The Problem
Getting a 60,000 square foot inventory using a network of vendor suppliers with different
descriptions and item numbers was an enormous challenge. Automating the part
inventory systems and consolidating them into a single search was critical. By not fully
understanding which parts mapped to various oil producing wells, CRC couldn’t create
true vendor partnerships when off-catalog requests cropped up. The vendors couldn’t
provide inventory management services at the margins or service levels desired by both
parties.
CRC only had their parts inventory cataloged by description, a field with lots of variability.
Procurement was difficult, with CRC vendors rapidly searching inventory to locate needed
parts. Off-catalog requests were too high and parts procurements was 20% over budget.
The Solution
CRC relied on a dozen legacy procurement systems before ProcessMaker. With
ProcessMaker, an automated, Google-like search of disparate inventory sources was
created. CRC was then able to introduce a “Search Before You Buy” process that made
procurement efficient. Wells are now repaired more quickly, positively impacting oil
production.
By bringing together inventory data from disparate sources, standardizing and improving
indexing criteria and making it available for downstream decision making, CRC is
transforming their business and becoming much better steward of financial resources.
Access to the right data in an easy to find, structured process would reduce variability and
costs from procurement, contracting, vendor management and inventory management
processes.
The Value Created
The “Search Before You Buy” procurement protocol immediately reduced calls and emails
between departments, requesters, the warehouse, and external vendors. Parts were found
faster and more accurately within the existing inventory as a result, greatly reducing the
number of off-catalog purchases. Each off-catalog purchase had upcharged 20% or more.
Additionally, metrics were reported on many new pieces of data. This information
indicated frequently used parts, showing demand for various parts to be sourced locally.
It is preferable for the vendor to incur the cost of inventory, having the service level
agreement deliver to CRC for local parts. Finally, automation allowed CRC to understand
what was in their 60,000 sq. ft. parts warehouse. Parts not tied to active field-based
assets were obsolete. Some were recycled, sold for scrap, or disposed. The newly-freed
warehouse space reduced the need for extra storage.
ProcessMaker professional services worked closely with CRC for nearly four months to
develop an automated and searchable procurement solution. Field-based executives,
leaders in IT, procurement, and relationships with vendors all took part in implementing
a successful solution. Since transparency in the inventory increased, CRC was able to
translate these learnings into better contract terms with suppliers to reduce non-catalog
purchases.
CRC experienced lower costs from savings while increasing revenue due to improvement
of document-intensive, approval-based processes. Smoother workflows and greater
efficiency of resources has fundamentally changed procurement, inventory management,
contracting, and vendor relations strategies in the oil and gas industry in California.
