Verdiskapning gjennom verdikjedeforbedringer med blikk på innkjøp og logistikk forbedringer og outsourcing til lavkostland

Transcription

1 Supply Chain Fagdag Arrangør STiG, Telemark offshore og Industri Clusteret Grenland Verdiskapning gjennom verdikjedeforbedringer med blikk på innkjøp og logistikk forbedringer og outsourcing til lavkostland Edgar Heitmann, Director Deloitte

2 Agenda Norwegian industry in a global competitive perspective Improvements through Supply Chain optimization 2

3 A quick Google search reveals the hard, honest truth 3

4 The spending on the Norwegian Continental Shelf (NCS) is expected increasing to NOK 300 bill per year Projections of Operator E&P spend on NCS NOK mrd Maintenance Services Operational and Professional Services Engineering Procurement, Construction and Installation Well Service Drilling Tools and Commodities Rigs and Drilling Contractors Topside and Processing Equipment 150 Subsea Equipment and Installation Transportation and Logistics Seismic and G&G Other Internal Data: Dcube 4

5 utlandet Hardt ut Asia pris Norge for dyrt 70% dyrere -5-1 av 4 fokus på effektivisering samhandling

6 Looking at labour cost, Norway is the most expensive country to do business in Benchmarking of hourly compensation cost Norway 63 Sweden 501,3 x Germany 46 Finland France 40 Canada 37 US 36 Japan 35 Italy 34 Korea 21 Czech Republic 12 Slovakia 11 Brazil 11 Estonia 10 Taiwan 9 Hungary 9 Poland UK 31 Spain 27 Philippines 2 8 Hourly direct pay, USD Actual 2012 USD Social insurance expenditures and labor-related taxes, USD 43 5,3 x 6,1 x 30 x Growth rate per year CAGR ,5 % 2,9 % -0,9 % -0,7 % -1,2 % 3,4 % 2,1 % 6,5 % -0,7 % -2,2 % -0,8 % 5,3 % -0,6 % 1,3 % 7,4 % -0,4 % 2,2 % -2,2 % -3,7 % 4,7 % ABS, USD Source: U.S. Bureau of Labor Statistics, International Labor Comparisons, August ,4-0,3-0,5-0,7-0,2-0,2-0,1 0,0-0,2-0,3 0,1 0,2 0,1 0,8 0,8 1,2 1,1 1,6 1,4 2,3 Observations Hourly compensation costs in manufacturing are over five times higher in Norway than in the Czech Republic If compared to the Philippines, Norway is about 30 times more expensive The same goes for China and India, for which hourly compensation costs were estimated to be 1.74 USD and 1.24 USD respectively in 2009 Even though the gap between e.g. Norway and Japan is 28 USD today, the absolute annual growth in salary is higher in Japan (2.3 USD vs. 1.6 USD) Even if countries like Brazil and the Philippines have a very rapid relative increase in hourly compensation cost, the absolute gap between Norway and these two countries will continue to grow for several years 6

7 A high productivity level can outbalance this extraordinary cost level. But are we productive enough? Examples of last months news articles Dagens Næringsliv,

8 A comparison of our productivity level show that we do not outbalance Norway s cost level Real GDP per hour worked (PPP adjusted), USD ,6 x 3,1 x Norway United France Germany Sweden Spain Finland United Canada States Kingdom Source: U.S. Bureau of Labor Statistics, International Labor Comparisons, December 2012 Italy Japan Czech Republic Korea Hungary Poland Estonia 8

9 At the same time, decreasing cost in global transportation is making the world smaller Global logistics perspective Logistics cost example 2 Full truck Oslo - Trondheim Oslo Cost: NOK Logistics cost example 1 40 ft. container Shanghai Rotterdam Cost: USD ~ NOK 9

10 Norwegian industry seems lagging behind other Nordic countries in terms of increasing its productivity level Measures for increased productivity a b Low cost country sourcing Offshoring Move supplier base from local supply markets to lower cost supply markets Moving business processes abroad to a low cost country, as a daughter company or to a subcontractor Benchmarking of productivity measures Sweden Denmark EU-27 Norway Foregn investments as a percentage of GDP 45% 54% Percentage of Norwegian companies reporting to have outsourced to specified regions 73% Eastern Europe 39% Text 71% Western Europe 36% South-America Middle-East Asia 49% North-America 10% 5% 3% Automation Automation of processes that used to be performed manually (physical automation or digital automation) Domestic investments as a percentage of GDP Sweden 1.5% Innovation New innovations increase the customer value proposition of the firm s products Denmark 1.2% Norway 0.7% Labor efficiency improvement Labor intensive processes are made more efficient without investment in new equipment or technology Sweden Denmark Innovation performance [index 0-100], % 76% Labor import Temporary or permanent import of employment EU-27 Norway 48% 65% Source: SSB, SCB, DST, Dansk Industri: Globaliseringsredegørelse 2012, OECD: Economic Outlook 2011, OECD Statistics, Innovation Union Scoreboard, Quartz+Co 10

