Economic Report 2019

Figure 18: Offshore Supply Chain Cost Index

1

110

Maintenance & Operations Well Services & Commodities Drilling Contractors Subsea Engineering, Procurement, Construction & Installation Seismic

100

2

90

secirP tinU niahC ylppuS dexednI

80

3

70

4

60

50

5

0

2014

2015

2016

2017

2018

2019

Source: Rystad Energy

6

As business begins to pick up, it is important that the focus on efficiency and performance improvement is maintained — only by doing so will the spiral of cost inflation, as seen in previous cycles, be avoided. New business and contracting models, innovation, partnerships and true collaboration are all vital to achieving a sustainable balance between cost control and a reasonable return on investment for supply chain companies. Increasing the focus on value-driven outcomes rather than solely on costs will require all companies to work even more constructively, with a more balanced share of risk and reward. There are many examples of these collaborative approaches and this work needs to continue at an increased pace. Experience shows companies are most effective at developing and implementing new contracting strategies when thewhole organisation, at all levels, is committed to achieving such an outcome — senior leadership acting alone cannot achieve the same impact.

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10

11

33