Projects in many industries are becoming more challenging because of the remote, undeveloped areas in which new resources are being discovered and, subsequently, the global projects market is beginning to follow a more innovative approach towards logistics, giving it higher priority, says materials management and logistics consultancy Greiner, Mendi & Associates (GMA) MD Lars Greiner.
He explains that there is a significant increase in the competition for these resources, which, in turn, requires new ways of delivering cost- effective projects.
However, Greiner says: “There remains an inherent conflict of interest between the core requirements of the project owners, engineering, procurement and construction managers (EPCMs), mine owners and their contractors and suppliers and those services currently supplied by the various transport service providers.”
He says the current transport service provider model runs projects on a transactional basis, which entails that such providers be paid per transaction.
“The more transactions and the more complex the transaction, the more income the transport service provider will earn,” notes Greiner.
It is, therefore, not necessarily in those service providers’ interest to accelerate the project, improve the supply chain, or limit the number of freight movements.
Simply put, they will provide the supply chain as requested, without seeking to implement significant improvements or solutions, or address weaknesses, he points out.
“Projects are given set timelines and deadlines and EPCM companies are paid on an hourly rate for work that has been carried out, while contractors and suppliers are paid a lump sum for their input and according to targets reached, with penalties for time delays,” says Greiner.
“As a logistics management company, it is the role of GMA to fill the gap between project owners and suppliers and transport service providers.”
GMA offers a support service to projects – from the early stage of the prefeasibility study through to the definitive and bankable studies and then to full materials management and logistics, when moving to execution, Greiner adds.
He stresses that the earlier logistics is considered in the prefeasibility stage, the more it can be incorporated into the process, leading to more positives and savings.
“The MetroWind Van Stadens wind farm, in Port Elizabeth, identified savings in excess of $45 000, but was unable to realise these savings because of their late inclusion in the project – after the terms of sale had been finalised,” he highlights.
GMA will investigate the logistics of exporting the product to be mined or drilled. The company will also ensure that the site is reachable and that there is a plan for supplying all the necessary goods to the required site safely and reliably, with alternative plans, should they be needed, notes Greiner.
“On the Askaf project, in Mauritania, last year, GMA drew up a full logistics strategy from worldwide origins, through two ports to a site in the Sahara desert, which is still being used, despite its client changing EPCMs,” he notes.
Further, he asserts that the company’s primary focus is to increase efficiencies and optimise prices, while ensuring that all goods reach the right place, at the right time, in good condition.
Logistics is no longer the “hidden in the dark” aspect of most projects, says Greiner, adding that companies are starting to realise that logistics is core to any successful operation.