How to Build Through the Cycle: Three ways to come out stronger from the downturn
A couple of months ago, after attending GE Oil & Gas’ 17th Annual Meeting in Florence, Italy, I shared some thoughts on the work we are doing at GE to provide enhanced solutions to navigate the current downturn in our industry.
By then we had just come out of two days of insightful discussions about the future of our sector and the changes we’d like to see in the short to medium-term future. For the offshore landscape in particular, it’s been clear over the past few years that the key to make our operations successful is not just cost saving but an integrated, structured effort across industry participants to create long-term value and a robust framework of practices and tools to boost efficiency across the supply chain.
This week at Houston’s OTC, the conversation is revolving around similar topics – how to inject new energy into our sector and ensure that the industry emerges stronger from the downturn. Whether we’ve hit the bottom, or whether the price of oil will sit sub-$40 per barrel, I believe the silver lining here is how we become more resilient and more efficient, regardless of oil price.
This means focusing our efforts on what we can control, re-defining some of the fundamentals of the way we operate as well as introducing smarter technologies that optimize operations - both today and in the future.
Most definitely, there is significant room for fresh thinking in the way we operate. However, the ability to remove unnecessary layers of cost and complexity from our processes will be the true game changer for the next chapter in oil and gas operations. In this very same forum, I previously shared some examples of the way we are developing new technologies or enhancing existing products to drive tangible simplification results. To complement those efforts, at GE Oil & Gas we are also focusing on streamlining processes, refocusing our organizational outlook and overall redesigning our operations around our customers’ priorities. We are doing this in three distinct ways.
1. Simplification to drive consistency, reliability and lower cost
A crucial element to this vision is the work we do to simplify the way we operate as a company. Like most OEMs, we deal everyday with complex processes and schedules. Delays automatically translate in added cost, which means that in our business time is literally, money.
And when it comes to managing complex, long-cycle operations such as the manufacturing of subsea equipment, it often means having several tools and interfaces supporting critical processes and exchanging key information. Our effort in this remit is twofold. On one side, we are adding enhanced tools to our portfolio, optimizing process control and visibility and enabling seamless execution.
Then, we are unifying our platforms and harmonizing interfaces so that our teams have access to a simplified framework of tools that allow them to avoid redundancy and get things done in a time-effective and reliable way. Finally, we are standardizing our processes where it makes sense, with the roll-out and implementation of Enterprise Resource Planning (ERP) to integrate information across our organization and facilitate data sharing.
2. Enhancing organizational models
When oil prices soar, base cost, duplication, layers and complexity sneak in. This is the time to re-focus, de-centralize and simplify as much as possible while harnessing a culture centred on collaboration, agility and responsiveness.
We are doing this by taking an in-depth look at the way we are organized and transforming our business with the ultimate goal of deploying our resources, domain knowledge and expertise to be closer to our customer base. This has led us to regionalizing our operating model and concentrating on project-centric and mission-based organization structures to unite employees during this tough cycle.
3. Driving partnership across the industry
While the oilfield industry has often been called ‘familial’, it’s taken time for stakeholders across the industry to truly collaborate with each other. Developing partnerships that improve customer outcomes and simplify customer engagement creates a true symbiotic relationship. When our customers win, we win. We believe in close collaboration, and strive to redefine the way we operate as an industry. By creating more space for partnership amongst industry participants, we can develop innovative commercial models that include risk sharing, and lead to the introduction of new supplier practices and an overall re-shaping of the role of the OEM as a true partner across the full life of field.
One example of this approach are our new services partnerships. We have recently announced a business relationship with SapuraKencana Well Services to deliver light well intervention services. Combining technical expertise with local infrastructure and support, we are bringing a new way of working to Asia-Pacific to unlock previously uneconomic approaches to subsea intervention. Between this and lasting agreements with ENPRO for further well intervention services, as well as Diamond Offshore Drilling for BOP services and maintenance, we are paving the roads needed for a more efficient, collaborative future.
As our industry faces ongoing challenges, we are committed to continuing to look at our role in the round, seeking opportunities to standardize, simplify and partner to improve the efficiency of offshore operations.
Our continued commitment to delivering customers’ needs means we frequently collaborate with like-minded companies in order to provide our clients with the very best in operations.