A recent survey finds oil and gas firms may be putting themselves at risk by not having effective supply chain management practices in place. A recent survey by Achilles, a global ‘supplier information’ management company, finds oil and gas companies in North & South America, and globally, may be putting themselves at risk by not having effective sup0ply chain management practices in place. It finds that a quarter of international oil and gas companies are in the practice of awarding contracts to suppliers, including those in stainless steel fabrication, while neglecting to gather information on their financial standing.
The decline in global oil prices has prompted oil and gas firms to slash spending and cut costs, including layoffs. Many of the workforce reductions taking place are occurring in oil and gas firms’ purchasing and supply chain departments, meaning fewer workers are available to carry out proper validation, pre-qualification and auditing of their suppliers. Since supply chain problems can affect a company’s financial position and reputation, failure to carry out supplier reviews puts contractors in a significant position of risk.
“With up to 80 percent of revenue spent on suppliers, it is vital that oil and gas firms take a long-term approach to managing all risks within their supply chains – particularly those involving contractors,” Achilles noted in the report.
The survey of 300 supply chain professionals from large businesses across the United States and Canada; the UK; Latin America; Spain and The Nordics, included professionals with 64 oil and gas companies. Companies surveyed include drilling and production companies, refining and oilfield services. The survey was conducted by independent consulting firm IFF.