Rationalising inventory holdings to reduce costs associated with storage and maintenance
Inventory management is a key cross-industry issue. Companies hold significant inventories, much of which are unused or obsolete. This presents an opportunity for improved collaboration, processes and procedures so that stock can be rationalised to reduce costs and to enable cross-sector access to items that are needed at short notice.
In 2016, the Inventory Management Work Group launched a pilot online platform for trading stock to help reduce inventory management costs, as well as shorten lead times to access equipment and in turn reduce production downtime.
The group is now increasing its focus on sharing good practice in inventory management, with guidelines to be released later this year.
The group is also looking into the feasibility of developing a broader UK Continental Shelf Inventory Hub. This would be designed to help cross-industry collaboration by storing, sharing and maintaining information on inventory with appropriate certification and to reduce unnecessary duplication of information from suppliers.
Developing an industry vision for the optimisation of logistics
Guidelines for good logistics practice across the UK Continental Shelf (UKCS) will be launched with the aim of helping to facilitate a 20 per cent reduction in operating costs associated with logistics.
The Oil & Gas Technology Centre conducted a feasibility study, partnering with Aberdeen’s Robert Gordon University (RGU), focusing on support vessel logistics in the North Sea, to see how data can be used to quantify inefficiencies. The Efficiency Task Force Logistics Task Finish Group reviewed and made recommendations for some changes to the final publication. Download the Marine Logistics Feasibility Study
LOGIC (Leading Oil and Gas Industry Competitiveness) is a not-for-profit wholly owned subsidiary of Oil & Gas UK that works towards identifying collaborative industry-wide solutions to the UKCS’ commercial challenges. Flightshare Vantage POB
Developing a simplified approach to specification
Due to specification creep and a lack of standard specifications, re-use and sharing rates of engineered products are low across the industry, resulting in large volumes of stagnant inventory.
The Simplification of Engineered Products Guidelines will cover best practice for inventory use, repair versus new supply, and a standardised approach to specification, certification and documentation.
Determining the key drivers of compression system failure
Unplanned shutdowns and maintenance account for substantial production losses with compression system outages the main cause, equating to the loss of a minimum of 40 million barrels of oil equivalent per year.
The work group aims to determine the root cause of compression system failures and develop good practice guidelines for maintaining operations.
Removing costs from the tendering process
Duplication and non-value adding activity in the tendering process has led to industry-wide inefficiencies in procurement. The Tendering Efficiency work group was established to determine the motivations and behaviours that drive these inefficiencies and the extent and nature of the duplication, so as to recommend the best steps for overcoming this.
Good practice guidelines that outline the recommended Tendering Efficiency Framework are available to download.
The Tendering Efficiency Framework (TEF) focuses on minimising duplication and maximising tender compliance. The guide is designed to help industry save 12-15 per cent (or £25 million per year) by streamlining the procurement process through industry-wide cultural change.
FPAL is the oil and gas supply chain database and is the key tool for purchasers on the UK Continental Shelf to identify, select and manage current and potential suppliers when awarding contracts or purchase orders. FPAL tools, such as the Model Invitation To Tender (ITT) templates, can help avoid duplication in the tendering process.
The Supply Chain Code of Practice (SCCoP) outlines a set of best practice guidelines and is an aspirational code of conduct to help the UK oil and gas industry improve performance, eliminate unnecessary costs and add value and boost competitiveness.
Improving efficiency through optimised subsea projects
There are significant savings to be realised by adopting a simplified approach to project execution and through standardisation of subsea technology, eliminating non-value added specifications.
The Efficiency Task Force (ETF) Subsea Standardisation Group had input from a multi-discipline group of over 70 people at 30 companies. It has demonstrated that between 15 and 30 per cent can be removed from the cost of subsea developments by adopting a simplified and fit-for-purpose approach.
The ETF continues to promote the efficiency gains achieved through subsea standardisation.
Inefficiencies in maintenance routines are needlessly driving up costs
In December 2015, Oil & Gas UK formed a work group (not part of the ETF) to bring together technical specialists in the fields of maintenance and asset integrity to share experiences and learnings on the topic of maintenance optimisation and how to tackle safety-critical maintenance backlog.
The work group has produced a document on Maintenance Optimisation Reviews – Sharing Experience and Learnings to help make sure maintenance regimes are fit for purpose.