Keeping expertise in the oil and gas supply chain in times of turmoil

by Luke Benton, MNB Precision Engineering

The entire oil and gas market is having to reassess its supply chain. As operators try to navigate an increasingly challenging commercial landscape, they are becoming ever more dependent on trusted business partners. Those partnerships must go beyond transacting products to supplying solutions.

As a family-run precision engineering business, MNB has been working within the sector for the last four decades, constantly adapting to the changing needs of our customers. As their needs have become increasingly complex, we’ve adapted our business model to one of servitization, putting the customer at the heart of the operation and designing our service offer around them. As the oil and gas market enters an era of falling prices and tighter margins, it is only by forming these types of partnerships that operators will survive.

Over the last 40 years, our business has been on the same roller coaster ride as everyone else within the sector. We have experienced tough times before, survived market downturns, recessions, and financial crashes. We all know the market is cyclical but there are some trends that are here to stay.

First and foremost, our customers have to find ways of tackling increasingly complex projects with fewer resources. Rystad Energy estimated that by the end of 2020, more than one million oil workers would have lost their jobs. As the sector is haemorrhaging experience and talent, it is down to its supply chain to plug the gap. We are entering an era where manufacturing partners will be as focused on services as they are on products; providing a one-stop-shop of solutions for customers who have diminished in-house capabilities.

Developing Advanced Services

My brother Elliot and I took over the leadership of MNB eight years ago and began rethinking our business model. We recognised that as projects became more challenging, and remits more sophisticated, there were huge opportunities for manufacturers with a track record in precision engineering. We began exploring a solution-driven approach which put the needs of the customer at the heart of our business.

In 2014, we began working with Aston University’s Advanced Services Group on its servitization programme. We looked beyond selling products to addressing customer pain points by providing expertise and capabilities as a service. We not only manufacture parts but offer advice, consultancy, and in-house capabilities as additional services. By collaborating with the team at Aston, we developed a new business strategy which allowed us to take MNB to a new level.

We consolidated operations onto a single site, increased capacity through acquisition and invested in a range of in-house services, including Non-Destructive Testing, shot peening and spark eroding. Continuous business improvement to keep pace with the changing needs of our customers has been our number one priority. We have spent £3.5m on new tooling and machinery over the last three years and which has proven benefits for our customers who can now access an end-to-end engineering service to reduce their costs and lead times.

Customers across the oil and gas industry are being presented with new challenges every day and can use our expertise to respond accordingly. They turn to us, as always, for precision, quality and reliability, but increasingly we have been invited to get involved much earlier in the process, with our customers knowing that they can access our breadth and depth of knowledge and industry expertise. From involving us in the initial conceptualisation and product design to prototyping and testing, we have been able to help plug the gaps through good times and bad, but it’s in downturns in the market where we can really be of value.

Successful Partnerships

Our customers have come to realise that our facility acts as an extension of their own operation and if they do have any gaps in terms of skills and capacity, they can turn to us for help. That leads to longer term collaboration and transforms the supplier/purchaser relationship into something far more productive. We are helping transform our customers’ capabilities and competitiveness. As a result, we’ve seen our turnover grow from £3.3m in 2016/17 to more than £18m in the last financial year. We are now ranked 30th in the Sunday Times Virgin Atlantic Fast Track 100.

The key to that success has been establishing the business as a global manufacturing centre of excellence. MNB’s ongoing commitment to quality has won the loyalty of customers who trust us to handle their highest complexity projects and parts.

The sector may be going through tough times, but those operators who can transform their business models, drive efficiencies and embrace innovation have much to be excited about. By working collaboratively with their supply chains and forming relationships built on advanced services, this is a perfect time to gain competitive advantage.