Later this week, oil&gas industry key players will unveil their plans for the next 18 months at one of 2009’s most important events.
After a tough year due to volatility in the oil price and the freezing of the financial markets, PILOT’s Share Fair 11 offers an opportunity for contractors and suppliers to plan and prepare for what lies ahead.
It is just one of a raft of measures that Oil & Gas UK is implementing to try to support the supply chain, which is significant not just for the industry, but for the UK economy and security of energy supply.
Indeed, its importance is illustrated by the setting up of a new Oil & Gas UK directorate to focus on supply-chain and industry-development issues, including the promotion of UK offshore suppliers of goods and services. This new directorate will be fully operational early next year.
The supply chain is the network of organisations that support the industry, with many complex organisational interdependencies. It is a chain which must be sustained from top to bottom because the loss of even some of the smallest specialist links could compromise the integrity of the entire operation.
Share Fair, run by the industry for the industry, has enjoyed considerable success, and last year was a sellout, attracting more than 700 delegates.
Fears that the recession might impact on its success have proved unfounded and, in addition to an A list of 11 presenting companies, a further six are offering one-to-one sessions to allow delegates to discuss contract requirements in detail with prospective clients. Once again, it is a sellout.
“This year, we have introduced a self-help zone with the aim of informing the SME community about some of the helpful supply-chain financing models available,” Norman McLennan, supply-chain manager, told Energy.
“We have HSBC, Barclays, Accenture and UK Trade and Investment coming along. UK Trade and Investment is talking about its export strategy and Accenture is talking about how its consultancy services can help companies move rapidly towards a more sustainable cost-management model.
“We are tackling current challenges from a number of different angles.”
In spite of bank pledges to release funds, the reality is that many SMEs are unable to access them and are facing a difficult situation.
“We thought it was important to have something which focused in on that, and the two banks coming along are new to the sector and looking for business,” said Paul Dymond, operations and supply-chain director.
“It is not guaranteeing a solution for people, but it is raising awareness that there are supply-chain financing models they might want to explore, and we are facilitating that discussion.”
One area of particular concern to Oil & Gas UK is that, while there have been significant improvements in almost all areas of compliance with its supply-chain code of practice, there has been a significant deterioration in 30-day payments, in spite of its special 30-day payment helpline.
All member-company managing directors have already been asked to investigate why and identify ideas to reverse that trend.
“It is really important for the UKCS to have a robust payment schedule because that is what holds the supply chain together,” said Dymond.
McLennan added: “You don’t lose people if they get paid – and it makes business in the UK more competitive than overseas. It is people in the middle of the supply chain who are experiencing protracted payment cycles for whatever reason.
“They then can’t pay those further down the chain, and it is the potentially more vulnerable ones at the end who are going to catch the cold. More often than not, these smaller suppliers are critical in supporting the industry – if they go under, the consequences going back up the chain could be quite significant.”
Oil & Gas UK promotes more sustainable and efficient working practices in the sector through its supply-chain code of practice. Recently, a new tiered compliance scheme with the code was introduced to encourage more compelling application of these good practices.
The scheme enables suppliers to feed back (with anonymity) what they think of their clients’ or customers’ performance in terms of adherence to the code’s principles. They will be ranked gold, silver or bronze in an effort to drive standards up.
Another of the initiatives that will be showcased at Share Fair is the new web information portal, which provides advice to SMEs during the economic downturn. The portal offers a range of information, from practical tips to best practice on mechanisms and provisions to help companies protect themselves against financial and commercial exposures and bad practice.
“There is lots of help out there, but it is very fragmented, so we are trying to pull it into a ‘one-stop shop’. The information portal will provide sharp-end advice and helpful tips to protect businesses during these challenging times,” added McLennan.