At a Glance
- This case study explores how a major land-based drilling contractor overcame inefficiencies caused by a decentralised and underdeveloped supply chain organisation. Facing challenges in cost management and scale optimisation, the company partnered with Renoir Consulting to transform its operations into a world-class supply chain.
- Learn how this collaboration delivered over $22 million in identified savings and achieved more than a 20% reduction in spending on drilling materials and supplies—demonstrating the power of an integrated, data-driven approach to procurement.
Key results
$22 million
Savings in excess through supply chain improvements.
Established a more structured supply chain organisation with improved management control and visibility.
20%
reduction in the spend on drilling operations materials and supplies.
Background
The client is a major land-based and offshore drilling contractor with operations spanning the United States, the Gulf of Mexico, South America, the Middle East, and Africa. With a history of over 95 years in the industry, the company is renowned for its innovation and service excellence in oil and gas well drilling. While the company’s technical expertise and scale positioned it as an industry pioneer, rapid expansion and acquisitions led to a fragmented supply chain. Decentralized procurement, siloed operations, and a lack of strategic oversight created inefficiencies, hindering cost optimization and scalability—a critical challenge in an industry where price volatility demands agility.
Analysis
The client’s supply chain was highly decentralised, with five separate procurement organisations operating in silos. This structure resulted in:
- Lack of Coordination: No formal communication or leverage across procurement teams.
- Inefficient Processes: Ad-hoc sourcing, unqualified suppliers, and missed cost-saving opportunities.
- Market Pressures: Inability to adapt to oil price fluctuations or capitalize on supplier negotiations.
The absence of a centralised strategy meant the client was unable to unlock the full potential of its supply chain, leading to unnecessary costs and operational delays.
Project Approach
Renoir’s approach commenced with the installation of an improved Management Control System (MCS). This system incorporated effective operating metrics and Key Performance Indicators (KPIs), providing senior management with weekly reports on ongoing initiatives and achieved savings.
Enhanced visibility enabled the Supply Chain function to gain management support for crucial efforts such as reducing the supply base, consolidating catalogues, and consolidating vendors and contracts. A key element of the strategy was to establish a formal RFQ (Request for Quotation) process for key commodities and services, many of which were previously procured ad hoc.
Furthermore, the project focused on increasing the involvement of Supply Chain with other essential functions within the organisation, aiming to foster a culture of true cross-functional integration.
“The savings realised were beyond our expectations, but the real win was the cultural alignment across teams.”
— Supply Chain Director
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Implementation
Renoir collaborated closely with the client’s project team to implement the Management Control System. This involved updating and setting standards for weekly alignment meetings within the centralised Supply Chain organisation and with Inventory Control Specialists in the field. Metrics were introduced to track and report the status and results of various sourcing and fulfilment activities supporting field operations.
As the Supply Chain organisation demonstrated its value through tangible results, its influence within the client’s structure grew, enabling it to facilitate other critical aspects of Supply Chain Management. A significant example was the centralisation of planning and scheduling for Structural Audits, which were previously managed ad hoc by rig managers or engineering without a comprehensive understanding of the total costs involved.
By implementing contracts and centralised planning, the client was positioned to achieve further cost reductions beyond those realised through the RFQ process.
Results
The transformation delivered measurable and sustainable improvements:Â
Cost Efficiency: Beyond the $22M savings, the client achieved a 20% reduction in materials and supplies spending, directly boosting profitability.Â
Process Standardisation:Â By establishing a more formal RFQ process, the project team achieved a 25% cost reduction, equating to $1 million in one area alone, simply by reducing mobilisation, travel, and ancillary charges.Â
Cultural Shift: Supply Chain gained organisational stature, enabling proactive collaboration with engineering and operations teams for long-term value creation.Â
The client now operates with a world-class supply chain, equipped to navigate market volatility and drive continuous improvement.Â
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