Currently, within the Oil & Gas industry, there is a lack of standardization in both the way specific Supplier Key Performance Indicators (KPIs) are defined/measured as well as how they are communicated from Supplier to Operator. As a result, Suppliers often have to provide Operators with the same (or slightly different) data, in multiple formats. This causes significant redundancy. Additionally, there is no easy way to compare KPIs across the industry.
There is also no formal process for the sharing of this information. Data is captured and shared via niche software solutions, ERPs, Excel spreadsheets, word of mouth, or in other cases, not captured at all. Until now, there has been no standard on how to communicate the variables and values of Supplier KPIs.
PIDX recognizes these significant challenges. After studying all the various industry metrics, we have been able to determine solutions for both the standardization of the KPIs as well as the associated automatic transmission between Suppliers and Operators, resulting in significant quantifiable benefits.
The first phase of this project, to establish the new standardized KPIs, is on track for May completion. While there are some challenges around regionalization of KPI standards, the consensus is that these variances can be narrowed down to 2 core sets of KPIs, with a calculation method for comparing the two directly in order to roll up into a single result. Phase 2 will focus on automating the data transmission between Suppliers and Operators.
Adopting these new KPI standards, and the future practice of automatic transmission of the data, offers significant value to the industry.
- Simplification – less complex methods of capturing, manipulation, and presenting performance data saves time and effort.
- External reference point – new Suppliers will benefit from significant time savings related to developing KPIs.
- Automated data transfer protocol – by sending the information electronically in a single format, businesses save time and money associated with timely, manual processes.
- Risk management – real time data availability allows the operator the transparency and ability to manage risks and respond early to challenges.
- Integration – a standardized transmission method will allow integration with existing software and eliminate manual methods.
- Benchmarking –comparing industry KPIs and quickly responding to performance trends facilitates better internal decision making.
- Contract KPIs – use of Suppler KPIs as part of the tender process makes it easy for Operators to compare their options.
For more information or to get involved, please go to http://www.pidx.org/supplier-kpi-2-0/
PIDX thanks PIDX Marketing Chair Joel Leetzow, CEO of Cortex, and Andrew Stewart, Director of Marketing and Investor Relations at Cortex, for their contributions to this article.