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Why Upstream Oil & Gas Manufacturers Need Inventory Automation

Inventory automation for Oil and Gas manufacturers

In today’s uncertain industrial landscape, upstream oil and gas manufacturers looking to automate their inventory management must find a supply chain solution that provides a win for the supplier and the consumer. Solving inventory management issues requires implementing an affordable, automated supply chain platform that provides accurate and granular consumption data, a magical user interface, and collaboration among manufacturers, suppliers, and consumers.

Digital transformation can seem daunting, but almost all change management is incremental. A sophisticated digital VMI platform is a practical enough digital solution to be applied to existing companies, existing supply chains, and existing infrastructure without massive upgrades.

Once applied, digital VMI is practical and flexible. Features like traceability and collaboration among suppliers are built in. The transformative power is made possible by taking that first step into automation—establishing the underpinning granular, fine consumption data. Once the foundation is set, companies can build on it over the course of months and years.

Current upstream oil and gas supply chains have two key challenges—the remote aspect of operations combined with the crucial need for traceability. An effective supply chain solution will address both challenges using automation.

How to Solve the Challenge of Traceability in Oil & Gas Supply Chain Management

From the product provider all the way to the point of installation, the oil and gas industry needs better supply chain traceability. Digitization improves the challenge by providing traceability throughout all the supply chain partners, particularly when they are all on the same platform.

There is an enormous volume of reporting mandated for the oil and gas industry, and compliance of API standards requires crucial traceability. However, many manufacturers currently accomplish this with a cumbersome paper trail handoff between various points of the supply chain—a process that is labor intensive and prone to human errors.

With a digital vendor managed inventory (VMI) system, the data can be pushed into a digital platform, handed off digitally to the supplier and then trigger that handoff when the product is pulled from the inventory.

When the part is physically removed from the inventory, the product is tied to the digital paper trail and targeted to be deposited into the manufacturer’s quality control or compliance digital file tree so that it can be easily and accurately referenced.

How Digital VMI Solves the Remote Aspect of Oil & Gas Supply Chain

Upstream oil and gas companies often work with minimal infrastructure in extremely remote places—often 300 to 500 miles away from the closest supplier. The remote aspect of drilling operations affects sustainability, fuel efficiency, fuel prices, and labor prices. It makes managing that remotely-deployed inventory extremely expensive and time consuming.

The traditional model of VMI relies on branches being closer to service areas. In most upstream oil and gas operations, that’s not possible. With an internet-based technology, the data on what’s being consumed at the jobsite is virtually transmitted with real-time visibility.

The downtime repercussions of critical component stockouts on a drilling site can cost hundreds of thousands of dollars per day. Real-time usage inventory helps to forecast future demand.

Why Digitization is Essential in Oil & Gas Supply Chain Management

ShelfAware CEO Andrew Johnson wrote an indepth article for Oilman Magazine that describes the necessity of automation for upstream oil and gas supply chains. In the article, he interviews supply chain expert Scott Cunningham, sales manager at WN Global, a bolting manufacturer for the petroleum and natural gas industries. Cunningham describes several examples of why automation is crucial to oil and gas inventory management. Read the full article by following this link.

How Do I Get Started With ShelfAware?

Implementing ShelfAware’s robust platform is often complex but does not need to be slow. It begins with a group conversation involving a mix of finance, operations and IT professionals. A site audit (often multiple sites) is usually required before a proposal can be made.

Final proposals usually involve a formal stocking agreement, installation fee, and a product pricing quote. Onboarding consumers varies widely, but the minimum time required to convert a supply chain in most markets is about three months.

Want to learn more about an affordable way to automate your supply chain? Request your free ShelfAware demo 

Too good to be true?  ShelfAware is redefining the vendor-managed inventory industry. For this reason, we’re happy to talk to you about how our intelligent inventory platform can benefit your business. Contact us today for more information.


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