Oilfield service companies typically experience high mergers & acquisitions activity. Sometimes the newly acquired data and systems aren’t thoroughly integrated into the new owner’s operations, resulting in adverse effects on engineering, manufacturing and even accounting.

Capitalizing on the economies of scale and leveraging the benefits of a merger can be achieved with proper management of assets and inventory across the enterprise. We help companies through a simple process to classify, cleanse and normalize data against corporate standards. The end results deliver many benefits, including more accurate financial tracking and inventory management across the enterprise.

Tour through the information above to see how some of our clients take advantage of our software toolset. See how they did it, what they used and even hear what they have to say.

Use Case

Like most Oilfield services companies, Weatherford’s rapid growth is mostly from acquisitions, as many as 300 in the last 10 years. Convergence Data software has been used at Weatherford since 2002, primarily to assist the data conversion team with data migration for their enterprise PLM and ERP deployments. Since then, Weatherford has classified and cleansed over 1,000,000 parts during new business migrations to their corporate ERP system. Today, when they acquire a new business, they can easily identify and map duplicate items and remove them prior to the ERP migration. This saves Weatherford millions of dollars in duplicate part and inventory costs.

One recent example, an acquired business had over 200k parts and about 50% were identified as duplicates. Most of these items were duplicate purchase parts and raw materials. The migration then only required 100k parts to be cleansed and moved into their ERP system. Their completed acquisition then delivered inventory consolidation, significant strategic sourcing benefits and saved time immediately. Other Oilfield Services companies can use our classification software to map duplicate parts and gain all the benefits mentioned and even save a boat load of cash.

Weatherford followed Convergence Data’s Roadmap:

  • Phase I – migrate data from legacy ERP systems to CDS software.
  • Phase II – update classification data model.
  • Phase III – classify, cleanse and validate the data for ERP migration
  • Phase IV – migrate cleansed data to central ERP and PLM systems.

Software Solutions

Weatherford leverages Design for Retrieval TM to convert data prior to migrating a business to their central ERP and PLM system. Weatherford’s team classifies and cleanses the data, removing duplicates and cleans up Bill of Materials prior to migration. They also manage the administration of the CDS software and data conversation efforts for the ERP deployments supporting all locations around the world.

Primary Capabilities of DFR.

  • Cataloging and consolidation of products and parts is key, especially post merger.
  • Preparing and managing product data for Enterprise Resource Planning (ERP) systems
  • Preparing data for direct material cost reduction sourcing initiatives

Question & Answer

The following is a question and answer session between Convergence Data and Mike Betik, Engineering VP at Benchmark Completions, formerly with Weatherford and Baker Hughes. Mike Betik shares his experiences in deploying product classification in the Oil Field Services. In this short Q&A interview, Mike uncovers some of the hidden benefits of classification and how it can be used to drive cost savings, improve inventory costs, spend analysis and help obtain tax benefits.

  • Date: September 4, 2013
  • Name: Mike Betik
  • BIO: 30 plus years Oil Field Services/13 Years Classification
  • Title: Engineering VP at Benchmark Completions

How can classification help a company control inventory costs?

Mike A: Its starts with classifying all the items you keep in inventory. What I mean by Classify…having all your items assigned to categories, where each category may have between a dozen and 20 attributes that provide critical data that differentiates items e.g. size, material, type, performance, etc.

Companies need to pull data from all their local ERP data repositories on their products, where some companies maybe managing data on the same products at many different manufacturing locations. Then you want to align this data to your global classification structure of categories and attributes. So similar parts and products from different mfg locations get grouped into a single category and attributes values are normalized against approved standards.

How does this control inventory costs?

Mike A: You assign an inventory code to each category e.g. GL code. Now inventory can be managed globally versus locally against this single code, shifting inventory management responsibilities to a global level, making it a shared responsibility. You need classification to insure you have applied the correct code to the correct item to improve the accuracy of your financial reports.

Are there any other benefits from classification?

Mike A: If a company deploys a governance model around each one of these categories, it makes it much easier to deploy and police standards e.g. stop the proliferation of creating duplicate items, mitigate non-standard configurations that drive costs, etc.

What other reporting capabilities can be enhanced from classification?

Mike A: Serializing Assets – which improves tax reporting on existing assets. By applying a serial code to each category and asset, it makes it much easier to track assets that can move around. The big advantage here is really the tracking and classifying of the assets themselves. If I am running a Liner hanger, it needs a running tool. Since the running tool is leased to the oil company to run the hanger, then the running tool has earned revenue, is brought back to the shop where it is rebuilt for another job. These rebuild cost parts are taken from inventory (helps with tax) and are applied to the serialized running tool which now can be depreciated.

What other items can be managed by classification?

Mike A: Raw Materials and common buy items. To know exactly how much of a particular raw material you need globally, you need to make sure your classification includes key raw material attributes – material types, raw materials, specifications, hardness, finish, etc.

For common buy items, like o-rings, a company may have multiple internal part numbers for the same o-ring. You will want to have one category for O-rings and any duplicate o-rings should be mapped to a single part number to obtain the strategic sourcing savings and better manage inventory globally. For a company that may have grown through acquisition, this is where the low hanging fruit is…common components and raw materials used across product lines.