The oil and gas industry is no stranger to uncertainty. Producers contend with a myriad of challenges – everything from supply chain uncertainty, geopolitical shocks, ROI demands from investors and an unpredictable policy environment – so it’s no wonder a big industry focus is on creating efficiencies.
With industry production costs increasing by more than 6% for each of the previous two years, and an expected growth of 9% on labor rates per annum , companies are striving to get their spend under control and strengthen internal spend management processes. By digitalizing their maintenance workflow – including ordering and materials management processes – industry leaders have not only brought down production costs but have increased their profitability by up to 10%.
In short, it’s what you do with the inventory once you’ve acquired it that counts more than ever. And that’s where our two made-for-industry solutions – OpenOrder and OpenMaterials – have you covered from pricing, ordering, receiving, transferring and invoicing.
Data Is the Secret to Efficiency
So, apart from saving time through digitizing workflows, why does data matter?
Well, a common industry problem we’ve come across is that, due to paper records and manual data entry, a lot of inventory is improperly tracked and eventually disappears “off the books.” So, although it might be languishing in an inventory yard somewhere, it’s totally invisible from a financial accounting perspective, except maybe to the occasional experienced warehouse manager with an encyclopedic knowledge of on-hand materials. You might have experienced something similar and can probably see where we’re going with this.
For example, let’s say there’s an emergency repair that needs to be performed out in the field, and inventory managers searching available items might have forgotten about “off the books” materials. Putting a rush order in for new parts seems to be the only option. But not only does this cause overspend on materials already in inventory, it also exposes the company to volatility and inflation in the supply chain. If this situation happens on a regular basis, it’s easy to see how these expenses can add up and contribute to overall spend leakage.
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Inventory Oversight, From Order to Transfer With Fit-for-Industry Solutions That Work Together
Like we said before, it all comes down to data and what you do with it. An effective digital solution that has you covered from the time a purchase order is issued, to when those materials are transferred and financially and physically tracked is an invaluable resource that adds to the overall efficiency of your businesses. Why? Because digitalizing the numerous steps involved overall will help seal any weak spots where you might be experiencing spend leakage.
Here’s a walkthrough of the order to transfer process and how OpenOrder and OpenMaterials helps along the way.
Create an Order
To start, let’s say you want to create an order. Some of your existing workflow might be overly complex, with coding and additional approvals required before sending to the supplier. Because of this, it’s inevitable for errors to occur at this stage, which can eventually result in accounting inconsistencies down the line and extensive work by AP before payments are eventually made.
Here’s how OpenOrder improves your ordering and receipt workflow:
- Reduces duplicate entries/errors with digital POs and goods receipts that capture the correct coding, quantity and rate correctly every time.
- Automates compliance checks and billing workflow, including three and four-way matching between contract, order, receipt and invoice.
Log Your Items in Inventory and Process Material Transfers
Now that you’ve received your items into inventory you might be relying on paper-based recording and manual data entry for transfers, or fragmented processes that use a mix of emails, texts and phone calls. It’s no wonder then, that some of the biggest pain points we hear from customers is related to audit issues due to discrepancies in documentation, overpay and spend leakage on items already in inventory and compliance issues.
Here’s how OpenMaterials helps you move past these issues with a streamlined and fully digital materials handling workflow:
- Provides unrivalled ease of use. Make transfer requests, process goods receipts, query inventory levels and locations, and perform cycle counts from your mobile device.
- Connects the field to the office in one workflow by ensuring that all items, whether they’re located in the field or in the warehouse, are connected to your item master and provide detailed information about their location, condition and value.
If you’re ready to take the next step and want to see how OpenOrder and OpenMaterials can streamline your procurement and materials handling workflow fill out this form for a quick product tour!
1 McKinsey & Company, 2023. Taken from: https://www.mckinsey.com/industries/oil-and-gas/our-insights/how-oil-and-gas-companies-can-secure-supply-chain-resilience
2 McKinsey & Company, 2021. Taken from: https://www.mckinsey.com/capabilities/operations/our-insights/a-smarter-way-to-digitize-maintenance-and-reliability#/
