Energy & Utility Management

Driving Data & Decisions

Improving Profitability by Inventory Optimization

Improving Profitability by Inventory Optimization

Improving Profitability

Optimization of inventory management is crucial, especially in improving profitability. For upstream oil and gas companies, success depends on timely and error-free delivery of materials through a complex and high-value supply chain.

A failure or even the shortest delay anywhere along this chain can immediately ripple into a significant loss.

Material management and spare parts provisioning, present unique challenges. Onshore and offshore maintenance spares inventory storage facilities each deal with specific location and space constraints.

The problem faced is, these warehouse facilities exist in silos: Each individual site operates as a unique purchasing and inventory management entity. Along with the tendency towards outdated methods to determine re-order levels, this situation encourages overstocking, unnecessary inventory holding costs, and inefficiencies like wasted time searching for parts.

The lack of proper coordination between the different inventory warehousing and distribution facilities encourages excess and obsolete inventory. Warehouse overcrowding is not only inefficient and unnecessarily expensive but also potentially unsafe. Oil and gas companies need to operate their functions in a more efficient and cost-effective manner in order to optimize operations and maximize production.

Inventory Optimization

Rationalizing maintenance inventory with analytics optimizes warehouse space and resource time and eliminates the compulsion to overstock. Inventory rationalization means stocking warehouses by business unit, instead of managing each facility as a unique entity. This keeps both onshore and offshore warehouses working optimally.

How We Can Help

Doing the math manually is humanly impossible. Hence why you need sophisticated analytics technology. We at EDMS Consultants can assist our clients with modelling of the data and streamlining the processes to achieve optimization of inventory.

By leveraging analytics to automate processes and optimize outcomes, inventory rationalization boosts warehouse efficiency, eliminates waste, improves worker productivity and safety, and ensures high service levels.

Rationalizing inventory can also reduce the working capital tied up in inventory and spare parts. Also, those cost savings directly impact profitability. Let’s work smarter and return value to the organization.

Written by,
Peter Buck
Head of Asset Management Services at EDMS Consultants Sdn Bhd