Oil & Gas Industry
Suppliers Performance Questioned
EnergyPoint Research has published the 2007 Drilling / Wellsite Equipment & Materials Survey -- which provides a detailed understanding of how many major upstream oil and gas industry equipment and materials providers are performing
By Doug Sheridan, EnergyPoint Research, Inc.
Hundreds of respondents at E&P companies, drilling contractors and upstream consultants worldwide completed over 2,000 evaluations of drilling/wellsite equipment and materials suppliers in EnergyPoint Research's 2007 Customer Satisfaction Survey. These respondents have significant and industry-wide impact on the selection and utilization of drilling and wellsite equipment and materials. The data provided in the survey offer insightful and impactful perceptions of the current state of customer satisfaction in the oilfield equipment and materials sector. In the oil and gas industry, the success of initiatives ranging from exploration to the development, management or optimisation of existing assets has never been more dependent on the quality and capabilities of one's supplier partners. Add to this the never-ending push to increase productivity while driving out costs and it's easy to understand why supplier relationships are so important.
The Results
This revved-up interest in supplier performance has manifested itself in increased participation in EnergyPoint's surveys. In fact, the number of individual evaluators in this year's poll grew almost threefold from two years ago. Participants and their employers not only are increasingly looking to have their voices heard, but are also augmenting their own perspectives with the industrywide data EnergyPoint provides in an effort to obtain a more comprehensive understanding of suppliers' performances across global regions, product and service categories, time periods, etc. Record activity levels, scarcity in personnel and resources and rising costs have all taken their toll on customer satisfaction levels with some oilfield suppliers taking a hammering whilst others excel. EnergyPoint's survey of oil & gas industry purchase decision-makers show major oilfield supplier companies among both the best and worst per26 MTR
formers, with some of the biggest players showing the steepest decline in customer satisfaction. In the words of one large drilling contractor, "Major equipment suppliers have been very weak performers for us. Quality issues are a major concern, along with failures to meet promised deliveries." While many perceive vendors as taking advantage of the prolonged market strength to continually escalate prices, most agree today's suppliers are motivated to do what they can to meet burgeoning demand. What's more, notwithstanding the persistent friction surrounding pricing, there is a growing sense between upstream companies and their suppliers that, as one industry participant described, the two are increasingly "connected at the hip". As a result, many buyers are reexamining their sourcing methods, developing more robust supplier competency programs, and creating more structured supplier -- and contract management processes. Their ultimate objective is simple: to gain more value from dollars spent while maintaining high levels of safety performance.
Managing Expectations
While some still hold to a misguided belief they must lower prices in order to perform well in terms of customer satisfaction, more enlightened providers understand that overall value is what matters most to customers these days. And one of the more fundamental aspects of the value equation for customers is the ability of a supplier to deliver products on time and as specified. Accordingly, many survey respondents saw fit to rate suppliers lower for making delivery commitments they were unable to keep in the end. In the words of one respondent, "Suppliers need to be more honest with customers rather than simply telling us what we want to hear. This is especially the case when it comes to delivery times."
November/December 2008
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