HK1351

SAADIA IRFAN
NIDA KARIM
FIZZA KHAN

INVENTORY MANAGEMENT AT WESTA

PETROLEUM SERVICES
With hundreds of thousands of inventory items at Westa Petroleum Services (WPS), each
having its own characteristics, inventory management seemed to be an impossible game.
Ahmed joined WPS as Procurement Manager after working as a data analyst at TeraData,
spending two years in consulting specializing in optimization, and obtaining his degree in
mathematics at a leading university in Pakistan. Although his job description included many
tasks such as initiating procurement partnerships and devising cost-effective deals, Ahmed’s
priority was to urgently work out a more effective way to manage the inventory.

WPS’s Chief Operating Officer (COO) was concerned that the excess levels of inventory would
lead to a requirement for more warehouse space, increased holding costs, bigger financial losses
due to frequent write-offs from thefts and damages, and capital tied up unnecessarily. Inventory
levels that were too low, however, carried the risk of stock would run out and therefore disrupt
the whole supply chain; it might have severe consequences financially and for WPS clients.
After a month in his new position, Ahmed sat in his office compiling notes for a scheduled
meeting with his new team and the COO where he was to recommend improvements to the
inventory management.

The Oil and Gas Industry

The oil and gas industry contributed 18.34% of the total gross domestic product (GDP) in
Pakistan. The industry consisted of three main segments: upstream, midstream, and
downstream. While the downstream and midstream segments focused on refining and
transporting oil, respectively, the upstream segment was the provider of the oil and gas services
to the downstream companies. In particular, the oil and gas upstream segment provided
products to the oil and gas refineries by searching for reservoirs of oil and gas in the country
and then drilling to extract them. As of 2019, Schlumberger, Halliburton, and Baker Hughes
were the three largest oil and gas service providers in Pakistan in terms of total sales revenue.

Dr. Saadia Irfan, Nida Karim and Fizza Khan from the National University of Sciences and Technology prepared this case for
class discussion. This case is not intended to show effective or ineffective handling of decision or business processes. The authors
might have disguised certain information to protect confidentiality. Cases are written in the past tense, this is not meant to imply
that all practices, organizations, people, places or fact mentioned in the case no longer occur, exist or apply.

© 2022 by The Asia Case Research Centre, The University of Hong Kong. No part of this publication may be digitized, photocopied
or otherwise reproduced, posted or transmitted in any form or by any means without the permission of The University of Hong
Kong.
Ref. 22/733C

Last edited: 23 June 2022

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 22/733C Inventory Management at Westa Petroleum Services

An oil well could produce 100 to 5,000 barrels of oil per day. In general, the higher the
production of the oil, the higher the profit of the drilling company. The oil wells in northern
Pakistan were 5,000 to 6,000 meters deep, while those in southern Pakistan were relatively
shallow, with a depth of 2,000 to 4,000 meters. The concentration of wells was greater in the
southern part of the country.

The overall economy in Pakistan depended largely on oil and gas as the major source of energy
generation. As it became increasingly costly to extract oil from deep wells and the amount of
gas production couldn’t meet the demand arising from the economic development, the Pakistani
government started importing liquefied natural gas (LNG) from Qatar as a substitute for natural
gas in 2018. In 2019 the supplies of imported LNG increased by 14% over the year before. In
addition to LNG, the manufacturing sector used coal as a power-generating source to decrease
dependence on oil and gas. The government also began to focus on renewable sources of energy
such as wind and solar energy. All these measures led to the drop in demand for oil and gas and,
hence, the business of the oil and gas companies. Since the revenues of service companies were
tightly tied to the activity level in the downstream oil and gas industry, inevitably oil and gas
services companies were negatively impacted.

