Hybrid Models can Boost Supply Chain Efficiency with Less Workers

Price Waterhouse Coopers (PwC) has recently published a report entitled, “Understanding Upstream Supply Chain Management: What does good look like?,” and contained within it is an examination of challenges faced by the supply chain in the petrochemical industry, specifically in the US since the shale boom. It is explaining how offshore conventional and offshore conventional are two completely different enterprises when it comes to timescales for projects and speed of activity.

In the study, PwC claims that companies which use hybrid models for organizing average at least 45 less FTE (full time equivalent) employees than their competitors who use completely centralized or de-centralized models. The same companies can also claim to have a greater number of FTE employees working in strategic roles, spent more on formal contracts, had greater costs saving targets per year and lower current inventory values, as stated in the report.

PwC are also reporting that the companies who do most of their sourcing and contracting via a central command center had approximately 40 less FTE working in their supply chain than companies who sourced regionally and locally.

In addition to this, companies who had carried out formal spending analysis in the two years prior had higher levels of managed spend per FTE working in the supply chain, higher levels of managed spend per supplier, higher targets for average annual cost savings and comparably lower current inventory values than their competitors who were not working with analytics. When spend levels are at an average, companies who carried out spend analysis turned out to have 937 less active suppliers when compared to companies who weren’t carrying out spend analysis. Companies who are operating formal supply management systems came up as leaner when it comes to a headcount of workers in the supply chain than companies who did not.

Projects conducted offshore usually have higher factors of lead-time and coordination, compared with onshore projects, which are conducted much more quickly. Offshore projects take place over months, while onshore ones are conducted over a period of weeks. Due to this difference in project timescales, offshore projects tend to have processes in place which are much more robust, with many layers of approval required due to the riskier environment they operate in. Moving from offshore to onshore requires that these differences are accounted for.

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