How to Disrupt the Undercut
Are you sick of competitors swooping in and winning work with a cheaper price? It’s a lot harder
to be undercut if you truly know your costs. The oil and gas sector has been heating up, which has continued the intensity in the oilfield supplier landscape. As oil companies continue to look to the
market for lower cost services, prices in certain segments are not increasing significantly as suppliers are in fierce competition driving down price.
What are leading oilfield service and supply companies doing to control the undercut from the competition?
- Top service – Quality of product and service brings staying power and allows suppliers to price their product at a premium to market. Oil companies value uptime more then anything, as burn rates can range from $3k-$5k/hr. for drilling to $10K/hr.+ on a frac site.
- Equipment availability - Having equipment on the shelves in an unpredictable supply chain can be a challenge. However, if you don’t have it, it’s hard to deliver the work. Accurate forecasting and understanding of inventory churn and prime items are crucial to gain market share.
- Reducing days sales outstanding (DSO) - The sooner you can convert your jobs to cash the sooner you can take action on the above. Cashflow is the lifeblood of any oilfield business, leading companies use field ticket and invoicing automation software to make this process as fast as possible.
- Competitive pricing – Pricing based on exact target margin, formulated from actual data versus experience. Leading service companies have absolute clarity down to the penny of their profit per job, service, or product. This allows them to price jobs on target margin and cut out any buffer costs to stay ultra competitive against the undercut while still ensuring profitability.
These are just a few ways leading oilfield service and supply companies are succeeding in today’s competitive market. One of the tools they are using to help tackle these issues is the use of an oilfield operations specific ERP (Enterprise Resource Planning) software. When you collect all your operational data real-time you can turn these insights into action and make the right business decisions, keeping your business miles ahead of the competition. The advantage of an Operational ERP such as Discovery Solutions is that you can manage everything from one system.
Discovery Solutions offers the following product features:
- Inventory Forecasting – Complete visibility of your inventory with predictive elements for you to forecast and define critical purchase points.
- Reducing DSO – Discovery’s field service module includes field ticketing, meaning you can collect all your costs, generate a field ticket and invoice all in the same software, reducing third party integration issues.
- Job Costing – Because Discovery is an all-in-one operational ERP, it pulls all your job costing data together from the source, providing you confidence in your pricing model.
Find out how Discovery Solutions can help you disrupt the undercut.