I interviewed Victor Coetzee who discussed Logistics and Supply Chain Management for Dealing with Remote Sites.
Well, it's nice speaking to you today, Victor. This is going to be a great topic on logistics and supply chain management for dealing with remote sites. So, Victor, can you first provide a background about yourself and share some of your experience?
Good morning, Dustin. Thank you for the opportunity to share some of my experiences on construction projects and oil and gas projects during my past 10 years working in different regions and areas and countries, especially in regards to the situation to identify remote sites. And how to operate logistics and supply is vastly different compared to a normal working environment. And I appreciate the opportunity to share this.
What are some of the characteristics and differences between the industries?
The first thing that I would like to mention here, some of the characteristics or differences between the industries as far as similarities are concerned is that all projects are measured in form of cost as well as time. All projects are measured in terms of two aspects – namely, their ability to remain in budget and delivering in time the [inaudible 00:01:17] requirements.
But operational [inaudible 00:01:21] are linked to a project schedule or to a construction schedule, and they are subtle differences in variances between the different industries in terms of the reliance or importance of safety, the involvement of government, as well as the extreme global nature of some of the industries and the regions and areas that the projects are working in.
Processes and work culture also differ from industry as well as from organizations.
What are some of the unique challenges that face a logistics and supply chain executive?
Dustin, some of the unique challenges that face a logistics and supply executive, especially working on a project, is to understand that it might be a technology, material requirement planning are linked to the project schedule or construction schedule. To do thing right the first time and do things cost effective and quickly is critical and very important.
From a supply and logistics executive position, you must not only know all the functions and processes in your specific department, but you must have a realistic view in regards to project operational processes and how to form synergy and flow between construction teams, [inaudible 00:02:52], quality, cost control, engineering, operations, health and safety, etc.
You must be able to measure the success and the implementation against [inaudible 00:03:07] class supply chain practices, namely [inaudible 00:03:11] use of the data and information flow. Inventory optimization flexibility is very, very important and critical to adapt to [inaudible 00:03:21] changes, especially on projects.
Performance and auto processing, as well as customization of ERP technology and system implementation and processes are also very, very important factors because working on remote sites in some regions and countries, you are always prone to disruptions in terms of your support structures, what you have available to work with. And you must be able to adapt to those environments and adapt your processes and your procedures and your technologies to be able to fulfill the function. Sustaining your operations and compliance and visibility are also two important factors.
From a logistics and supply perspective, emotional intelligence, being able to manage your own emotions as well as those of others and understanding conflict and how to handle conflict are very two critical components for logistics in a supply executive on a project.
Can you tell us what is a critical component that can affect the success or failure of a logistics and supply chain team?
Dustin, I think the critical components that can affect success or failure of a logistics executive are closely linked to the fact that they need to get involved from the start,in the process from the start, meaning the planning and development and evaluation before actual mobilization. Understanding three key components is understanding the companies operational strategy and objective that the company want to achieve for this specific project in terms of policies, SOP design, and guidelines, is critical.
The second factor that is very important is evaluating the risk in a country of the operations in terms of laws, regulations, permits, government approvals. And obviously, restrictions in terms of policies and hiding practices that can affect your operations on the site. [inaudible 00:05:53] a company support infrastructure in countries as far as freight agents and supplier capability of concerned are also critical. And obviously, evaluating the processes in terms of reverse logistics processes and investment recovery are also very important. That [inaudible 00:06:15] comes into effect, especially during reconciliation and closure of projects.
Victor, can you give us some indication of warning signs that can lead to project failure?
Dustin, I think from my perspective, in relation to give you some indication on warning signs of things that can lead to project failure is the lack of knowledge and skill and using a proven approach to project management and risk management. Gaps in organizational policies or inadequately enforcement of these policies and procedures and underestimating the project scope of work and acquirements.
Now, high staff turnover are also warning signs, but it can be linked to various outside factors that are out of control of the organization in terms of their policies, procedures.And it can be a situation where it is highly tied to government or outside sources in terms of if you have not only one organization, but you're in a joint venture, you not only consider only one organization, but you have three different organizations to consider, and that is, when I was in Iraq, you have to consider the client [inaudible 00:07:48], oil company and then obviously also the two parties — like the company that I work for, [inaudible 00:07:59] — that formed the joint venture.So there's many factors that can influence or can lead to project failures and, I think, project work organizations, work culture, also play a very high factor in success or failure.
My last question is, Is there a shift in business leaders' perspectives that is required regarding project implementation?
Dustin, I think from looking at the way business leaders and executives look at projects these days, I think the main focus would be regards to looking at financials. Financials and cost holding are critical components. Obviously, also sustainability. The main focus here is to understand that if you work on a project, a project's success is interlinked with all the various departments that make up a project team.
So understanding that you have to be flexible in your implementation of processes and procedures and systems and to form synergy is a key component. If the project fails because of various outside factors or success, then it's a combined team success or team failure.
Coming back to the main concerns on business leaders, looking at what is currently happening, is that there is definitely a shift to be more concerned in regards to financial performance and cost reductions. Working capital, warehouse occupancy costs, training and development manpower, and also including productivity [inaudible 00:10:08], customer service, obviously, risk management, and visibility are important components.
Futureproofing is a critical component and that is, again, got to do with the company or the organization’s ability to perform the project in time — under or in budget. Based on that, they have the opportunity either for [inaudible 00:10:39] and that can lead to futureproofing and making sure that the future are secure for that specific organization.
As far as competitors in the market, obviously, there is also going to be competitors. And the way that the organization or the industry organizations look at project success is in terms of how successful an organization was delivering that specific project. And that will always form critical [inaudible 00:11:18] regardless of industry, regardless of region, and regardless of culture.
Dustin, thank you very much. I appreciate having the opportunity to discuss some issues. I hope in the future, we can get together again and discuss some other points or things that are critical in regards to projects. And once again, thank you very much for the opportunity.
About Victor Coetzee
Sr. Manager of Global Procurement, Logistics & Supply Chain