Offshore firms ready for supply chain Logic_2
19 July 2012
Supply chain relations within Britain’s offshore oil and gas industry are set for a major shake-up, in the wake of a new Department of Trade and Industry (DTI) initiative.
Supply chain relations within Britain’s offshore oil and gas industry are set for a major shake-up, in the wake of a new Department of Trade and Industry (DTI) initiative.
The DTI, in conjunction with the five main offshore trade organisations, will set up the Leading Oil and Gas Industry Competitiveness group (Logic). Companies represented by the associations include platform builders, marine drilling outfits, pipeline developers and all associated second-tier suppliers. The decision was made following a recommendation by the Oil and Gas Industry Task Force. “There are other industries where supply chain management is further advanced,” according to Jonathan Elliott-Jones, interim head of Logic. “Part of this industry’s supply chain culture is still in the command and control mould.” Logic, financed by the associations and the DTI, will facilitate relationships, using procurement consultants, conferences and training in an attempt to improve efficiency. Elliott-Jones, on secondment from the DTI’s infrastructure and energy projects team, is under no illusions about the difficulties in bringing together oil and gas producers, major offshore infrastructure contractors and the hundreds of suppliers that fall into the category of small to medium-sized enterprises (SMEs). In all, this will be upwards of 4,500 companies. SMEs, which are mostly second-tier suppliers, could feel that supply chain improvements will reduce their profits because of increased collaboration between producers and major contractors, mostly first-tier suppliers. “Logic is part of a wake-up call for the industry,” said one association insider. “But it’s going to be a tough job,” he told SM. SMEs need assurance that Logic programmes will increase profits of all companies. “I’m very aware of that,” Elliott-Jones said. “I’ll be working closely with trade associations to help SMEs in particular.” Including SMEs is crucial to Logic’s success, said Graham Broome, chief executive of the Society of Motor Manufacturers and Traders’ Industry Forum . In the past 20 years, the automotive industry has revamped its supply chain, focusing on SME inclusion. Tony Read, head of International Marine Contractors Association, said that greater efficiencies could lead to smaller margins, but this in turn could be compensated by increased supply contract business. “The offshore industry doesn’t really understand its supply chain,” said James May, director-general of United Kingdom Offshore Operators Association. “Crine, the oil industry’s cost-saving initiative, was seen by SMEs as a cost-reduction exercise and it suffered.” “Suppliers have been pursuing various separate agendas. It needs somebody to see the bigger picture,” a spokesperson for the Offshore Contractors Association said. A chief executive for Logic should be in place by early 2000.
The DTI, in conjunction with the five main offshore trade organisations, will set up the Leading Oil and Gas Industry Competitiveness group (Logic). Companies represented by the associations include platform builders, marine drilling outfits, pipeline developers and all associated second-tier suppliers. The decision was made following a recommendation by the Oil and Gas Industry Task Force. “There are other industries where supply chain management is further advanced,” according to Jonathan Elliott-Jones, interim head of Logic. “Part of this industry’s supply chain culture is still in the command and control mould.” Logic, financed by the associations and the DTI, will facilitate relationships, using procurement consultants, conferences and training in an attempt to improve efficiency. Elliott-Jones, on secondment from the DTI’s infrastructure and energy projects team, is under no illusions about the difficulties in bringing together oil and gas producers, major offshore infrastructure contractors and the hundreds of suppliers that fall into the category of small to medium-sized enterprises (SMEs). In all, this will be upwards of 4,500 companies. SMEs, which are mostly second-tier suppliers, could feel that supply chain improvements will reduce their profits because of increased collaboration between producers and major contractors, mostly first-tier suppliers. “Logic is part of a wake-up call for the industry,” said one association insider. “But it’s going to be a tough job,” he told SM. SMEs need assurance that Logic programmes will increase profits of all companies. “I’m very aware of that,” Elliott-Jones said. “I’ll be working closely with trade associations to help SMEs in particular.” Including SMEs is crucial to Logic’s success, said Graham Broome, chief executive of the Society of Motor Manufacturers and Traders’ Industry Forum . In the past 20 years, the automotive industry has revamped its supply chain, focusing on SME inclusion. Tony Read, head of International Marine Contractors Association, said that greater efficiencies could lead to smaller margins, but this in turn could be compensated by increased supply contract business. “The offshore industry doesn’t really understand its supply chain,” said James May, director-general of United Kingdom Offshore Operators Association. “Crine, the oil industry’s cost-saving initiative, was seen by SMEs as a cost-reduction exercise and it suffered.” “Suppliers have been pursuing various separate agendas. It needs somebody to see the bigger picture,” a spokesperson for the Offshore Contractors Association said. A chief executive for Logic should be in place by early 2000.
