Case Study | Acquisition Management Support | Procurement Services | Cost-effective Value Analysis | Value Engineering

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Case Study: Naval Patrol Boats

Background

OSG was engaged to assist with the operation of a fleet of naval patrol boats. The client had a total of 10–15 large patrol boats deployed up to 125 miles offshore in addition to 8–10 smaller patrol boats.

There was an urgent need to address excessive operating costs, inefficient processes, and ongoing maintenance and reliability concerns.

The Issues

Several issues were immediately identified and prioritized for OSG to address:

  1. Operating expenses were well in excess of the manufacturer’s budget estimates.
  2. Maintenance tasks were too expensive and taking much longer than standards obtained from similar operations.
  3. Suppliers were frequently missing delivery deadlines.

Solution

1. Service Study

All vessels in the fleet required scheduled maintenance and in-service-support.

OSG observed an example of on-site scheduled services for each of the vessel types.

This enabled OSG to value engineer the maintenance and service practices and propose amendments that would facilitate a sustained value management process.

2. Logistical Support

In an effort to streamline operations, OSG offered a complete integrated logistical support system, known as The OSG Total Care Value Management System.

In this case, OSG’s value engineering process involved implementing inventory management and e-procurement systems. This enabled OSG to negotiate internationally competitive rates by utilizing comparable data from existing clients using the OSG system. The outcome for the client was a considerable “total cost” saving made up of cost reductions in a range of areas, including the ex-supplier price, holding costs, and delivery costs. OSG’s value management process, involving the ongoing monitoring of international prices and supplier practices, produced a sustainable outcome.

3. Parts

To achieve improved inventory management, OSG first applied our value engineering principles to the entire maintenance process.

In this case, these principles included, inter alia, OSG’s condition-based maintenance program and improved scheduling of planned maintenance. This enabled the client to know exactly what was needed and when it was required.

OSG only uses OEM parts. This ensures the equipment maintains the expected performance throughout its operating life. In OSG’s experience, substituting after-market parts may deliver short-term cost savings but falls outside our value engineering principles. This practice means cost benefits are not sustained and introduces the major issues of variable wear patterns and abnormal in-service parts failure.

How We Did It

  • Clients receive total support with e-procurement, warehousing, technical support and training for service, maintenance, repairs, and system scheduling.
  • This complete value management process leads to a sustainable, enhanced, streamlined, managed, and cost-effective way of doing business.

The Results

  • The application of OSG’s value engineering principles enabled OSG to develop a Total Care Value Management System to meet this client’s requirement to achieve a sustainable increase in overall performance and financial efficiency.
  • The savings the client achieved from the change to the OSG planned maintenance management proposal were in line with the initial OSG budgeted estimates.
  • The typical savings that OSG generated over the life of a vessel equates to savings in excess of 10 percent. In this case study, OSG was able to demonstrate a net saving per 13 vessels which equated to the complete cost of one vessel, including its capital cost.  
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