Long term value add or short term cost savings?
A recent survey conducted by Trelleborg's offshore operation paints a positive industry outlook with decision makers taking a long term 'value-add' view. Original equipment manufacturers (OEMs) rated product quality, responsiveness and skills above cost as the most important supplier attributes. In fact, only 4% cited cost as a primary driver in determining preferred partners. However, there is a missing value link, as in practice cost savings appear to be taking priority.
While suppliers with more substance may be winning-out at the tender stage, when it comes to implementation the temptation to try and make short term cost savings is clear. 78% of OEMs, operators, contractors and consultants admitted to changing the specification of a project for budgetary reasons. Thor Hegg Eriksen, President of Trelleborg's offshore operation, says: "The overall effect of reduced oil prices is applying pressure across the supply chain and that's evidenced by the research findings. While the market buys into choosing a value-add partner over a purely transactional arrangement, it doesn't appear to be maximizing the third party expertise we know can make the difference.
"Our survey points toward an offshore industry that believes it is putting long term strategies first, when the research shows short term decisions with cost front of mind. The market also seems to under-prioritize some of the most important value-add attributes that it should be seeking from a provider that can compete on more than just price.
"Innovation, for example, should be high on the agenda but it appears the link between new thinking, products and solutions and a healthier bottom line is missing. Indeed, only 3% of respondents identified 'creative approach to the brief' as a sought after supplier competency. This could lead to truly innovative suppliers being overlooked and potential overall cost savings being unexploited."
Trelleborg's offshore operation surveyed a global audience sample of original equipment manufacturers, operators, contractors and consultants, to identify ways in which the industry can respond to pressure against a backdrop of slowed market growth. Trelleborg studied the responses for its brand new 'Next Level Report' to comprehend what is affecting corporations and how this pressure can be overcome.
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