Here is an example of the Opportunities and Activities for, in this case, Cost Competitiveness. Point out that, as we have said, cost is not ignored when you take a TVC approach but it does get looked at differently. Example: Shell took $15 million out of the cost of a $5million Sub-Sea Tree. They did it by focusing on value, not cost re: the build-out of the tree – How do you “save” $15million on an item that costs $5 million? Used standardized design to allow more efficient on-site deployment of the Tree – got oil pumping 12 months more quickly and recovered what otherwise would have been a huge lost opportunity cost Comments re: Opportunities and Activities associated with Cost Competitiveness – not about going to market to get lower price – ask selves how much value sponsors get from cost predictability, from fully documented cost structures, from using cost arbitrage more effectively, etc. ASK: What do participants notice about the Opportunities and Activities? Lead them to: These are focused on value and are much more strategic than is typically the case when organizations take a Cost focus. Explain that we will distribute an Appendix to the workshop materials that contains a similarly generic list for each Value Contributor. The important point is that no Category Team should accept the generic list and try to apply it to their Category. The list must be analyzed and the Team should look to add as many BP specific Opprortunities and Activities as possible to help extract value from their Category.
Here is another example for Sub-Sea Trees. Again, point out how a generic list must be adapted to the Category. ASK: What is “customer of choice” and how important / valuable is it? What about joint R&D, compressed cycle, time, etc. Point out: wouldn’t make sense to try to be “Customer of Choice” in every category – challenge is to, first, hone in on the Value Contributors that really make a difference and then identify the Opportunities and Activities that will create leverage around those Value Contributors for your Category Discuss ASK: What are some of the Opportunities and Activities that you would normally expect to see for Sub-Sea Trees related to SRM that are NOT on this list. What are some of the items on this list the surprise you?
Key Messages Describe the Two Scenarios Emphasize how a cost focus destroys value when sourcing hamburger or trees
Need a couple of slides for this one…on with an arrow going from the outside to the in (Value) and another from the center, out (Cost) Another slide needs to show where factors (from Janus slide 7) fall into the different sections
