Vopak Emerson

Alliance Structure Terminal Automation Strategic Sourcing Eindhoven, 19 June 2012

http://www.vopak.nl/index.php

[File Name or Event] Emerson Confidential 27-Jun-01, Slide 2

2 2

Agenda

• Introductions

• Organizational Forms and Change

• Reference Model

• Firm Characteristics

• Alliance Conditions

• Formation

• Operation

• Outcome



3 3

Introduction Vopak An independent tank storage provider



4 4

Vopak’s objectives

Accelerate implementation business best practices

Supportive to operational policies

Leverage market automation products / skills

Reduce time to market

First time right project delivery

Cost leadership



5 5

Introduction Vopak’s presenter Louis Janssen

Role: Manager Terminal Automation and IT & Vopak

Netherlands

Background: Chemical Engineering, Business Process

management & IT

Business: Oil, Chemicals, FMCG, Logistics

Solutions: Production Automation, MES, ERP

Roles: PA engineer / project manager, program manager for

international SAP implementations and manager common

systems.



6 6

Introduction Emerson Industrial Automation provider



7 7

Emerson’s objectives

Enhanced development of Emerson’s solution

Provide life cycle management

Licensing of functionality to compete on the market

Competitive low threshold

Competitive reliability and project predictability

Cost competition



8 8

Introduction Emerson’s presenter Cor Vermeijs

Role: Director Terminal Automation Europe

Background:

• Vehicle Technology

• Instrumentation and Control Engineering

Business: Oil, Pharmaceuticals, Chemicals, Logistics

Solutions: Integrated Automation Solutions for Terminals

Roles: Research Engineer, Process Automation &

Maintenance Engineer, Sales Engineer, Project Manager,

Sales Manager



9

Different Organizational Forms

Source: adapted from Walter Powell

Key Features Hierarchy Alliance Market

Normative

Basis

Employment Secondment Contract

Communication Routines Relational Prices

Conflict

Resolution

Fiat

Supervision

Reciprocity

Reputation

Haggling

THE Law

Flexibility Low Medium High

Commitment High High Nil

Tone Formal

Bureaucratic

Committed

Mutual benefit

Precision

Suspicion

Actor Preference Dependent Interdependent Independent

Mixing of Forms Informal organization

Profit centers

Transfer pricing

Equality

Flexible rules

Recent Systems

Repeat

Transactions

Contracts



10 10

Change is a Challenge

So change … … doesn’t happen automatically nor overnight!

Change is driven by benefits, benefits in for example:

Competences: Access to other resources than your own

Speed: Responsiveness to opportunities

Capacity: Outsourcing work outside formal organization

Flexibility: Quick allocation of resources

Certainty: Mutual solidarity

Intelligence: Sharing market information

“Qui Bono”

- Charles Robert Darwin

Cha(lle)nge



11

Strategic Alliances

Source: Wikipedia



12

Organizational Fit

Cultural Fit

Str

ate

gic

Fit

Low High

Lo

w

Hig

h

Source: David Faulkner

Many

start here Optimal

Situation

No

Synergies

Where is

Sustainable

Competitive

Advantage?



13 13

Alliance Development Model

ALLIANCE

ENVIRONMENT

Firm

Characteristics

ALLIANCE

CONDITIONS

Collective strengths

Inter partner

conflicts

Interdependencies

FORMATION

Contracting phases:

( Wilson D.T. 1995)

Defining objectives

Relation boundaries

Value creation

OPERATION

Growth

Reformation

Termination

OUTCOME

Stabilization

Reformation

Decline

Termination

Source: Das & Teng 2002



14 14

Firm Characteristics

Vopak

Leader in tank storage business

Recognition of Automation as Performance Enabler

Focus on Core business

Global foot print

Emerson

Leader in industrial automation business

Recognition of Terminal Industry as Strategic Market

Automation as Core

Global foot print



15

Firm Characteristics

Competition

Co

op

era

tio

n

Low High

Lo

w

Hig

h

Source: David Faulkner

Value Creation

(stable)

Learning

(unstable)

Static

(dissolution)

Value

Appropriation

(danger)



16 16

Alliance Conditions Collective Strengths

Knowledge management

Multidisciplinary teams

Joint project methodology

Inter-partner conflicts

Governance required for preventing local divergence

(alternative solutions, functional, financial, planning cycle)

Interdependencies

Organizational alignment creates interdependencies, requiring trust.



