Gaining better visibility into the company’s physical assets can open up an untapped operational resource, with a significant impact to the bottom line. A physical asset audit surfaces material transfer and cost-reduction opportunities. It also provides more accurate accounting of well costs and company-owned assets.
Additionally, physical asset audits enable companies to uncover potential residual value from surplus as well as end-of-life equipment and materials for disposition. Most importantly, they offer a fast return on investment, essentially paying for themselves.
Stonebridge recently completed the comprehensive physical inventory audit for an Oklahoma-based upstream company. The project, which was completed in six weeks, was facilitated by an inventory playbook developed by Stonebridge to identify key equipment types and attributes. The playbook accelerated the project time line by providing physical audit methodologies and pre-defined equipment types and associated attributes consistent with COPAS guidelines.
The completed physical asset audit generated inventory data in a structured format for data visualization and reporting, to include:
- Equipment cataloged by well site and third-party yard
- Equipment types
- Equipment attributes
- COPAS/CEPS valuations for all equipment and materials
- Picture references of equipment and materials associated by location
- Documenting miscellaneous equipment for potential disposition
The physical asset inventory audit provided immediate and long-term value to the operator. Short term, the inventory process identified surplus equipment with a potential disposition value as well as an average valuation of equipment per well site and third-party yards. Long term, full visibility into physical assets provided the operator a data-driven cost-avoidance mechanism by enabling opportunities for material transfers and avoiding unnecessary equipment purchases.
Additionally, the audit discovered high variations in certain equipment types, which provide future cost-savings opportunities through standardization of specifications. COPAS-compliant valuations of equipment and materials also lay a foundation for the credibility of asset valuations and accuracy of well costs.
Going forward, the operator is in discussions with Stonebridge to conduct semi-annual physical audits. It is also in discussions with Stonebridge on a number of functional areas where outsourcing can enable the organization work more effectively, stay lean, and take advantage of new cost management opportunities.
“A physical inventory audit is a win-win for operators because it generates both short-term ROI and long-term cost savings opportunities. The project is quick and pays for itself in a matter of months while providing operators with long-term value”
– Leo Oei, Managing Director, Supply Chain Management Services
Contact us to find out how supply chain practices and processes can deliver bottom-line results for your organization.