Falling Oil and Gas Prices Provide Opportunity For Lean Principles

By Kristian Kalsing on May 26, 2015

“When the tide recedes, you can see who’s swimming naked.” – Nils Svabverg, ConocoPhillips

That was how keynote speaker Nils Svabverg, Global Contracts & Services Manager from ConocoPhillips, described the current state of the Oil & Gas industry at the PIDX meeting in Houston this past April. He was referring to how the drop in oil prices is exposing all kinds of inefficiencies throughout the supply chain.

PIDX is the standards organization for the Oil & Gas industry. The whole idea of PIDX is to move the industry forward through better collaboration in their supply chains, and data standards are a critical component within that mission. If the Oil & Gas companies and all their suppliers speak the same language (i.e. same data standards), they can achieve a higher degree of automation and integration. Oil production and the pipe in the sea.

The event attracted around 150 people, including many senior business leaders from the largest companies in the industry, (many of their direct and indirect suppliers were well represented too). SAP’s penetration in Oil & Gas is around 80%, so most of the companies in attendance run SAP.

The one-day conference kicked off with Svabverg’s keynote outlining the biggest challenges in the industry. The overarching message was centered around streamlining data collection processes, reducing cycle times and eliminating errors and rework.

All the sessions throughout the day were entirely focused on the benefits of data standards and all the great things they enable from a business perspective, including powerful (and expensive) analytics initiatives. However, only Winshuttle had a good answer to how the data gets into the system in the first place. Without good data collection and upload tools, many of these initiatives will ultimately fail.

In general, there was a lot of talk about how falling oil prices are putting immense pressure on everyone to do more with less. This presents a huge opportunity for utilizing Lean principles. When IT budgets are cut, some of the larger “Big Solution” projects get cancelled, leaving behind unmet business needs that can only realistically be solved with more cost-effective solutions. Sudden exposure of inefficiencies means many companies are actively looking for solutions that can deliver quick results. Don’t get caught swimming naked – learn more about our lean approach to data management.

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