Rigged out

Moving 40 rigs 400 times a year takes the perfect  partner, says Warith Al-Kharusi, Logistics Manager, Petroleum Development Oman

Warith  Al-Kharusi  has  a big  job.  As  Logistics Manager  for  Petro-leum Development Oman  (PDO)  he oversees  the  logistics  functions  of Oman’s national  oil  drilling  company.  This  includes  cargo  haulage,  passenger  movements,  leet management  and  emergency  response  across  a more  than  200,000 sq  kilometre  country.  “It’s  a US$300 million a year activity, and  
to do it on your own is very difficult,” says Al-Kharusi.

But in 2005, his job became easier when PDO made the decision to outsource  the movement of  its  rigs and cargo  such  as  pipelines  to  Bahwan DHL  Exel  Supply  Chain.  DHL  essentially serves as a 4PL, managing various  sub-contractors  and  service providers  to move  rigs over 400 times per year.  “We’re talking about 500 next year,” adds Al-Kharusi.

Warith Al-Kharusi

By 2006, PDO could already seeing  the  value  the DHL  relationship was  adding  to  its  business.  Rigs were moving  faster, and  thus sitting idle for less time and drilling for oil more. “We’ve got about 40 rigs  that we move, and if we move them better we can actually  take one rig out of  the  sequence,”  he  explains.  “It’s not  about  only  creating  cost  reduction but also value creation.”

The  transition  to  outsourcing, however, was  not  so  easy. “We  had to invest a lot of time in articulating what we needed out of  the  relationship,” he says. “We created the right expectations,  and  we  created  the right suppliers.”

Al-Kharusi says the partner selection and transitional phases were the biggest challenges of outsourcing its logistics  activities.  PDO  chose DHL  out  of  over  160  bidders for  the  contract. The  selection and  design  process  took  four
years  and  implementation  took two  years.  He  emphasises  the importance  of  committing  a task  force  to  develop  the  outsourced  relationship. “You need a transitional management team  to manage  the  transition away from the everyday operational  side,”  he  says.  “People doing their everyday work will have a hard time thinking about process improvements.”

He  also  emphasises  the  importance of having a clear plan in  place.  “In  any  outsourcing project, you have  to articulate your  vision,”  he  says.  “What do  you  really want  out  of  the relationship?  What  are  the critical  success  factors?  You have  to  think  about  this  well in advance. You’ve also got  to measure  where  you  are  starting  from  and where  you want to end up.”

Al-Kharusi  says  PDO  may even  outsource  more  of  its activities,  for  example,  the management  of  its  three  airports  in  Fahud,  Qarn  Alam and Marmul; as well as warehousing and material handling activities. “Now we  are going through  the  second generation of contractors,” he says. “The process could take a couple of
years.  We  have  to  excite  the market now.”