Is Your Inventory Control System "Rigged" For Success?
Apparently, his company had run out of VX Gaskets (metal gaskets for the wellhead) after the last few were used for In-Between Well Maintenance during BOP Pressure Testing. Then, due to a bad test on the wellhead, the client wanted to replace the gasket— but John’s company had none on their shelves to use. What typically happens is that during the In-Between Well Period, gaskets are used for testing and then replaced with a new gasket prior to running in the BOP stack and ensuring that adequate spares are onboard after doing so.
That did not happen this time.
Rick, the Company Man, called him and informed him that they did not have any gaskets onboard and that they would be on downtime until more arrived. He also expressed his disappointment that a simple count was not performed to ensure the proper number of gaskets were on board and available as needed. Rick informed John that this would reflect poorly on their performance, and he wanted answers as to why and how this situation happened— and what steps would be taken to prevent it from happening again.
John called the OIM to see if there were any extra gaskets on the rig. The OIM told him that the Materials Coordinator said that, per the Inventory System, there were three in inventory but he was unable to locate them. The Materials Coordinator told the OIM that a physical count was performed about a month ago and, at that time, everything was in order. The Subsea Engineer, responsible for maintaining the equipment and ensuring that enough was on hand to perform as needed, had no record of the last time the gaskets were used.
John knew he had to tell his boss. He hoped this mistake would not cost him his job… or, worse, the contract!
As Rig Manager, the responsibility for ensuring that stocking levels in the warehouse are not only suitable but are maintained for situations like the one mentioned above lies squarely with John. Clients expect every bolt and part to be in prime working order on the rig and that a sufficient supply of replacements is on hand when the need arises. Non-productive time is lost time, which means lost money. No one likes to lose money, especially in an economic downturn such as we are in right now.
How does a Rig Manager ensure that the correct amount of materials is on a rig? How does the Rig Manger ensure that inventory supplies are accurate and up-to-date? By doing an accurate Physical count (the process of counting all inventory in a single event), Rig Managers and others can be confident that the rig has what it needs when it needs it.
Some common challenges of performing an accurate Physical Count are:
- Inexperienced resources - Materials Coordinators have received little to no training in the past except on how to use the inventory system.
- Incorrect adjustments - Were adjustments done for the correct item? How were the adjustments made and ultimately approved? Were there discussions on accountability and relaying expectations for accurate reconciliations that were communicated with the proper parties?
- Temptation to cut corners - It’s too easy to simply check off an item that hasn’t moved much since the last time it was checked. An accurate count requires a count every time.
- Difficulty researching the root cause - Are we learning from our mistakes, or are we just writing them off?
- Warehouse closure - Do you have adequate time to count items? Is time management adequate?
- Money - Saving money sometimes costs money, especially if inventory management is negatively affected. And inventory management tends to be last on the list of importance when cost-saving measures are implemented, and this tends to be a costly error.
- Pile of unidentified inventory - How often have you put an item away for later, only to forget about it and/or let others know what you did with it so that it is easily located in the future?
- Undefined process and procedures - When your company has clearly defined processes and procedures, there is no gray area when it comes to inventory counts and when and how they are done. By following these procedures and updating them as necessary, a company saves a lot of time and money when it comes to inventory on hand.
While these problems often lead to inaccurate inventory counts, the ultimate responsibility for the inventory must lie with an individual or a group of employees. In the example at the beginning of this post, part of the responsibility fell on the Materials Coordinator. In addition, the Subsea Engineer needed to plan accordingly to ensure that the materials needed were ready to work to keep the rig running smoothly before, during and after In-Between Well times. The OIM had the responsibility of supervising all involved to ensure the processes were running smoothly, while the Rig Manager had the ultimate job: Ensuring peak performance of the rig and the crew onboard.
Performing an accurate physical count is imperative for keeping adequate supplies on hand for when they are needed. In addition, problems that may arise (and frequently do) can be dealt with quickly and smoothly, with minimal lost time. Remember: A rig running efficiently makes a very happy client, which makes you and your company very happy, too.
To obtain more information on Physical Counting, please click the link below: