In terms of securing the best deal for any product or service, there is a limit to what can be achieved by negotiation alone. Negotiation has a tendency to focus on price reduction. Sooner or later a point is reached where price reduction either hurts the quality of the goods or services being provided or it erodes margins, damaging the supplier and ultimately the customer. Before that point is reached, the emphasis needs to change to mutual, smarter working so that either price reductions are affordable without compromising standards or longer-term viability or price increases are acceptable based on proportionately greater yields. The Value Improvement Programme (VIP) is a proven approach that does just this.
It is based on the simple premise that different goals and objectives exist both within and between organisations and that these different perspectives result in a different understanding of what value is and how it is created. As a consequence, value-enhancing opportunities are not fully exploited and operational waste exists.
In major renewables Operations and Asset Management, a VIP will create the dialogue between Owners and Operators that exposes those opportunities and translates them into mutually agreed action plans. Action plans that commit all parties to improvements that increase customer benefits and generate savings and efficiencies. There is, therefore, an increased revenue cake and/or a cost-saving cake that can be shared to protect or even enhance Operator profitability while enabling a better return to the Owner.
The process is not suitable for short-term relationships. It requires a willingness to develop collaborative supply chain working, sharing information, risks and benefits. It is, therefore, most appropriate where a long-term relationship is envisaged. The VIP is equally valid as a way to enhance revenue and reduce cost where the Owner and Operator are the same.
The whole process is facilitated to ensure an even-handed involvement of all parties, a structured approach, the use of the best problem-solving tools, the development of collaborative working, and a learning environment so that improvements are sustainable.
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