Supply Chain Fragmentation in the Energy Business

Key Takeaways

"The oil downturn has spawned significant recognition of the importance of procurement and supply chain to achieving, supporting, and protecting the success of our business." - CEO, Oilfield Fabrication Company

With material prices increasing, lead times extending, and suppliers becoming more and more difficult to find, manufacturing and fabrication companies serving the oil and gas space are in a bind. Not only are supply chains deeply impacted by fragmentation, managing input costs is as important as ever given revenue ceilings placed by end-users.

Fragmented Vendor Network

Finding and connecting with new suppliers is really hard.

"I barely have time to communicate with our current vendors let alone identify new ones" lamented one procurement colleague. "Even if I did have time, it takes weeks to find the right business on Google, learn who to contact, and, once I've reached out, I rarely get a call back."

Sound familiar?

Historically, having a point of contact at a supplier was handled via email or phone call. There was institutional knowledge in the oil and gas space. Procurement and supply chain specialists would simply "call their buddy" if they were looking for parts or if they were trying to find new vendors. Unfortunately, most of those connections are buried in old email chains or in someone's phone contacts, or, those contacts, are no longer working for the businesses they were previously due to widespread layoffs. This begs the question, "what are other industries doing to cure supply chain fragmentation"?

Curated Supplier Networks

Finding new manufacturing and fabrication materials suppliers via Google is painful. First, you search using generic business descriptors or product details. Then, because the oil and gas energy hasn't yet adopted SEO optimization, you're presented a few potential businesses that MAY provide what you're looking for. Next, you decided to reach out. Maybe you identify one of their sales people on LinkedIn and you send them a message that likely won't be answered quickly. Worst case, you call the contact number listed on their website or you submit the classic ~Contact Us~ form. Let's face it, you probably won't receive a response or call back. Ok, let's assume you proceed reaching out to 3 - 5 new vendors. With every attempt, failure to connect is inevitable. Now, you've spent roughly a few days, maybe a week, with only frustration as a result. Thus, you return to using the same suppliers you have always used.

Studying marketplaces and the removal of friction between the buyer and supplier relationship led us to believe a centralized watering hole for buyers and suppliers to connect, get to know each other, determine if they're a good fit, and begin working together, would serve as a force multiplier in an industry that relies on speed.