The client’s problem
The market for one of Europe’s major energy companies was undergoing substantial changes in the fuel types being used for power generation. As a consequence the business unit providing technical design and logistics services was challenged by a future demand for a wider set of services, a higher fluctuation in demand, and a risk of a higher cost level. Based on this the client was unsure whether it should continue to keep technical services internally or outsource the services to lower costs.
Oleto Associates was asked to come up with a clear recommendation on which solution would provide the best quality of service as well as being most economically viable. The first phase included a mapping of the technical and logistics services, activities, processes, FTE’s, organisation, cost structure, and an analysis of change in demand for technical services. Surveys, interviews, and preliminary analysis showed outsourcing technical and logistics services to be the most attractive scenario for the client. Based on this insight the second phase identified different outsourcing alternatives including transaction form, organisational setup, asset ownership structure, and type of supplier. Hereafter, the most efficient sourcing mix was recommended and selected. The third phase included a thorough supplier analysis including location, financial performance, services fit, energy sector experience, and none-competitor supplier. A clear supplier recommendation and a detailed implementation plan were delivered to the client as well as assistance in the execution of the actual transaction.
Outsourcing the technical and logistics services enabled the client to become more flexible and reduce costs by 10-20% per year while preserving or improving service quality.