The oil and gas industry is known to be volatile. For decades, companies in the sectors of service and supply have been able to not only survive but thrive in a climate of continuous pendulum pricing and bottom-priced bids.
As the prices of oil and gas continue to stay low, it’s becoming increasingly clear that a change is coming. Organisations can no longer afford to wait it out; now is the time for innovation and collaboration. It is here that SA Equip are focusing their efforts to ensure a bright future for oil and gas, supplying state-of-the-art EX equipment to help companies with excavation, storage and shipping of materials and goods.
The new era of oil and gas needs the industry to work together to make the transition into a new climate happen. Companies must think outside the traditional box of normal cost-cutting measures like mass layoffs, efficiency improvements and leaner operations.
Profit margins need to be grown, and more innovative techniques need to be developed. Two alternative methods companies must consider include nurturing new inter-business relationships and introducing more ways of strengthening communications with both customers and suppliers.
No company has it all
The oil and gas industry is one of the most competitive in nature, so it may initially seem that collaboration is not a natural goal. Explore the issue further, however, and it becomes clear that there is ample opportunity for organisations to:
- Strengthen their foundations
- Cut down on outgoings
- Propel the entire industry into the future by forming partnerships with service providers that complement their own
These strategic alliances will come in a variety of forms and can be an elegant solution to many business issues. Whether your aim is to expand your services offered, increase profit margins, lower prices or free up cash flow, it is likely you can find an arrangement that will work.
For example, you may be able to reduce your overhead by combining fixed cost centres with a compatible service provider. This could mean offering unused space in your shop or sharing your resources and/or equipment. Alternatively, you could consider partnering with an organisation that offers its service to a similar client base. The EX lighting supplied by SA Equip is essential for companies working in high-risk environments.
Working together, you can leverage each other’s networks or expand your service offerings, opening you up to new markets and customers whilst simultaneously offering more extensive services to both customer bases. You could also see inefficiencies and prices improve this way, potentially improving your margins.
The strategy of forming alliances
Strategic alliances can also mitigate the expense that comes with bidding wars for jobs. Those lengthy, hotly contested bid processes drive margins down and can even cause delays to a job’s start date. By making joint bids, these inefficiencies can be alleviated, and jobs can go off without a hitch.
Customers will always demand lower prices, particularly whilst the market is depressed. It’s important to take up a policy of open, honest customer communication to strengthen customer relations. Forward-thinking customers are more likely to come to a mutually beneficial arrangement with you when they get an explanation of your company and your pricing. These are the customers that will understand the benefits of a trustworthy supplier.
SA Equip goes to great lengths to be as transparent as possible about their products and company mission, offering ATEX lighting and other equipment designed to support workers in hazardous environments. Through this transparency, SA Equip has been able to foster positive relationships with a number of loyal customers, with whom they collaborate for the benefit of the industry as a whole.
Making a success of collaboration
It is down to you to make the effort to ensure your business ledger is filled with these understanding customers. You must outline your expectations clearly for all business arrangements and be prepared to walk away if the situation calls for it.
It is imperative that your customers come first in order to develop strong customer relationships – think of them as partners and approach innovation with them in mind. Reach out to them frequently to understand what they need and work tirelessly to develop new ways to help. Your offering should be tailored to the customer, and you should fill any gaps where you are failing to deliver on their needs.
Succeeding in this new environment will be a new challenge, and organisations must collaborate if they are to find the new, innovative techniques and strategies that will be required to stay ahead. It’s important that the industry lays the new foundations now to ensure it remains healthy for many years to come. There are all sorts of players in this rich, global industry, and we need to work together to guarantee our own future.
Quality & Continuous Improvement Specialist for a manufacturing company in Edinburgh specialising in ATEX and IECEX equipment for use in extreme environments.