The Company
WPS belonged to the upstream oil and gas industry in Pakistan, specializing in providing oil
and gas well-drilling services to oil producers in the country. Based in Islamabad, it was a local
company founded in 1995 and was one of the 10 largest drilling companies in the country. Most
of its competitors were international (with Schlumberger, Halliburton, and Baker Hughes as the
top three). WPS served three clients, namely Pakistan Oilfields Limited (POL), Shell, and Oil
& Gas Development Company Limited (OGDCL), in the cities of Chakwaal, Kohat, and
Rawalpindi, respectively. These clients had negotiated day rates of USD31,000, USD30,000,
and USD28,000,1 respectively and had two years remaining on their contracts. With all three
drilling rigs engaged at high day rates, the nonproductive time (NPT) never exceeded the ceiling
of 1%, and competent manpower employed and profitability had increased; WPS had every
reason to be satisfied.

WPS hired 100% local employees and ensured the best quality service to its client. To WPS,
the benefits of hiring local people were twofold. Unlike in most of the Gulf countries, the
drilling operators in Pakistan were not required to localize job roles to comply with the
country’s local content legislation. As a result, the workforce of the international drillers mostly
comprised expatriates. The support functions of the international companies were centrally
based outside Pakistan and served the whole region. For example, the auditors, maintenance
team, and certification inspectors all were expatriates who came from abroad to the Pakistani
rigs. This meant that branches of these companies (such as Schlumberger, Halliburton, and
Baker Hughes) depended on staff from an international support function and faced increased
expatriate failure rates, which occurred when expatriate employees were not adequately able to
adapt to the local countries’ environment and challenges. One important challenge the
expatriates faced was that they were unable to move freely. The western ministries did not allow
expatriates to go to certain parts of the country because of security threats. Often their security
clearance took more than three months. Moreover, bullet-proof cars and escorts had to be
arranged for expatriates to go to concessions. At WPS, this issue didn’t exist as the whole
workforce was local and hence was able to freely move to the concessions in any part of the
country, if the need arose. For this reason, WPS enjoyed a high reputation among its clients for
its drilling services, with its client evaluation ratings never going below 95%. Moreover, hiring
local labor translated into lower costs and higher profitability for WPS.
1
All currency amounts throughout the case are in US dollars.

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The contracts with each client required that in case of a necessary shutdown of a rig for repair
or maintenance or for any reason for which the client was not responsible, WPS’s remuneration
during such shutdown was calculated as follows:

A full rate was to be paid for the first 15 consecutive NPT hours accumulated
in any calendar month. After those 15 cumulative hours of NPT in any calendar
month, a zero-day rate was to be applied if the shutdown continued. A zero-
day rate was also applicable if drilling operations were halted due to reasons
within WPS’s control.

The NPT Issues

WPS started to face various challenges, and the COO found himself struggling with issues on
multiple fronts in 2018. The company’s NPT had shockingly increased from 1% to
approximately 8% in total operating days calculated on a monthly basis for the three rigs. The
increased NPT hit the company hard, as the company lost the day rate amounting to over
USD2.25mn for the three rigs in 2018 [see Exhibit 1].

The increase in NPT also had serious financial consequences for clients, as each client
concurrently had other contractors on the site engaged in logging, cementing, and wireline
logging processes. With operations halted because of delays on the part of WPS, the contractors
were left idle. As a result, the clients faced spread costs of approximately three times the NPT
loss. In such a situation, the operational evaluation the clients conducted dipped from a core of
95/100 to 70/100, and this seemed to be a trend that had started in early 2018 [see Exhibit 2
for a sample evaluation form]. In addition to filling in evaluation sheets, the clients started to
openly and frequently express their dissatisfaction in the head office meetings held in Islamabad.

The shortfalls in performance, job quality, service reliability, and professionalism all led to
disappointed clients. It made running the business very difficult for the COO. Given this
situation, the COO’s key concern was that WPS no longer had a competitive advantage and its
reputation was continuously declining in the industry. The COO conducted rounds of meetings
with the team to identify what had caused WPS’s performance to deteriorate. According to the
team, the most apparent reason for the decline in reputation was the decrease both in oil prices
and in demand for oil extraction services worldwide, so the clients had higher expectations. The
team said that WPS should rethink its marketing strategy or clients would leave WPS and start
doing business with its competitors. However, the COO knew that less apparent reasons were
yet to be investigated.

