Cost Savings in Buying Direct in these Tough Times - Supply Chain Efficiencies in India O&G Industry

VISAKHAPATNAM, India - Jan. 29, 2015 - PRLog -- With oil prices falling in a steady trend, what are the implications in the markets of procurement (equipment and material) in oilfield services ? Companies that have traditionally operated on a vendor based model to buy A-Z of their requirements from selective vendors need to now take a relook at their procurement policies. Overdependence on few suppliers who work on a buy, add margins and deliver basis will result in increased costings that will hurt the bottomline. Oilfield companies have mostly relied on this system to reduce administrative burden of going to multiple suppliers and managing a complex supply chain that having numerous vendors can create. However, with oil prices at its one time low and prices recovery looking bleak in the next one to two years, a relook at these is necessary to tide over the situation. Rig contracts will be up for renewal at lower prices or existing agreements cancelled as termination fines will be lower than continuing with the contract at higher prices. Bringing cost reductions in procurement of materials and services is essential.

Project Sales Corp (PSC), one of leading oilfield suppliers and a supplier to most oilfield suppliers can assist Supply Chain Managers with cost reductions in procurement with direct supplies during this time. PSC's business model has been to sell to vendors who in turn supply to their customers. With over 70 resellers, PSC covers over 80% of India's oil and gas drilling operators, service providers like SLB, Halliburton and Baker Hughes through a widespread network across India. It imports directly from manufacturers, has distribution agreements for India markets, stocks the product and then supplies the resellers who in turn sell to their end-customers. This business model has been very successful for Project Sales Corp and today it does over $1.5 million worth of material supplies to the oilfield industry. With oil prices falling and operators looking at reducing costs in procurement, PSC now plans to go direct and reach the end-customers directly resulting in procurement savings of 10-15%, a typical margin that a reseller would add to its costs and supply.

Several leading O&G Companies already work with PSC on Auto PO basis across India with multiple projects and locations releasing orders based on annual India geo-market pricing for its safety line. Safety Gloves and other safety products are one of those product categories where a company cannot cut down on quality at any time as the cost implications of injuries are very high. PSC has one of the most complete line of safety products for oilfield in India. In addition it sells specialty lubricants, sealing materials, ropes-soaps-dopes consumables where a rig can cut down on quantities but would still need them to operate on a daily basis.

What makes PSC a suitable supply partner at these times for Oil & Gas companies ?

         1/ Direct imports from manufacturer's as India distributors - Lower costs compared to other vendors who source from consolidators/wholesalers or buy locally to resell

         2/ Bulk purchase and stocking in India - Buying efficiencies and cost savings that can be passed on to large direct customers

         3/ Single Margin model - Buying direct can cut down cost by 10-15% as reseller margins are done away with

         4/ Just-in-time purchase cost savings - No need to carry inventory for customer, PSC stocking enables customers to buy just-in-time as required

         5/ EDLP – Everyday low pricing enables customers to avoid paying more to vendors who take opportunity to make higher margins in emergency situations

         6/ Domain expertise - PSC has focussed on oilfield consumables for last several years that help provide the best in their operating product categories

         7/ Stock what we sell, sell what we stock model - PSC does not get into trading, buying locally, adding mark-ups and delivering, so you only buy what they stock and import directly or buy from manufacturers directly. At last count, it represented over a dozen companies in India and a dozen other MNC with India sales subsidiaries.

O&G companies serious about reducing costs in procurement of consumables materials can contact PSC for a direct purchase account. PSC is registered with most O&G companies or can provide necessary docs to proceed with a registration at a short notice. Contact Satish at Project Sales Corp on +91-98851-49412 or satish@projectsalescorp.com to open a direct buying account today.