Succeeding in a Cyclical Industry

Achieving sustained performance in the oil and gas industry can, quite frankly, be a challenge. A primary reason is cyclicality. For suppliers, the task of continually scaling one’s organization to match the market’s temperamental ways can prove especially tricky.

Numerous factors lead to the swings in demand that define the oilfield. Mercurial commodity prices top the list. Fluctuating exchange rates, capital availability, seasonality and weather, government policy and geopolitical events also play a part.

The uncertainty can have serious implications. In fact, how a company navigates the sector’s crosscurrents can mean the difference between success and failure. It can also shape how it’s perceived by customers.

One way suppliers can help tame the effects of industry volatility is to stay focused on the horizon. Longer-term perspective allows companies to sidestep some of the risks of a flighty marketplace. It reduces the inclination to grow too quickly during upswings and cut recklessly during downturns. In other words, it introduces balance where there is none.

Integral to executing a longer-term strategy is the financial strength to survive the troughs. Sound financial footing also allows for greater investment — including research and development — throughout the cycle. This leads to more consistent and differentiated performance over time.

The best performing suppliers also have visibility in their business. While many can’t effectively hedge using financial instruments, they can enter into long-term, take-or-pay or minimum-payment contracts with customers (many of whom can and do hedge). The resulting cash flow stability is invaluable during crunch times.

Finally, suppliers that outperform across industry cycles also tend to display an outsize commitment to process. This is the case at all levels of the organization. Processes are the proven playbooks they follow during both contractions and expansions. And their procedures are continually honed over time.

Commitment to process is also almost always evident in a company’s approach to talent management. Because they typically enjoy lower employee turnover, top performing companies are more willing to invest in training, cross-training and retraining of their people. This enhances employee utilization, loyalty and morale. The upshot is better performance, even as activity fluctuates.

In downturns the best workforce-reduction plans ensure treatment of employees is fair, communication is clear and responsibility transfer is smooth. During expansions, prior employees — familiar with the culture and the job — are among the first contacted to return. For the better companies, many will.

As in most industries, there are far too many short-sighted players in the oilfield to expect all to heed the advice given here. However, those that do will find the deck stacks in their favor. And in an business where opportunity can turn to challenge (and vice-versa) overnight, no advantage should be ignored.

The Industry’s Most Customer-Oriented Suppliers

EnergyPoint publishes its independent customer satisfaction ratings and rankings of oilfield suppliers on an annual basis. These announcements reflect the best and most current information available for tracking the performance of oil and gas industry suppliers.

While each year offers its own surprises as companies move up and down ranks, there is a small group of companies that have consistently remained at the top over the years. These are the industry’s superstars.  For them, customer Continue reading The Industry’s Most Customer-Oriented Suppliers

Invest in the Future with EnergyPoint Research’s Market Data

It is a hallmark of top-performing oilfield suppliers to use times of pause to invest in the people, technologies and processes that lead to better performance.  It’s also been shown that focusing on customer satisfaction is one of the most effective ways companies can take control of their futures.

EnergyPoint is the leading source for independent customer satisfaction intelligence in the oil and gas industry.  Moreover, the acceptance of our Detailed Reports and Online Portal research products only continues to grow.  In the process, our data and tools are changing the way industry suppliers are measured and viewed by their customers, peers and investors.

Should your organization be interested in learning more about EnergyPoint’s customer satisfaction Continue reading Invest in the Future with EnergyPoint Research’s Market Data

How Suppliers Can Lay the Groundwork for Better Times Ahead

If the truth be known, the tendency of many suppliers to the oil and gas industry is to live for the up cycle.  When challenging times hit, enthusiasm inevitably wanes.  Companies go through the motions, but their hearts aren’t in it.  Some even shut their doors until times improve.

But it does not have to be this way.

As the industry awaits a downturn to run its course, forward-looking suppliers have an opportunity to the lay the groundwork for better times ahead.  For some, this new foundation will be evolutionary.  For others, it will prove revolutionary.

Below are some suggestions for those intrepid oilfield suppliers wanting to increase their customer focus and understanding when times are slow so they can enjoy even greater prosperity  Continue reading How Suppliers Can Lay the Groundwork for Better Times Ahead