Global Logistics and Supply Chain Strategies - June 2008 - (Page 26) Shipyard Keeps Its Projects on Time For Todd Pacific Shipyards in Seattle, everything the company does is a project, whether the job is a quick $10,000 repair on a fishing trawler or a $50m overhaul on a Navy warship. And while project-centric IT systems are relatively new to U.S.-based users, Todd Pacific has been using its IFS suite of project-centric applications for several years. The integrated IT system manages the scheduling, procurement, subcontractor management, supplier collaboration and all financials for every ship that comes into the yard. While cost management is a key driver for Todd Pacific and its supply chain, time deadlines are the overriding issue on many jobs, especially for the Navy, the Coast Guard and the wartime effort. “If an aircraft carrier being worked on has to have its reactor started on a certain date to get it back into service, that deadline cannot be missed,” says Scott Arndt, Todd’s senior business analyst. “Above all else, we manage these projects according to strict deadlines, and IFS Applications keeps us on track.” When the second Gulf War started, Todd Pacific handled Navy warship repairs on a strict deadline, not just to finish the work, but be able to put the ship back in service within 24 hours if called back to duty. “Those restrictions have been relaxed, but there is always a tight deadline to get the warships back in service,” says Arndt. Naval vessels are not the only ships on tight deadlines. Todd recently worked on a ferryboat for the State of Alaska. The more Todd got into the job, the more repair requirements and change orders arose. But the overriding concern of the shipowner was to have the ferry back in service. “We were told to fix as much as possible, but still meet the deadline,” says Arndt. Even with all the change orders and having to order parts on the fly, IFS Applications allowed Todd to get all the parts ordered in record time and stay ahead of the deadline. Todd not only completed the base repairs, but most of the additional repairs uncovered before the ship had to go back into service. “The customer was surprised, and very happy,” says Arndt. access—and control—of data to outside users. IFS and other agile ERP suppliers have all built collaborative functionality into their products. With these agile collaboration systems, access can be provided to any outside party, even down to tier three or four suppliers if their role is critical at any point in time. “Collaboration is usually limited to as few tiers as possible for control purposes,” says Cork, “but the benefits of these collaboration portals extend past their actual hands-on use. The shortening of the lines of communication at the top levels brings the smaller players closer to what is happening on the job.” Relationship Building The reduction of supply chain partners to a trusted few has the added benefit of developing much closer relationships with the suppliers and subcontractors. The benefits of these closer relationships work both ways. “The project owner is more comfortable with the familiar suppliers and contractors who have proved themselves,” says Cork. “The suppliers and contractors know that they will be paid on time, which is a bugbear for subcontractors these days. Trust is greatly enhanced for everyone.” A related trend is that project owners are looking to their contractors for longer and deeper relationships that go beyond the construction phase. A large building project might take a year or two to build, but the asset management for the project goes on for many years beyond the construction phase. The contractors that worked on the job have important project knowledge that can extend their role. “It used to be that you would hire a contractor for 18 months for the life of the project, and afterwards they were gone,” says Cork. “Increasingly, the same suppliers that built part of the project are maintaining the assets for the project owner. There are real benefits to that relationship.” For example, Debut Services is a property management company that is a joint venture of a large construction company and another property management firm. Debut takes care of 40 percent of the building infrastructure that one of its parent firms may have constructed for the U.K. defense ministry. The property management function includes long-term maintenance of more than 9,000 individual assets from barracks to entire garrison towns, including roads, buildings, communications and mechanical items. “There are real benefits to having supply chain partners that not only are involved in the construction phase, but also are longterm partners in the maintenance of the project,” says Cork. “Deeper, longer relationships improve communication and control, and reduce overall risk.” Tighter supply chain relationship also pay off when business cycles overheat and skill shortages become a serious problem. For example, London will be holding the 2012 Olympics and every good contractor, subcontractor and supplier is lining up for the huge building boom that is unfolding. “It is very difficult for any supplier or contractor to pass on bidding for a job,” says Cork. “It is not in their nature.” Contractors hope that if they get all the business they bid on, somehow they will be able to manage the process. Too often, they are awarded more jobs than they can handle. It soon becomes apparent to the general contractor that they are stretched too far, but it may be too late. “Project managers with close relationships with a limited number of long-term partners should not have this problem,” says Cork. “The subcontractors will depend on these relationships for new jobs and will take on new clients only when they are able to satisfy the long-term clients.” Risk Management The greatest risk for any project is the failure of a key player to perform, which is why every major partner in the supply chain of a project signs some sort of service level agreement. But such SLAs provide little real risk protection. “If you ever have to pull the SLA out of the drawer and look at it in any detail, you already have a problem,” says Cork. “Something serious has gone wrong with that partner.” While SLAs will never go away, Cork 26 JUNE 2008
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