Now that we've looked at our first 2 sins - Lack of Sales Process, and Asset Underutilzation, for our third post in our 7-part series on the Seven Deadly Sins of Oilfield Service Companies, we are going to explore item mismanagement.
The 3rd Deadly Sin: Item Mismanagement
Under-utilizing large assets is a sin, but so it mismanaging small tools, parts and other materials. Many companies write off tens of thousands of dollars each year in these smaller items, simply because they can’t keep track of them. This leads the companies to buy more and more of these items, so that what they need is always at hand.
“It’s a tricky balance,” says Jory Lamb, President & CEO of VistaVu Solutions. “When we don’t have the right tools on hand, it reflects badly on the company. If we have too much inventory, it costs money. In fact, for every dollar in inventory you carry, it costs you 10 to 30 cents per year in extra costs.”
Lamb continues “I know this welding company. In two years, they had written off $300,000 in tools. Impact hammers, torque wrenches, you name it. It was a perpetual yard sale. In fact, the manager joked that the competition would just follow behind them on each job to outfit their own trucks.”
Mismanaging small tools and parts like this can often be overlooked, but cost oilfield service companies in huge ways. For sure, inventory mismanagement is a cardinal sin in this industry.
