Logistics Strategy
Introduction
Logistics cover the movement of materials, equipment and people from one location to
another, including their handling and storage. These activities account for a significant
proportion of the Group fatal accidents and costs.
It is not uncommon for 20% to 40% of the operating cost of an OU to be involved
in logistics. For projects the total logistic costs are often unknown as the logistics process can be very fragmented, actioned by many different parties, with no one person
identified or specified as the ‘process owner’. It would be reasonable to expect that
the cost of logistics as a Capex element in a project is of similar significance as their costs
in the Opex element.
The importance of timely delivery of materials and equipment (fit for purpose) and its
potential influence on timely project completion is well recognised. Offshore materials
storage is also a major factor in hook-up productivity. Effective and efficient
transportation of people to/from- and on site can also have a significant influence.
Growing concerns about logistics, safety and performance has led to the development of
a Logistics Business Strategy (LBS) by SIEP-EPF. The LBS is supported by a Logistics
Business Model (LBM), performance indicators, benchmarks and a guide in logistics
management.
The need or applicability for a Project Logistics Plan will vary considerably dependent on
the nature, scope, and contracting strategy adopted in the project execution plan. For
example, a routine project using predominantly company procurement and logistic
resources should already be covered by existing company logistic plans.
A statement to this effect may be all that is required.
On the other hand, a major project in a new area will have a very extensive project
specific logistics strategy, involving a number of contractors logistics strategies in addition
to the company’s.
Most projects will fall between both these extremes. The starting point in considering the
requirement should be to review the extent to which the company’s logistics strategy is
applicable, and to focus on areas where it is either inappropriate, or inadequate.
Project Logistics Strategy
It is recommended that at the project execution plan development stage, a project
specific logistics strategy should be developed and included. Key elements which should
be considered in developing this strategy are:
- a site visit to see the location, the local conditions, infrastructure and its impact on logistics support for the project;
- identifying supply sources and their impact on logistics operations;
- understanding and identifying what has to be moved, how and when in terms of weight, volume and any special storage and materials handling requirements. Once the logistics requirements have been defined it is essential that various options are considered and challenged;
- taking full account of all the people logistics aspects (by land, sea, air or rail transport, for crew changes, visits to site and movement of families);
- developing a logistics hazard management model (SMS);
- taking logistics aspects into account at the design and engineering stage;
- planning and timing of more detailed project activities at a later stage and their impact on logistics. Challenge and ensure that the most effective and efficient ways and means are being utilised;
- developing contracting strategies for all logistics aspects with due consideration for leverage, TCoO, responsibilities and opportunities;
- recognition that contracts logistics operations, costs and safety performance must be benchmarked and monitored;
- assessing the logistics consequences of the disposal of surplus material, scrap, waste etc.;
- translation of all the above aspects into a logistics resources plan;
- recognising the need for a logistics coordination role to be fulfiled within the project team at an early stage.
The relevant reference documents (LBS, LBM, Guide to Logistics Management) should
be obtained from OU Supply Management and considered in the formulation of the
logistics strategy.