In the old anecdote of the Blind Men and the Elephant, six blind men each describe an elephant based on the part they touch. One man describes the elephant as a snake while holding the wiggling trunk, while another describes the elephant as a tree while feeling the knee. The differing perspectives mean that not one of the men has the complete picture of the elephant since each only knows a small portion of the truth. Decentralized management of major spares inventory by drillers often leads to the same result – a disjointed approach based on limited viewpoints.
Local operations exercise greater autonomy while held accountable for their P&L in a decentralized model. This structure is often necessary to meet the differing complexities presented by each geography but poses a challenge for managing major spares at the local level. A local operation often lacks the time, incentive, and visibility to make decisions that are in the best interest of global operations and rather does what is best for its own bottom line. The result of decentralized major spares management is often suboptimal sourcing decisions and excess or poorly maintained inventory that sits in the shipyard.
How can offshore drillers effectively manage the most critical, expensive, and highly technical inventory across a worldwide fleet? Major spares should be managed by a group who understands the technical, operational, and financial components of managing such specialized equipment. Then it is important to:
- Determine scope of major spares:Develop and prioritize criteria for what constitutes a major spare. Criteria may include the potential for safety incidents in case of spare failure, cost of spare part, and lead time for fixing or replacing the spare. The major spares group manages equipment that meets the set criteria while all other inventory is managed by supply chain. The group also oversees major spare processes including sourcing, inventory planning, certifications, technical specifications, and retirement decisions. The group needs full visibility of inventory within its scope across shipyards, warehouses, and assets worldwide. When disputes arise regarding needs for major spares across geographies, the major spares group has the final say. Centralized management supports improved longevity of assets and financial decisions regarding inventory levels and allocations of spares on a global scale.
- Centralize decision-making, decentralize execution:The central group manages major spares, but coordinates with other parties (and geographies) affected by major spare activity. This includes consulting with the projects group regarding impact on newbuilds and overhauls, operations regarding their needs and concerns, and supply chain regarding the procurement and warehousing of major spares. While decisions are managed centrally, this does not mean that all spares should then be stored in one central location. In fact, spares should be located close to the local operations – such as strategic hubs that serve particular regions or time zones. The goal is to find the right balance between enabling a quick response time to operations and achieving economic cost efficiencies through pooling resources together.
- Align processes to support the new major spares program:The current processes need rationalization to communicate how decisions will be made going forward and the action steps required for activities involving major spares. This entails eliminating, modifying, and adding policies and procedures to reflect the new major spares process. Part of this process is data input, as the output is only as good as the data entered into the system. If end users lack uniformity and transparency of maintenance tracking or inventory levels, the major spares group will lack visibility into the information it needs to make informed decisions at a global level.
- Ensure the right systems and tools are in place:In order to have global visibility into the major spares inventory, the company needs a tool that captures inventory levels and tracks maintenance across geographic locations. A user friendly system will increase likelihood of effective data entry. A critical step often missed is the initial configuration of the system to meet the information and reporting needs of the business. Once in place, end user training and acceptance testing will allow the users to learn the system and catch any issues that need fixing for a smooth go-live.
While there are unique complexities faced by each company, Trenegy has the industry experience to help companies tailor solutions to meet their needs. Learn more about our comprehensive organization design methodology by reading Say Goodbye to Mediocrity: Basic Principles of Organization Alignment.