No Time for Downtime
In today’s world of e-commerce, many businesses never close. Stores open their doors 24 hours a day, global enterprises that operate across time zones and support customers and suppliers non-stop. Today being “on the payroll” day-in and day-out is the goal and the avoidance of downtime is a critical concern.
To answer the challenge of downtime, Noble has implemented an effective and efficient inventory system throughout its global fleet, with the goal of improving the efficiency of operations and reducing the risk of downtime.
“The supply chain for an offshore drilling rig can be very complex and difficult to manage and many of the parts are highly specialized,” says Brian Wolf, Noble’s Vice President of Global Supply Chain “Critical parts must be not only readily available, but we must navigate the logistics of moving these parts to where they are needed on a moment’s notice.”
Prior to 2009, Noble, and most offshore drillers for that matter, had the luxury of maintaining inventories of a few key components at each rig. Decisions on what parts to keep on hand were largely based on personal experience and historic experience. As rigs grew in complexity and the fleet grew more globally dispersed a more systematic approach was needed.
“Noble was quickly moving into a new era of offshore operations, with a more high-spec, high capability and technologically-advanced fleet,” Brian says. “Our challenge was to develop a plan for implementing an effective inventory management system leveraging Noble’s SAP ERP system and standards for critical spare management. At the same time, our task was also to facilitate a culture change throughout the fleet.”
Understanding the Need
Owners of a Rolex watch may believe them to be among the most complex and demandingly made products in the world – but in reality they contain fewer than 120 moving parts. By comparison, many of the systems aboard a modern drilling rig have thousands of individual parts – all made to exacting tolerances. Failure of any of these parts can bring drilling to a halt.
“For example, the engines that power our HHI drillships are made up of over 1,500 distinct and unique parts,” says Rod DeVersa, Director of Procurement. “When you consider that each of the four ships has six engines – that represents tens of thousands of individual parts. “It’s not necessary that we have all of those individual parts on hand at any one time, but clearly we have to understand how likely they are to fail and how best to get replacements if they are needed. In the case of the main engines installed on the HHI ships, we inventory over 350 of those unique parts for routine and preventative maintenance requirements.
On Noble’s drilling rigs today, heightened attention to preventive maintenance, regimented order points and mandated minimum stock levels are the norm. When the reorder points are reached, a requisition is automatically proposed, reviewed, approved and sent to a buyer in Supply Chain who sources and manages the purchase order. This helps ensure that in as much as possible, parts are on hand at the rig level for many of the most often replaced parts. Efficiency of the procurement process is strengthened with fixed price and delivery contracts that account for fifty percent of all materials supplied to the rigs.
When it absolutely has to be there overnight
Having the right part on hand or available at a vendor can sometimes be just half the battle. Getting the part to a rig on the other side of the world often falls to Kevin Smith, Noble’s Senior Logistics Manager.
“We have worked hard to establish close working relationships with freight forwarders who meet our high standards for business and process transparency, as well as them offering real time ability to track and trace our shipments.”
For Noble, a delayed supply shipment is more than a temporary inconvenience. “If we’re waiting for a part or material and not having that item prevents us from doing our work, our clients and our revenue are directly impacted,” says Kevin. “It would be a big problem if a critical part is lost in transit and we could not supply our rigs with the parts they need.”
“By working closely with our suppliers and our forwarders – a missed shipment rarely happens – even to remote locations. We all understand clearly that the ramifications of not having a smooth-running logistics operation can have a profound impact on our bottom line. We never want a rig to go offline because we are waiting for materials,” he adds.
Materials and supplies are sent via air, ocean, or ground shipments to regional hubs, then into the country nearest to the offshore rig being supplied. Logistics providers in each country handle customs and last-mile shipping, then make deliveries to shore bases operated by Noble.
One such shore base is located at Bayou Black, Louisiana, which handles freight shipments bound for the Company’s fleet in the Gulf of Mexico. In 2014, the Bayou Black facility coordinated the shipment of more than 3,200 “packages” bound for Noble rigs. This volume is all the more impressive when you consider that they represented a combined weight of more than 5 million kilograms (11 million pounds) and a value of more than $100 million. Most important was how the timely movement of those materials supported Noble’s performance.
“Noble’s materials management team today is a key contributor in Operations ability to reduce downtime,” says Therald Martin, Vice President Operations - Eastern Hemisphere, Operations. “This process has now been refined to a point where their use of historical ware and failure data such that even for our newbuilds, they have the correct material for spares even before field operations start. This approach is clearly driving uptime performance.”
Off the shelf
Noble’s global supply chain encompasses large, highly technical equipment as well as standard supplies used by rig crews such as switches, electric motors and valves. The Company purchases materials and supplies throughout the regions it operates in and employs buyers who are responsible for those specific areas.
Approved purchase orders are sent via electronic information interchange to freight forwarders, each of whom has a two-way EDI link to Noble’s SAP system. “We get items into our supply chain system as soon as possible, so we work with contracted logistics providers that have a link to us,” Smith says.
“As Brian and his team have continued to centralize his supply chain group with the capital spares warehouse, we are better prepared to deal with any planned or unplanned event with efficiency through their control of available spares and equipment,” said Ronald James. Vice President of Operations - Western Hemisphere, Operations
Strong supplier relationships
Solid relationships with suppliers also help Noble overcome the logistical challenges that are inherent in operating a global, high-spec fleet. Direct spend with our suppliers is in excess of $700M annually. Of that, the top 10 make up more than 50 percent of the total, making Noble a significant customer to parts and components suppliers.
“One of our greatest strengths is removing impediments to the smooth flow of items,” Brian adds. “We’ve established relationships with suppliers who understand our urgency and our needs. They understand that our rigs are counting on the items they make to arrive and that in a very real sense – time is money.”