Bridging the Gaps of Offset Obligations and Challenges with DOMP
Published on 28 Mar 2019
What is offset? There is no simple way to define offset. A very basic explanation is that offset is a reciprocal trade arrangement over and above international procurement. Offset relates to any reciprocity transactions and are limited to defence or government import (Hall,2011). The term offset more recognized in defence sector, but exist under different names such as (Industrial Participation, Industrial Engagement and Industrial Collaboration).
Pragmatic definition of offset is a policy tool used by the government “Buyer” to seek additional economic, industrial and technological benefits from the contractors “Seller” as part of international procurement.
The objectives of an offset policy depend on the priorities of a country. These include: building domestic industry, employment, skilling of the work force and transfer of technology or general economic development.
Offset has a reputation of lacking transparency during project implementation, it is challenging to manage offset stakeholders because each one of them differs in their perspective to the expectation on the outcome of offset projects.
Moreover, the manual handling makes it even harder to track the progress, starting with the pre-contract stage which consist of tendering and offset evaluation, to second stage which is negotiating and finalizing and finally third stage which is post-contracting that involve the execution of the project, monitoring, reporting and performance evaluation.
In addition, dealing with sellers from the USA, Europe, Asia and other parts of the world one can see that each has corporate governance and process to manage their offset project, can create a complex environment which result on diverting the focus of the program outcome and get more involved in bureaucracy.
There are key factors and characteristics of government in offset policy formulations. First deciding on the national offset strategy, and second, based on the defined strategy offset authority formulate an offset policy. But in order to come up with a successful offset strategy government has to identify critical industrial analysis as per the followings:
- Military Industry Strategy
- Technology Industry Strategy
- Military Acquisition Strategy
- Local Workforce Strategy
Identifying strengths and weaknesses of each and incorporate these factors into national strategy to obtain maximum benefits.
But the million-dollar questions, after offset authorities develop their strategy documents with the assistance or support of external consultants, which enable them to fulfil the first step towards a unified and aligned organisation strategy. This is a good step, but then what?
1. Each stage has its own challenges because of the decentralised information and manual handling which makes the assessment, reviews and analysis lacking any leverage of integration with AI built –in capabilities highlighting the predictive analysis for clear visibility.
2. How to integrate and ensure the business cases submitted by OEM’s are aligned to the defined offset objectives, offset guidelines, met the defined KPI’s, aligned with the offset authority industry & technology focus areas and how will we assess and track the business benefits a year or two later?
3. The credit evaluation against deliverables is another major battle and debates which lead to major delays due to manual handling of the process, which lack any integration adopting smart algorithm and scientific methods to assess in a consistent manner for fair evaluation by the decision makers.
4. Lack of Transparency is another challenge in offset business that cause untrusted relationship across all stockholders.
5. Another layer of complexity for the OEM’s when they engage local sub-contractor to help with the deliverables and track and manages the various elements and dependencies in the same traditional method, scheduling etc… with no relation or integration with all the previous stages and steps.
6. Obtain approval from Offset authority for the OEM’s to gain the required credit as per the initial agreement is lacking clear success criteria definition integration that lead to another debate and argument.
The industry strategy and offset policies document continue to remain a great theory document. However, the execution of this strategy remains a theory on paper, unless we change the approach entirely by bridging the gaps.
LeadVision has developed and built a new framework and methodology aligning to the 4th industrial revolution to answer all of the above concerns.
LeadVision centralized platform DOMP “ Digital Offsets Management Platform” with the various modules and role access control, it enables tight integration leveraging build-in AI “Artificial Intelligence” analysis based on 100 of if-else scenario to provide a pragmatic mechanism with clear matrix, criteria, weighting, scoring and KPI parameters.
This will enable offset organization to manage and track their offset initiatives and ensure that it can be converted into executable plans, with the ability to track and measure the business benefits realization.
Furthermore, it will ensure all stakeholders from (Offset Authority-OEM’s-Local Industry-External SME) will have access based on their secure dedicated profile to maintain alignment to the strategic goals to achieve optimum outcome for all.
How DOMP will transform offset business by digitalising end-end the entire process and make it more transparent and efficient across all stakeholders, below are the key features of the revolutionary ODMP:
- Fully aligned and embedded to offset authority industrial and technology strategy.
- A built-in Offset policy (Quota-Threshold-Additionality-multipliers-banking- penalty)
- A digital business case template with a built-in assessment criteria of scoring and weighting to evaluate business cases submitted by OEM’s.
- Fully aligned to PMBOK methodology, framework, process and complying with both PMBOK and or Prince 2.
- A built-in financial management module to track the offset program cost details.
- A built-in schedule tool, scope, offset credit vs OEM’s deliverables and change management tracking including defect tracking with auto-analysis for change impact.
- A built-in documents management integrated with the PMBOK methodology process.
- The flexibility to be fully customised and managed 100% by Offset Management Office with no IT involvement. This is including all process customisation and project phases tailoring as per the project size, complexity and business needs.
- The ability to manage projects stage gate approvals and another pre-requisite requirement via front-end configuration module.
- A built-in Business Intelligence capability for data analysis and reporting.
- A pre-built security module to enable multiple role access based on the project governance and charter in relation to various stakeholder’s responsibility.
- Finally, the capability to be fully running as a web interface and have mobile capability to both platform iOS & Android and executive dashboard for senior management with macro and micro analysis capabilities for crystal clear visibility.
In-conclusion, offset implementation is as important as policy formulation. The role of Offset Management Authority is critical to ensure effective offset program/project implementation and with DOMP we have automated the process by digitalising offset business end-end with centralised platform that can drive people and not be driven by people.