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What’s Your Supply Chain Plan
to Get Back in the Game

Is your company and supply chain ready to get back to business?  We just got hit with a double whammy of Covid 19 and negative oil prices!  Add to that social unrest across the US.  What’s next?  Hornets or locusts?

Seriously, there are many businesses that have just tried to keep their head above water for the past few months.  Now is the time to get back in the game and reignite the growth engines.  What needs to be communicated, and agreed to, with your partners – up and down the supply chain?

First priority is to re-establish communication.  Get in touch with critical suppliers and customers; let them know you are prepared for new business.  Clarify your product and service availability and your key points of contact.  Craft a two-pronged message: explain your commitment to increase your presence in the market and explain how you are keeping customers and employees safe.

Emphasize your commitment to quality and your enhanced quality systems.  With reduced volumes and lower headcounts quality can suffer; we have seen this in prior oilfield contractions.  Communicate expectations to your suppliers and your high quality standards to your customers.  Don’t just assume that it will be back to business as usual.  Be sure to explain any changes in availability of products and services; re-assess and communicate adjusted lead times considering closed locations, reduced production capacities, and modified logistics.

Financial strength, especially at this point in time, is a key criteria when selecting partners up and down the supply chain.  Perform a robust cash flow and working capital analysis; look at optimistic and pessimistic scenarios.  Understand your current situation and access to financial assistance if required.  Require transparency with your partners and be realistic when you are renegotiating plans to ramp up your business.

Changes in legal and regulatory restrictions can have a significant impact on your business model.  Do your homework and be sure that you are aware of the most recent changes.  What are the latest regulations on imports/exports, transportation, and dangerous goods utilization?  What new workforce risks and liabilities need to be addressed?

Now is a critical time to review your pricing and costs.  Re-evaluate your position in the value chain.  How have your competitors fared through this crisis?  What moves are they making?  There could be market opportunities available if you are ready to take advantage of them.  Understand your rationalized service capabilities and existing inventories; price accordingly.  What has changed in your supplier base?  It could be a good time to renegotiate purchasing agreements adjusting terms in your favor.

Now is the time to re-establish lines of communications; share your plans and capabilities with your supply chain partners – suppliers and customers.  Get together and develop shared goals to provide confidence in the future.  Develop optimistic growth plans that are nimble and smart; be prepared for surprises – positive and negative.  It may seem counter-intuitive but now is a great time to explore new opportunities and pursue new revenue streams.  Gaps in the value chain have been created; they can be exploited.  We have survived and flourished on the oilfield roller coaster; let’s do it again!

 

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Categories

COVID19, Growth Strategies, Operating Effectively, Operational Effectiveness, Sales Acceleration, Strategic Marketing Planning, Strategy Alignment and Implementation, Transformational Strategy

David A. Gray Director

David A. Gray has over 35 years in upstream oil & gas.  He has deep operational experience with over 20 years in executive management roles with oilfield service...

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