Last week we took a look at the first of our seven deadly sins, and saw how lack of sales process can be costly for your oilfield services business. Just as deadly is our second deadly sin – asset underutilization – which we’re going to dive into this week, in our second post in this 7-part series.
The 2nd Deadly Sin: Asset underutilization
Oil and gas service companies typically need a lot of machinery to get the job done. Unfortunately, in our experience, many companies lack asset visibility. They don’t consistently know whether equipment is out in the field (and if so where), in transit or undergoing maintenance. This uncertainty leads many companies to buy or rent more assets than they actually need. Still, this unnecessary spending might not be the greatest cost of asset underutilization.
VistaVu has a customer – a $40 million company that manufactures and services mud tanks. One of the largest challenges they were facing was getting visibility into where all their equipment was and determining how to keep each piece of equipment billed out. At their peak – they had 3 to 5 mud tanks not being utilized because they didn’t know the job they were originally sent out for was complete. They had no way of knowing the exact location of the tank, whether it was being repaired or recalibrated, or even in transit. As a result, while these tanks sat idle on the job site – the dispatcher would often ship other available units three times the distance out to a new job, instead of redirecting one of the idle units.
“If equipment’s not used efficiently, your people probably aren’t deployed efficiently,” says Jory Lamb, President & CEO of VistaVu Solutions. “Hourly employees don’t get paid enough, and when they don’t get paid enough, they go away. Salaried employees are overhead and further impair the profitability that is generated while they were working and billable.”
Visit us next week to see the next post in this series, where we’ll tackle sin #3 - item mismanagement!
