Supply Chain nourishes the organization...
Oil and Gas Inventory Management
Introduction (Oil and Gas Inventory Management)
It is imperative that drilling contractors ensure that inventory management at their facilities is operating effectively. With the few contracts that are available, it would be devastating to lose one due to an inventory management issue that might have easily been averted. In this interview series, Inventory Matters, we will be speaking with industry leaders to gain their insight into improving oil & gas inventory management.
Interview #1 with Matthew Heaviside
- Question: What is the best advice you have received in your career in the oilfield?
- Answer: Look and see. Hear and listen. Speak with humility. Spend time with the man sweeping the floors and ask him what he thinks. The best ideas usually come from the most unexpected places. Keep your ego in-check—it drives many of the world’s problems today. Understand that you are not separate but part of a greater organizational ecosystem. Lastly, don’t be surprised when a company behaves like a company.
- Question: What do materials coordinators do well?
- Answer: I have very rarely met a materials coordinator who did not give 100% and I have never met one who felt that his/her 100% was sufficient. They nearly always are in need of support of some type—training, tools, and streamlined processes.
- Question: What could materials coordinators do better?
- Answer: Better understand the equipment, its functionality, and level of criticality. Planning and follow-up.
- Question: What is the first thing you do when you step inside a warehouse on one of your rigs?
- Answer Part 1: People First: Look the warehouseman in the eyes and get a feel for how his ship is running. Speak with him and get him to level with me on how things are. I always ask, “Is there anything I can do to support you or is there anything you need to drive improvement?”
- Answer Part 2: Equipment & Facilities Second: Look at preservation, housekeeping, and organization. Clean surfaces, proper preservation, tidy shelves, and organized paperwork are all indicators of the overall level of health in a warehouse. I will usually follow-up with some cycle count spot checks. Another important indicator is the consumables and equipment the warehouseman needs to do his or her job properly. This includes everything from labels to IT/IS Systems.
- Question: How important is oil & gas inventory management offshore?
- Answer: Oil and Gas Inventory management is a critical component of any successful organization. As the old adage goes, “an army marches on its stomach.” Supply chain nourishes the organization. It may not feed the men but it feeds the assets and promotes wellness within the company if it is functioning properly.
- Question: What training is needed most for the materials staff in our industry?
- Answer: Four primary areas for development
- Equipment Familiarization and Functionality.
- IT/IS Skills. This includes everything from Microsoft Excel to ERP Systems such as SAP, Oracle, PeopleSoft, etc.
- Planning, tactical decision making and ownership. Materials staff will benefit the organization at a higher level with enhanced ability to understand the full cycle of the business. For example, understanding the criticality of a part, choosing the right vendor based requirements beyond cost (schedule, quality, other business constraints), and following the transaction through to delivery and acceptance from the internal customer (Operations and/or Projects) is essential. We need to evolve from transactional to customer relationships.
- Project Management Skills. A good buyer and warehouseman on a project is hard to come by and essential to the success of any project. They need to understand basic project management methodology and understand how their contribution affects the project ecosystem.
- Answer: Four primary areas for development
- Question: What technology should be utilized in your opinion to improve inventory management in the oil and gas industry?
- Answer: I am a huge proponent of Information Technology and Information Systems. Recent decades have seen monumental strides in technology. Unfortunately, the opportunity hasn’t been fully realized within the industry for a variety of reasons. Advances in inventory management systems, RFID, automation, and big data are a major opportunity. I am most excited about continuing integration between historically disparate functions and the benefit of data analysis. For example, condition based maintenance data coupled with computational horsepower and integrated with a robust and advanced supply chain system could be a supreme differentiator.
- Question: What is the best oilfield story you have ever heard?
- Answer: The worker who arrives safe, goes home safe, and retires healthy.
- Question: What is the worst situation you have seen related to inventory management in the oil and gas industry and how could it have been averted?
- Answer: Too many to count. Anytime someone is harmed is the most heartbreaking. Purely from a business standpoint, in most cases it comes down to ownership, planning, visibility, and follow-up. Once we get to accountability, it’s too late. Nearly all failures can be attributed to people, processes, and tools. In most cases it is the company itself that requires positive change to promote excellence and not any single person who has dropped the ball. When I say people, this includes providing proper training to the employee and clear expectations, as well as holding them accountable for performance.
Interview Takeaways- Oil & Gas Inventory Management
Takeaway #1:Materials staff are in the field trying their best to do their jobs as effectively as possible but they don't feel it is sufficient which we see at customers as well around the globe. Oil & gas inventory management is typically overlooked and not considered an important cog in the wheel. If companies would invest in these areas of the business it could pay off greatly in increased up times of rig and reduced costs. The capital required to make these changes is minimal compared to the revenue savings that could be gained.
Takeaway #2: Rig management should spend time on all rig visits with warehouse/materials staff to ensure effective inventory management is in place and to show the staff the importance that management places on inventory. This should include spot checking the inventory, inspecting housekeeping, and ensuring they can operate the ERP system.
Takeaway #3: Most downtime issues that are related to inventory stem from a lack of ownership, planning, visibility and follow-up. Preventing these issues is not easy but with the correct planning, reporting, training and procedures they can be alleviated before they cost your company.
What other issues do you see in the industry related to inventory management?
Read our other posts or contact us for more ways to improve inventory management at your company.
Interviewee: W. Matthew Heaviside
Current Position: Director of Projects at Arabian Drilling Company
- Capital Projects Planning Manager at Arabian Drilling Company
- Capital Project Manager at Ensco plc
- Capital Project Manager at Rowan Companies
- Rig Manager Assets at Transocean
- Southern Methodist University - Cox School of Business: BBA, Finance, Asian Studies, Chinese Language