The Worst Supply Chain in North America

Steve Banker argues for Logistics Viewpoints that the well services industry has the least mature supply chain of any industry on this continent. This is in spite of the fact that it attains high service levels. Why is this the case? There are a few reasons.

The Least Good

A key way that well services companies provide value is through always having product available to customers when they need it. Well service firms tend to be global and very large, purchasing from hundreds of suppliers, and lead times are long as a result. Sand, for instance, is best purchased in Wisconsin, but due to demand and travel issues, it might actually be cheaper to buy an artificial equivalent from China or Russia. There is often no sales & operating planning (S&OP) process used in any of this either. When suppliers continue to promise short delivery times, what it really means is that they have to order a lot of extra product in bulk in advance and just hope that it gets sold. And to make matters even worse, upstream supply chain capabilities of independent producers are lousy as well. Banker notes, “The owner operator often has outsourced different parts of the production process to different firms and lacks visibility to a good forecast of what they will be produced in the coming days and weeks.” This is an industry that needs to reassess its priorities if it is to evolve.

You can read more here: http://logisticsviewpoints.com/2014/09/08/the-worst-supply-chain-in-north-america/

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