A “New Normal” in Supply Chain – how does it look?

As the world emerges from an enforced hibernation due to COVID 19, and the Oil and Gas sector attempts to come back from yet another downturn it’s an opportune moment to assess the Supply Chain implications. The term “A New Normal” has been used generally in relation to the pandemic, but it’s also relevant to our sector.

Let’s examine some of the key issues, mainly in relation to Supply Chain and Logistics for support for drilling operations but with relevance elsewhere.

People are the most important asset to an organisation but recent events have left many out of work; some want to come back, some have retired, many have moved to alternative employment which isn’t dependent upon Oil and Gas activity. So how do we encourage people back – what do we have to do to attract new people into the industry, particularly when there is so much talk of Net Zero and a surge in renewables activity? Changes in the application of Tax legislation (IR35), are also acting as a deterrent and on top of that drilling activity is sporadic in its nature. As an example, previous activity levels could support an offshore Drilling Logistics Coordinator, providing they were willing to move from job to job across many clients, but that activity level isn’t necessarily there anymore.

Perhaps the answer lies in a cultural change – the traditional roles and responsibilities may have to be assessed, with potential to divvy up responsibilities in a different manner. Add in the advances in technology, which allow an increasing number of tasks to be performed from onshore, and we could move towards a situation where Logistics activity could be managed from a central onshore hub. (Note, I am not at this stage advocating that offshore “DMC’s” are no longer required!!). Camera systems and Logistics software packages could potentially allow for a shift of resources to onshore, but would there always be a requirement for some logistics presence on the installation?

A further consideration may be to appoint multi-skilled personnel who can cover various roles. The component parts of on and offshore teams undoubtedly be re-assessed as pressure to optimise increases. My advice is to soak up as much experience as possible across on and offshore roles, but also to keep one eye on the energy transition, focusing on obtaining skills which are transferable.

With regards to Contracting and Procurement activities, again there are technological advancements which can streamline operations. E-procurement, E bidding and other such methods are coming to the fore, which assist with the admin burden for all parties. Additionally, industry-wide initiatives such as the OGUK Supply Chain Principles, or the use of FPAL and SeQual, allow some of the common activities and information to be shared.

Sustainability is at the forefront of discussions with more scrutiny than ever on Drilling operations. This is filtering down through the Supply Chain with suppliers now being assessed on their own methods to ensure sustainability. This can range from reducing their own emissions through to the management of their own sub-contractors. More weight is given to this area than ever before and at Vysus we are already examining ways to drive this activity, incorporating it into how we select and manage and collaborate with suppliers.

But sustainability can mean more – it can also relate to how, as an industry, we are fair on suppliers and don’t automatically try and “squeeze” them to a point where it has a negative effect on service levels. Methods such as open book procurement and profit share initiatives can align all parties, ensuring a common goal, rather than the old-school adversarial approach.

Collaboration has been another buzzword in the industry, and this continues to be the case within the drilling sector. In areas such as Marine, the sharing initiatives are in place for the UKCS but may not have been embraced as much as in other areas. For example, the Dutch sector makes greater use of the shared vessel pool for all operators. (I was doubtful at first until I experienced this). So, what’s the difference in the UKCS -is it once again a cultural thing? Are we still saying “It’s my boat and I’m not playing”?. ?I’ve seen many attempts to promote vessel sharing with varying levels of success. What’s become clear is that the decision is often based upon:

1.??????Money – there must be a benefit, in terms of a sharing of vessel cost OR a saving to the Operators costs.

2.??????Culture -As mentioned above, we may need to change our mindsets.

3.??????Contracting – How easy or difficult is it to get the necessary approvals and indemnities in place?

Any initiative needs buy in and drive from Operators to give it a chance of success.

In aviation there is a similar picture, but perhaps the sharing element is further advanced than for vessels. The Flight Share facility has certainly been of great use on previous operations, and once you are signed up the administrative element is simple. Not only does the sharing of helicopters save money but cutting down the number of flights on any day is positive for personal safety and the environment.

Something we have found useful, is making sure the cost elements are available to the decision-makers – what will it cost to run a flight, what would it cost us to keep service personnel on board etc. These costs can be weighed up vs the benefit to inform the final decision. At Vysus we put together this information for the key decision makers at the start of every project.

It’s great to see helicopter providers now coming out with innovative pricing methods, offering flexibility using flight “bundles”. The Oil and Gas industry may need to also adapt – no-one wants to fly in the afternoon or on a Friday, but there may be considerable benefits to more flexible approach.

At Vysus we are already considering the points made earlier in this article, to ensure we are in pole position to Contract, deliver and close out the safest, most efficient and cost-effective services to our clients. We don’t have all the answers, but we’ll maintain an agile and open-minded approach throughout to try and get them.

We’d love to hear from anyone who would like to discuss our track record and methods – feel free to drop me a line at any time.?