17 17

Formation Objectives and Value Creation

Vopak

Accelerate implementation business best practices

Supportive to operational policies

Leverage market automation products / skills

Reduce time to market

First time right project delivery

Cost leadership

Emerson

Enhanced development of Emerson’s solution

Provide life cycle management

Licensing of functionality to compete on the market

Competitive low threshold

Competitive reliability and project predictability

Cost competition



18 18

Efficiency

* front runners



19 19

Formation Boundaries => Governance

Partner Board

Program

Management

Project

Execution

Customer

Support

Solution

Management

User

Community

Quality

Assurance



20

Strategic Position

Source: Paul Cousins

Level of Certainty

Lev

el o

f D

ep

en

den

cy

Uncertain Certain

Ind

ep

en

de

nt

Dep

en

den

t Opportunistic

Behaviour Strategic

Collaboration

Traditional Adversarial

Tactical Collaboration



21 21

Operation Growth

Today in the phase to transform the proof of concepts into an active portfolio

Reformation

From a co-making development initiative to an implementation partnership

Termination

Business case monitoring by both partners



22 22

Outcome Stabilization

Product is licensed and general available

Product is operational in terminals of multiple customers

Service level agreements are in place (performance)

Reformation

More on demand service

Decline and Termination

Reduced strategic value

Transformation back to transactional relation



23 23

Planner

Desk

Operator

Jetty

Operator

Field

Operator

Operational Example

Customer

Service

Movement from Tank to Jetty



24 24

Planner

Desk

Operator

Jetty

Operator

Field

Operator

Operational Example

Customer

Service

Movement from Tank to Jetty



25 25

Outcome Results

Truck Turn Around Time

• Reduced by 30%

• Better Capacity Planning

Terminal Efficiency

• ~2000 Truck Loads/Operator

Paper Work

• Reduced by 20%

Quality of Service

• Reduced # Claims

Results

Award Winning Automation Solution

• TOM Award 2011

Terminal Efficiency

• 30% more efficient

Order Handling

• Improved Speed of Service

Heath, Safety & Environment

• Reduced Safety Risks

Vopak Logistics Services OSV

Vopak Terminal Westpoort



26 26

Thank You

More details in following back ground information

Any further questions?



27 27

Background information



28 28

Partner board

Strategic Alignment

Approval of

– Yearly planning cycle (business & budget)

– High level scope and generic developments

– Costing structure

Performance dashboard

– Evaluation

– Target setting

Meeting Frequency: once per quarter, by phone or physical



29 29

Partner board - Roles Chairman Vopak Global director Operations

– Ultimate owner of Vopak’s strategies in the operational area

– Ultimate functional owner Vopak’s processes and best practices

– Arbitrates possible issues in relation with Vopak’s operational policies and processes

Regional sales representative (Emerson) – Ultimate owner of Emerson’s business development within alliance

– Represents all Emerson regional sales representatives

– Owns the governance of alignment with local sales reps

– Mediates possible sales and commercial issues among Emerson program office and local sales reps

Information and Technology representative (Vopak CIO) – Ultimate owner of the Vopak’s architecture and IT policies

– Arbitrates possible issues in relation with Vopak’s IT policies and processes

Solution representative (Emerson) – Represents the Emerson product and solution developments

– Owner of product and solution strategy (functionality and technology)

Service representative (Emerson) – Ultimate owner of all Emerson services to be provided for projects and support

– Secures sufficient capacity and capabilities to fulfill program demands

– Mediates possible issues in relations of service deliveries

Reporting members – Program Management (Vopak & Emerson)

– Other program managers depending on agenda



30

Portfolio Planning Process

Yearly Budget

Cycle

Portfolio

Forecast

Capacity

Forecast

Quarterly Update

Vopak Program Manager

Emerson Program Manager

Vopak Program Manager

Emerson Business Development

Vopak Global Operations



31 31

Program Management

Business Development

– Execution yearly planning cycle (business & budget)

Functional Scoping Release Management

Portfolio Management

– Project forecasting

– Capacity forecasting

Local sourcing and partnering

Costing Model

Project evaluation

KPI Mgt

Meeting frequency: starting monthly, next bi-monthly



32 32

Program Management - Roles Program Manager (Vopak and Emerson)

– Daily Vopak’s vocal point for the individual project managers

– Ultimate responsible of the program execution

– Manages the program budget in relation with common initiatives

– Monitors and reports on progress local implementation

– Leading in forecasting and portfolio management terminal implementations (Vopak only)

– Leading in capacity demand and portfolio management for developments (Emerson only)

Business Developer Emerson – Daily Emerson’s focal point for business initiatives

– Owner of the pricing structure within the Alliance

– Ultimate owner of the commercial proposals and agreements

– Emerson owner of the KPI proposals and measurements

Purchasing representative Vopak – Owner of the cost structure within the Alliance

– Ultimate Vopak owner of the contracting process

– Vopak owner of the KPI measurements and target setting

Ad hoc: Possible Business Principals Specific Projects



33 33

Solution Management Early involvement in user requirements

Ownership release management

Alignment Blueprint

Application Architecture – Modularity

– Scalability

– Interfacing

– Brownfield approach

Technical Architecture – Market gate keeping

– Vopak infrastructure alignment

Meeting frequency: twice per year



34 34

Solution Management - Roles Solutions Development manager (chairman)

– Ultimate responsible for TAS solution in terms of functionality, quality and performance

– Manages the functional governance

– Plans upgrades, releases and fixes

– Manages the solution Roadmap

– Interface with Business Development, Program Management and Customer Support

Application Architect

– Responsible for functional (modular) architecture of TAS Solution in order to create scalability for different types of terminals

Technical Architect – Responsible for technical software architecture

– Ensures performance, flexibility and maintainability of the TAS solution

Emerson Business Process consultant – Linking pin to user requirements

– Monitors alignment with Blueprint

Vopak user representative

– Linking pin to user community and monitors fulfillment Vopak functional requirements by Emerson solution

Vopak solution representative – Linking pin to Vopak IT/ Automation community to align infrastructure, standards and security



35 35

Customer Support Responsible support methodology/procedures

Acceptance delivered projects/solutions

Closing SLA

Local implementation support procedures

Reports on KPI’s

– Includes consolidation quarterly terminal meetings

Proposes improvements

ITIL

– Incident Management

– Change Management

– Continuity Management

– Configuration Management

– Problem Management

Meeting frequency: twice per year



36 36

Customer Support - Roles Service Account Manager (Emerson)

– Responsible for SLA Management with Vopak central and with Vopak local OpCo’s

– Responsible for contact with Vopak user community regarding usage and support for TAS solution

– Mediates possible issues in relations of customer support service deliveries

Customer Support Manager – Ultimate responsible for quality of Customer Support service according to SLA

– Secures sufficient capacity and capabilities to fulfill customer support demands

SLA Manager Vopak central

SLA Focal point Vopak local



37 37

User Community

Periodical User meeting

Solution user feedback

Feedback Projects and Customer Support

New requirements

Alignment Release Management

Meeting frequency: yearly



38 38

User Community - Roles Vopak Program Manager (Chairman)

– Ultimate owner of periodical requirements roll-in

– Plans the periodical user events

– Proposes priority setting and budget requirements to the steering committee

– Owns the communication process in the user community

Vopak local members (per division) – Represents local (future) user community

– Functional link to Vopak Business Process Consultant

Vopak Business Process Consultant – Content manager for the Automation Blueprint

– Aligns and consolidates requirements from the various terminals

Emerson Business Process Consultant – Challenges the Vopak requirements on basis of peer industry experiences

– Assess the Vopak requirements on impact

– Aligns with Emerson Solution development



39 39

Quality Assurance

Lifecycle Management methodologies

– Projects

– Solution Development (projects & changes)

– Support

Rolling out and support methodology

Auditing

Reports to partner board

No dedicated QA meeting but fixed agenda point on program mgmt and steering committee meeting



40 40

Quality Assurance - Roles

Quality Assurance Manager Emerson – Defines and specifies standard processes, procedures and deliverables to ensure

quality of service delivery from Emerson

– Monitors program and projects executing according to standards

– Reports deficiencies

Subject matter specific auditors – Auditing specific parts of projects, like project management, software

development, etc.

Quality Assurance Manager Vopak (peer reviews, operational representative, IT representative)

– Readiness for FAT

– Readiness for Shipment

– Readiness for Go-Live

– Health assessment support



41

Terminal

Automation

Template

1st OpCo

requirements

Functional Governance

Common requirements

Business Best practices

OpX policies

International legislation

….

Common

Enhancements

1st OpCo

Enhancements

1st OpCo

Organizational

Change

Functional

Governance

Nth OpCo

requirements

Nth OpCo

Enhancements

Nth OpCo

Organizational

Change



42 42

Project Execution

Early involvement in user requirements specification (fit analyses)

Local terminal ownership

Program is supportive in preparations

Central solutions development under program regime

Local implementation with program support

Alignment Emerson-Vopak project methodologies required



43 43

Project Execution - Roles

Project Manager Emerson local

– Ultimate responsibility for the local execution in terms of scope, time, budget and quality

Project Manager Vopak local

– Ultimate responsibility for the local implementation in terms of scope, time, budget and quality

Emerson central lead engineer

– Responsible for the local technical implementation, development and configuration of TAS solution

– Interface to Solution Management regarding local specific issues

Vopak local business representative

– Sign-off the final project acceptance on behalf of the local business



44 44



45

Propositions on Trust, Control & Risk

Source: Das & Teng

Risk Perception

Goodwill Trust

Competence Trust

Behaviour Control

Output Control

Social Control

Relational Risk

Performance Risk

Control

Trust

1.Goodwill Trust reduces Perceived Relational Risk but not Perceived Performance risk

2.Competence Trust reduces Perceived Performance Risk

but not Perceived Relational Risk

3.Perceived Relational Risk is reduced more by Behaviour Control than by Output Control

4.Perceived Performance Risk is reduced more by Output Control than by Behaviour Control

5.Social Control reduces both Perceived Relational Risk and perceived Performance Risk

6.Output Control and Behaviour Control undermine Goodwill Trust and Competence Trust

7.Social Control enhances both Goodwill Trust and Competence Trust

8.Goodwill Trust and Competence Trust Enhances Output-, Behaviour-, and Social Control

9.The lower the accepted Relational Risk level the higher is the needed Goodwill Trust level

10.The lower the accepted Performance Risk level the higher is the needed Competence Trust level

11.The lower the accepted Relational Risk level the higher is the needed Behaviour- and Social Control

12.The lower the accepted Performance Risk level the higher is the needed Output- and Social Control

1,2 & 9

6,7 & 8

3,4,5 & 10


Documents

Vopak Emerson