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Opinion: Revamp supply chain and change ‘us versus them’ mentality

Mintra Group CEO Scott Kerr
Mintra Group CEO Scott Kerr

Our individual time frames affect the way we view and understand history – and as an effect, the way we react to our current business climate.

I often see a difference between those of us who started in the oil industry before 1990, before 2000 and after 2000. The latter generation knows an industry with mostly rising prices and relatively short but steep downturns. Until recently. Those who started even earlier than the 90s remember prices varying from $10 to $30 during the course of a few years. We thought such variations were large.

Over more than 30 years in the industry, I have read and heard numerous forecasts about the oil price. The one thing common to most of them was that they were wrong. And when the price changed unexpectedly, the industry  always had some sort of an explanation as to why – and the solution was usually to wait for the market to return to normal.

I see the same troubling pattern today. In an attempt to cope, the industry is cutting costs and postponing crucial decisions while waiting and hoping for a more stable market.

But if history has thought us one thing, it is that that there is no such thing as a normal market in this business. And hope is certainly not a viable strategy. Every day that goes by is a missed opportunity –  an opportunity to leverage how we use technology, to strip away unnecessary activities and to bring new ideas to the table.

We must of course continue the search for cost savings, but only as a means to invest in how we manage change. The desired position is one we were can take advantage of change, having secured the management capacity to do so.

One of my main concerns is how we deal with risk. Change increases risk, and we have change management systems to handle it. But risk in this context is not only something to be managed. It is just as much a driving force for change itself. Together these two create opportunity. And it is this opportunity I feel we are letting slip away on a daily basis.

The good news is that it does not have to be this way. It was not like this in the 90s. A period of low and volatile prices where the cost of money was three times higher than today, where computer storage cost 10,000 times what it costs today, and our computers were 1,000 times less powerful than today’s.

Still it was a decade of improved safety statistics and numerous innovations within the industry – driven by the need to be always more efficient. We developed e-learning and multi-lateral wells, outsourcing and automated pipe-handling. Top drives, substantial subsea well technology advancements and 3D and 4D seismic processing.

Today too many of us act like early and late accepters, even though the potential for change and the key to unlocking the competence in the industry is right in front of us.

We should revamp a supply chain that is still organized in terms of “us versus them”, where technology is underutilized and where both the airline and car industry have a lot to offer us. And we should start purchasing services the same way we purchase products. Training and competency management, HR services, maintenance and inventory control are all low hanging fruits in this field.

And we need to be more offensive in developing and acquiring new technology – and, for example, use it for sharing and analysing big data, the fuel of the future. Innovative companies are already moving ahead. And those who are standing still and waiting might want to read up on the fate of two famous late accepters, Nokia and Kodak. Consider this a wake up call.

Scott Kerr is chief executive of Mintra Group, a Norwegian training provider with a base in Aberdeen.

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