11 Agenda Norwegian industry in a global competitive perspective Improvements through Supply Chain optimization 11

12 Improvement goal Many companies are facing major improvement needs and need to reach beyond tactical improvements Profitability improvement by impact level Examples of initiatives Structural Acquisitions & post merger integration Fundamental change in the business model Structural change of production footprint and supply chain 20% Functional Structural Functional Change in procurement model from local organization to center led category organization Centralization of Supply Chain function 10% Tactical Tactical Consumption control and improvements in working capital Tactical sourcing Warehouse optimization Low Degree of involvement of the organisation High Limited downsizing 12

13 Deloitte s view is that cost of salaries get an unbalanced share of attention in the Oil & Gas profitability debate Cost structure of typical oil-service company Share of revenues Share of cost base External spend ~75% Salary cost ~25 % Omsetning Lønn Avskrivning EBIT og amortisering Driftsinnkjøp Capex Total innkjøp Lønn Total kostnad a Low cost country sourcing b Offshoring Kan bransjen redusere kostnadene gjennom å ta i bruk metoder for Supply Chain Management forbedringer fra mer modne industrier? * Kilde: Deloitte analyse 5 aktører innenfor norsk olje & gass subsea leverandørindustri. Resultatregnskap National Oilwell Varco Norway AS, Aker Subsea AS, FMC Subsea AS, FMC Kongsberg Subsea AS, Kværner ASA, Aibel AS. CapEx normalisert basert på et utvalg av selskapene, vil variere betydelig fra år til år. Spend-analyse med bedriftsinterne tall gir typisk samme bilde. 13

14 a The strategic part of the procurement process is usually suffering from reactive focus on the operational part Focus in the procurement process Procurement process Product and project design Purchasing strategy Supplier market profiling Negotiations and contract closing Ordering Order administration & discrepancy handling Impact on cost level Strategic Tactical Operational Typical time alloaction 10% 45% 45% FEED EPC Ettermarked Kilde: Deloitte erfaringsdatabase 14

15 a Strategic sourcing is a structured process where alternative supply models are evaluated Sourcing strategies Leverage your Power Volume Aggregation Reduce/ consolidate number of suppliers Pool volume across business units Redistribute volume among vendors for like materials/ services Rationalize/ standardize services/ products Develop alliances among purchasers or external companies Pricing Structures Conduct price benchmarking Identify arbitrage opportunities Use hedging/ trading Implement open book pricing Renegotiate/ rollback prices Unbundle prices and develop should-costs pricing models Compare total cost among potential suppliers Index/ cap prices Expand supply base Examine new suppliers in existing supply market Expand geographic supply base Low cost country sourcing Capitalize on currency fluctuations between supply markets Take advantage of trade incentives Optimize countertrade Profit from global supply/ demand imbalances Cross territory contracts Shift between agents and producers 15 Compliance Channel spend though the best contracts Identify and address the causes of maverick spend Eliminate pricing scatter/ non compliance from suppliers Create an Advantage Specifications/ Value- Engineering Standardize specifications Simplify products Substitute products Assess off-the-shelf vs. custom parts Identify product innovation opportunities Apply product value analysis/ engineering Examine life cycle cost Use functional buying Apply incentive based specifications & proposals Process Improvement Reduce R2P transaction cost in the extended supply chain Reduce imperfections in supply chain and define gain share models with suppliers Reengineer joint processes Optimize physical material flow Integrate logistics Use simultaneous engineering/joint R&D Develop longer term contracts Value Chain Disruption Analyze core competencies Examine strategic make versus buy decisions Establish/ develop key vendors Employ strategic alliances/ partnering Establish joint ventures Identify product tie-in Establish buying consortium Adjust degree of vertical integration Create market entry alliances Optimize tax Demand Management Implement policy changes that reduce demand Implement approvals control Eliminate demand Reduce frequency, volume or waste

16 b Offshoring is a strategic measure that should be used for areas with high level of differentiation As the competence and technology differentiator is diminishing, competition from global supply market will increase High Subsea production Offshoring package A? Comments Modning av teknologi vil gjøre stadig større deler av verdikjeden eksponert for internasjonal konkurranse Level of technology and competence differentiation Topsides Dette gjelder særlig de deler av verdikjeden som ikke er beskyttet av å kreve lokal leveransekraft Kostnad en stadig viktigere konkurranseparameter Low After market services Fabrication? Local Supply market Global Note: Ikke uttømmende 16

17 To survive in the global competitive landscape we need to define a global benchmark for our performance goals Local scale Global scale Excellent 10 Excellent Very good 10 Improvement potential Very good Mediocre Improvement potential Bad 0 Bad 0 17

18 Questions? Deloitte AS Dronning Eufemias Gate 14 Postboks 221 Sentrum, 0103 Oslo Norway Edgar Heitmann Director Consulting Mobile: Visit us at deloitte.no 18

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