Logistics missions costs

While there are significant differences between what is required to drill a well on land and in a marine or offshore environment, the basic mission is very similar. The differences in location conditions, design criteria, logistical considerations and related cost are enormous, hi deepwater, the process can approach the most sophisticated technical operations known to man and an individual well can cost in excess of sixty million dollars, often to be paid early in the project life well before surety of the results of the effort is known. 

To operationalise these principles requires an output orientation to costing. In other words, we must first define the desired outputs of the logistics system and then seek to identify the costs associated with providing those outputs. A useful concept here is the idea of mission . In the context of logistics and supply chain management, a mission is a set of customer service goals to be achieved by the system within a specific product/market context. Missions can be defined in terms of the type of market served, by which products and within what constraints of service and cost. A mission by its very nature cuts across traditional company lines. Figure 3.8 illustrates the concept and demonstrates the difference between an output orientation based upon missions and the input orientation based upon functions. 

---