The Inventory Management at WPS

WPS was a highly capital-intensive company, with its inventory broadly consisting of drilling,
mechanical, and electrical consumable parts for running the equipment [see Exhibit 3 (an Excel
sheet) for a detailed list of inventory items]. The drilling parts comprised top drives, hoisting
equipment, solid control equipment, and pipe handling tools. The mechanical parts included
filters, valves, engine parts, reciprocating pump parts, compressors, and centrifugal pump parts.
The electrical parts included cables, receptacles, circuit breakers, motors, carbon brushes, and
transformers. In addition, for convenience, the warehouses at each rig stored health and safety
equipment (HSE), which included firefighting equipment, spill control equipment, fall arresters,
safety devices, and hazardous gas sensors.

Managing inventory at WPS was always a challenge because of the complexity and long lead
times to transport the inventory items from offshore. However, with increased profitability and

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sound business performance in the past, WPS had every reason to delay the reengineering of
the inventory process. WPS procured inventory only from financially stable, technically
qualified, and reliable sources from abroad. In evaluating potential suppliers, the company
considered delivery prices, supplier reliability, operational costs, and after-sales support. The
import of inventory was regulated by Statutory Regulatory Order (SRO) 678.2 The available
options for importing inventory from abroad were by air and sea. WPS chose to import its
inventory by sea using the DHL courier service. DHL charged WPS according to the weight of
the consignment. There was a concessionary import duty of 5% for the industry. If any item
was imported temporarily (for example, any equipment or tool imported by a service company
from another country for a specific job was to returned to that country), custom authorities
could clear it against a corporate or bank guarantee without levying any import duty.

WPS worked on a decentralized model with warehouses at each of the three rigs. When a certain
inventory item at one rig was needed, WPS ordered it directly from overseas, not from other
rigs.

Each warehouse in the rig employed warehouse men who made an inventory request to the
head office by making a service material order (SMO) with the approval of the tool pusher3 at
the rig [see Exhibit 4 for a sample SMO]. The rig superintendent in the head office then
approved this request. A final approval by the COO was required if the value of the requested
inventory was greater than USD5,000. Once approved, the SMO was forwarded to the supply
chain coordinator in the head office who prepared the purchase order (PO), which in turn was
approved by the supply chain manager and finally the COO [see Exhibit 5 for a sample PO].

After the COO’s final approval, the supply chain coordinator took the quotation from the
original equipment manufacturer (OEM). The PO was sent to the manufacturer. The inventory
was ordered from three main destinations, namely, Houston in the United States, Dubai in the
United Arab Emirates, and Dhahran in Saudi Arabia. The lead time for inventory ordered varied
from country to country, depending on the distance involved. Typically, the lead time was 70
days for Houston, 50 days for Dubai, and 60 days for Dhahran The goods were directly
delivered to the relevant rig, where the warehouse man put them on the shelf and updated the
records in the system [see Exhibit 6 for the process described].

As with all other roles, WPS employed two warehouse men to share the job at each rig; they
had a 14-days-on–14-days-off rotation. Zayyan and Ghazanfar were the warehouse men at Rig
No. 2. They had worked at WPS for over 10 years; both were highly experienced. Having been
acquainted for a long time, they had a good and harmonious working relationship. Their mutual
understanding was that they took work-related calls from each other, even on their days off,
and shared every detail during the handover process. Unfortunately, at the beginning of 2018,
Ghazanfar suddenly had to leave his job for family reasons. He was replaced with a new recruit,
Ali, who had been interning at the rig for the past six months.

