BP reduces costs by improving inventory management

BP has worked hard over the last three years to improve its management of inventory to reduce lead times in getting critical spare parts offshore and reduce waste from the purchase and storage of excess materials.

Over the last five decades of operations in the North Sea, the company has built up a large amount of inventory, stored in many locations. This complexity and excess often resulted in long lead times to transport materials offshore and besides being costly, could have a negative impact on production when these materials were critical to the operation of the platform.

BP launched a project to improve its inventory management – identifying a number of improvements, including better materials cataloguing, disposal of surplus spare parts and a reduction in the number of storage locations being used. As a result, the company has created a more effective materials management process and reduced the costs of inventory management. The number of storage locations has more than halved from 120 to 48, greatly reducing storage costs. The number of inventory items has also halved from 158,000 to 75,000 and around $32 million has been generated by disposing of scrap and materials identified as surplus to the company’s needs.

BP is also participating in Oil & Gas UK’s workgroup focusing on the use of inventory. Through collaboration with other operators, materials are being shared, inventories are being slimmed down and required materials are being made available more quickly.

Arnie Mouat, BP Materials Management Delivery Manager, commented: “The need to address high costs and production efficiency issues in the UK Continental Shelf is clear. Our work to eliminate waste and excess is a good example not only of our relentless focus on making our processes more efficient and reducing operating costs but also of the benefits of collaboration across the industry.”

Please view BP logistics video here.