Project Logistics – Visibility and Value for Large Scale Projects
In my recent post we defined the term Project Logistics. The term is commonly used to refer to major initiatives that consume raw materials and produce and end tangible structure (e.g., major facility construction/redevelopment, drilling operation, solar farm, etc.). These large scale capital projects require significant logistics coordination to remain on-time, on-budget, and with a quality result.
Central to enabling the completion of a large-scale project is: a) materials management, and b) materials visibility. Visibility in this context is the transparency and control of materials flow from the creation of the planned need, to the Purchase Order from which it is sourced, to the timing of materials arrival for usage. The end consumption of the planned materials is the “job site” and it is from this location where materials, products, equipment, supplies, or other items are all received, stored, managed, and ultimately consumed.
Visibility in Transit
Given today’s endless borders, materials are sourced from around the world which makes the management and control of parts visibility so complex. Many times, critical supplies pass through the hands of several suppliers/distributors before making their way to the end job site. During the integrated process, supplies from through multiple parties orchestrating the flow from the time is purchased to the time it is needed. Each party will manage the mega processes (e.g., Buy, Make, Distribute, Ship, Sell) often managing the cross border activities ensuring they reach the desired destination.
Freight Forwarders often represent the EPC company (buyer), but often do not control every step in the production and transport. This supply chain creates several touch points that can cause problems:
- Purchase orders are submitted but not always processed on-time.
- Suppliers vary in response times, scheduling, priorities, and planning and scheduling their production.
- Production and customer priorities are not always favorable. Suppliers may tend to “hide” these delays for excessive times.
- Packaging and transport to export Ports can be delayed and errors can be made.
- Suppliers and Ocean or Air Cargo carriers may not be integrated.
- Manual progress checks can be difficult to identify and resolve.
- Site scheduling may change and expedites or delays are difficult to communicate and verify.
- Tracking and tracing at the SKU level requires detailed transparency for matching items to Purchase Orders to identify short shipping or errors in packaging.
- Supply chain disruptions can occur anywhere or anytime in the process of origin to destination, and manual adjustments can often be difficult.
- Costs and performance indicators for trading partners are challenging to monitor, and often not known until after the fact. Cost-plus agreements, surcharges, delays, Port fees, etc., can all happen without advanced notice. Obviously, these impact the Project Budget and Capital estimates.
This is an abbreviated list of the most likely delays one may experience. There is a whole list of corner case conditions that one may experience based on their unique situation. Visibility (i.e., near real-time status) is the only way to be aware of delays and alter expectations appropriately. Without this visibility, issues concerning cost overruns, time delays, quality issues, and contractor availability may result.
Visibility on Site
Site level need is defined based on project progress. Having an understanding of true project requirements coupled with the supply availability enables management decision making on how to deploy assets. Given th scale of these projects, management of materials is often done on-site in less than desirable controls environment with less than optimal management systems.
Major supply chain disruptions result in material shortages that impacts budget and efficiency. Without visibility, one cannot proactively reschedule teams to minimize contract delays, penalties, cost overruns, and overall project delays.
Because many projects fail to utilize any real systems to control materials levels, manual processes are deployed that often produce errors, aged validations, and fail to connect to future flow requirements. This inability to see “real time” inventory often results in overstocks, shortages, and a misalignment of supply with need. By deploying inventory control systems you set-up the requisite controls to manage part physical location, levels of supply, and the imbalances needed to keep a project efficiently running.
We all know that large scale projects never go as planned. From the very start, permits get delayed, weather slows progress, or materials shortages present themselves. By aligning constantly adjusting work plans with supply availability teams can better phase work efforts and align resources. Whether it is raw materials, equipment, supplies or contract labor all efforts need to be managed in an orchestrated way to ensure efforts are connected and timed.
Mitigating the Risks and Impacts
Any one of these problems (whether in-transit or on-site) will likely impact negatively the construction schedule, budgets, costs, and time. Serious delays of materials availability when needed can result in major cost increases and performance gaps.
Implementing a platform with proven systems for in-transit and on site goods visibility and stock management and control for the Project is more essential than ever before, as supply chains have suffered in recent years from item delays, risks and disruptions, increased costs, and unreliable data. Project Logistics have become more complex, and schedule impacts are more costly. Manual controls are simply inadequate to plan, manage, and control the complexities.
Logiswift is a solution available in the U.S. to address these issues. Their proven and tested solution has managed large scale Projects around the world. Visit their website at www.logiswift.com for more information and to contact their team.
