of every RFQ and PO!
I want to know the delivery forecast of every
PO Item!
I want to know EVERYTHING!RIGHT NOW!
© LOGIC 2002Page 15
What would make a project a success?What would make a project a success?
1. A smooth and continuous flow of products and services
2. Managed end-to-end3. A good contract4. Active Executive Sponsor / Project Sponsor5. Quality and value added at every step6. Good relationships and communication7. Improving performance8. Delivered within budget9. Delivered on time10.Satisfied customers11.Pro-active suppliers12.Shared risk and reward13.…………………………………..
In CONTROL
© LOGIC 2002Page 16
Aligned
Supply Chain
Head OfficeCustomer
Expediting
Inspection
Subcontractors/
Suppliers
Fabrication Shops
Const. Site(s)
Engineering
Procurement
Project Management
Accounting
Estimating
Planning / Scheduling
Cost Control
© LOGIC 2002Page 17
Functional organisation
Guessed or assumed
Secrecy and / or adversarial based
Individual task by function
Activity based (CPA)
Test, analyse & fix
TodayEmpowered
process owner
Rigorously deployed
Collaborative relationships
Cross functionalteam tasks
Goal driven (consensus)
Simulation & design of experiments
Tomorrow
Managementframe work
Customer requirements
Customer/ supplier relationships
Resource management
Planning
Development
Projects need help to make a Projects need help to make a MindsetMindset shift… shift…
© LOGIC 2002Page 19
• 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.
© LOGIC 2002Page 22
A collaborative approach to A collaborative approach to unfreeze unfreeze the traditional mindsetthe traditional mindset
Value Proposition
Simulation
Whole LifeCycle Costing Cultural
Profiling
Team Based Working
Customer Supplier Relationship Improvement
Project Management
Root Cause AnalysisPerformance Management
KnowledgeManagement
Standard Contracts
Supply ChainMapping
Relationship Management
© LOGIC 2002Page 23
Our goal is to unfreeze mindsets, develop Our goal is to unfreeze mindsets, develop teams, educate the team members and teams, educate the team members and identify improvement opportunitiesidentify improvement opportunities
• We want to overcome the We want to overcome the syndrome of “but we have syndrome of “but we have always done it that way!”always done it that way!”
• We must teach the effectiveness We must teach the effectiveness of ‘process’ versus functional of ‘process’ versus functional thinkingthinking
• How to reduce product lead timeHow to reduce product lead time• Involve suppliers to real benefitInvolve suppliers to real benefit• Use goal based project planning Use goal based project planning
to get resultsto get results
© LOGIC 2002Page 24
BenefitsBenefits
• Reduction in Lead Time Reduction in Lead Time • Whole Life Cycle Whole Life Cycle • QualityQuality• Right first timeRight first time• Cost Reduction Cost Reduction • TeamworkTeamwork
© LOGIC 2002Page 25
Procurement Improvement Processes
Project 1 Project 2 Project 3
Procurement Plans
Recommendations by Project Procurement Manager
Approval byProject Execution Team
ImprovedProcurement
Plans
© LOGIC 2002Page 27
How much
farth
er is
it?
Who’s got the map?
When can I drive?
I’m feeling sick, can you pull over?
ARE WE THERE YET?
The Business Intelligence “Road Trip”
© LOGIC 2002Page 28
Business Processes
Technical Architecture
How do we get there?
NetworkedNetworkedEnergyEnergy
EnterpriseEnterprise
Data Management
Applications
BusinessBusinessTodayToday
© LOGIC 2002Page 29
BusinessBusinessTodayToday
NetworkedNetworkedEnergyEnergy
EnterpriseEnterprise
Forces Affecting the Transformation
Mergers / Acquisitions
Standards / Interoperability
BI / Data Warehousing
Internet / ebusiness
Reduced IT Investments
Focus on Competencies
© LOGIC 2002Page 30
BusinessBusinessTodayToday
NetworkedNetworkedEnergyEnergy
EnterpriseEnterpriseL
ost
Da
taL
ost
Da
ta
Fo
un
d D
ata
Fo
un
d D
ata
Org
an
ize
dO
rga
niz
ed
Da
taD
ata
Bu
sin
es
sB
us
ine
ss
Inte
llig
en
ce
Inte
llig
en
ce
Kn
ow
led
ge
Kn
ow
led
ge
Ma
na
ge
men
tM
an
ag
em
ent
TimeTime
The Road to Change
Data ManagementData Management
© LOGIC 2002Page 31
OrganizationOrganization
PeoplePeople
Core ValuesCore Values
Business IntelligenceBusiness Intelligence
Knowledge ManagementKnowledge Management
TimeTime
The Road to Change
BusinessBusinessTodayToday
NetworkedNetworkedEnergyEnergy
EnterpriseEnterprise