One of the problems that the COO found was that WPS had accumulated a large amount of
inventory for some items, which was stored at the three different locations in the country. The
obvious intent was to house “sufficient inventory” that minimized downtime to avoid any NPT
cost to WPS and ensure its client satisfaction. However, the definition of sufficient inventory
remained unclear to WPS’s warehouse men. Historically WPS had set arbitrary targets for
inventory levels. Even so, the targets were frequently violated. No minimum and maximum
amounts of inventory level were set. At the rig warehouses, it was common to find surpluses of
some inventory items and shortages of others.

2
Statutory regulatory orders governing import of inventory in Pakistan.
3 The person who is the main in charge of the rig.

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The Analysis
WPS needed to investigate the causes of the surpluses and low inventories. A thorough look
into the items revealed that the inventory could be bifurcated into one-off inventory and
recurrent inventory categories. The one-off inventory items ranged from repair kits to overhaul
engines. The recurrent inventory, on the other hand, included items such as filters and liner
piston valves of reciprocating pumps.

Ahmed conducted detailed interviews with the workforce at the rigs and noted the reasons for
each incidence of NPT [see Exhibit 7 for a year-to-date summary]. Ahmed concluded the
increase in NPT incidents could have been avoided with better inventory management. While
it was not possible to conduct a thorough inventory analysis on each inventory item, Ahmed
focused on obtaining the amount of each inventory item consumed in the past two years. For
this, he scanned the sea of past data files created by the team at the cloud in detail for a week
and came up with the information [see Exhibit 3 for the list]. The inventory demand pattern
had been fairly consistent over the past two years. Therefore, Ahmed deemed it safe to base his
analysis on the assumption that demand for inventory would follow the same distribution
pattern in the future. He decided to create a model to calculate the minimum and maximum
levels for each inventory item.

In addition, he physically visited each warehouse to tally the inventory balances, interview
relevant staff, and gather data to find out where attention was required. He was unable to meet
the warehouse men at all three rigs; however he managed to hold in-depth meetings with both
warehouse men at Rig No 2. He saw Zayyan on the last day of his shift and learned that Zayyan
had all the demand patterns and price fluctuations at his fingertips. Ahmed’s contentment soon
turned to curiosity about the actual reason behind the surplus and or insufficient inventory levels.
The next day, still troubled by the same question, he met with Ali, who had just returned to start
his next shift. Ali was a bright young individual who seemed thrilled and enthusiastic about his
new role. He had so much to share about his new appointment that the meeting extended over
lunch at the rig café. Ali shared how Zayyan and Ghazanfar used to spend their overlapping
day sitting at the same table discussing every detail of the operations. He himself had joined
them a couple of times as their intern. However, he had laughed at how he couldn’t understand
the majority of the discussion because they had their own jargon. Ahmed deduced that Ali’s
lack of experience, partly due to the improper work handover from Ghazanfar, and the tendency
to order more inventory than needed might be some reasons for inefficient inventory
management.

Ahmed observed a practice of conducting daily 9 a.m. meetings between the warehouse man
and the tool pusher to get things in motion, in addition to the ad hoc meetings that were initiated
by contingent events. However, he never saw anyone taking minutes at any of those meetings.

Ahmed also noted that the warehouse at each location stored inventory without any segregation
of bins. The warehouses were not locked. As a result, the manpower at the rig frequently took
inventory parts from the warehouse without the knowledge of a warehouse man. In some cases,
critical parts were under the custody of technicians who did not work in the warehouse. In
addition, used or issued parts were re-stored in the warehouse. Could these reasons lead to the
inventory figures not tallying? Were there any other reasons?

The Challenge
Ahmed jotted down the various issues. He could see that definitely there were inefficiencies.
The challenge was not only how to solve the problems that had emerged, but also what the root

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causes were of all these inventory problems. An obvious solution to this issue might be the
digitization of inventory management, which would improve intracompany communications,
make the information consistent and transparent to the relevant personnel, and eliminate
paperwork and, hence, human errors. However, Ahmed knew that the companies in this
industry, no matter how big and profitable, still relied on Excel spreadsheets and didn’t have
much digitization in their drilling operations, while they did have fancy HR and finance
software in place. Ahmed understood that digitization required a significant IT investment,
including investment in IT software, IT implementation, future maintenance, as well as human
capital involved in the whole process. All this was something the company could not afford at
this time of turmoil. The challenge for Ahmed, therefore, was to find an optimal level for
inventory replenishment for each inventory item, given the existing resources. The other
solutions were better inventory management rules and regulations and better management
systems involving all three rigs, which Ahmed decided to work on.

Inventory optimization was a large-scale initiative at WPS. The thought of questions arising at
the meeting of “Why should we do this at all?” sent chills down Ahmed’s spine. As he heard
the rustling movement of the team members and the COO outside the meeting room, Ahmed
was dreading the response he would get. Would he be able to convey the importance of this
initiative with poise and confidence?

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EXHIBIT 1: COST IMPACT OF NPT

NPT 2018 NPT Hours NPT Cost Impact

Percentage (USD)
Rig 1 648.25 8.04% 748,843.80

Rig 2 734.50 9.21% 825,000.00

Rig 3 658.50 8.06% 680,750.00

Total 2041.25 8.403% 2,254,593.75

Source: Company documents.

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EXHIBIT 2: SAMPLE CLIENT EVALUATION FORM

Source: Company records.

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EXHIBIT 3: INVENTORY ITEMS CONSUMED IN THE LAST TWO YEARS

Exhibit 3 (in the supplemental Excel file) shows the details of various inventory items held by
WPS in the past two years.

Column A: the serial number.

Column B: the number of units of each inventory item consumed in the past 2 years.
Column C: the locations where these inventory items were imported from.
Column D: the name of the inventory item.
Column E: the manufacturer from which the inventory was bought.
Column F: the distinct part numbers of the items.
Column H: the number of units held in the current inventory for each inventory item.
Column G: the units of measurement of inventory.
Column I: the price per unit.
Column J: the dollar value of each inventory item which was obtained by multiplying Column
H and Column J.
Some inventory items had a cost per unit of zero because these items had passed their certified
life.

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EXHIBIT 4: SAMPLE SERVICE MATERIAL ORDER (SMO)

Source: Company records.

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EXHIBIT 5: SAMPLE PURCHASE ORDER (PO)

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Source: Company records.

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EXHIBIT 6: THE INVENTORY PROCESS

Source: Based on interview with the company.

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EXHIBIT 7: SUMMARY OF EVENTS

Total hours of
Date Event description Cause of event
NPT
Rig 1
13-Jan-18 Wash pipe failure. 1 a
12-Feb-18 Top Drive System blower motor failure. 7 e
Mud pump # 3 piston and seat
17-Feb-18 2 a
replacement.
18-Feb-18 Drill string washout. 7.25 e
Replaced wash pipe and pressure test the
7-Mar-18 a
same.

Pull out of hole (wet pull) from 3987 m to

2135 m. Found wash out in stand # 65
7-Mar-18 (2135 m from bit). Replaced drill pipe. 24 e
Record pressure @ 500 GPM. - OK Run-
in hole to bottom 3987m.

350 per square inch pressure drop,

suspected wash out in string. Pull out of
8-Mar-18 hole on elevator from 4025 m to 2154 M. 15 e
Found washout in stand # 66 @ 2154 m,
lay down same.
Washout – Pull out of hole from 4431 m
19-Mar-18 to 4266 m. Pull out of hole slowly 28 e
because of tight hole.
Troubleshooting of human machine
21-Mar-18 3 e
interference screen.

Observed drop in pressure (750 per square

inch), pull out of hole 2764 m, found
8-Apr-18 1 e
washout in drill pipe (1 1/2" x 1/4" near
slip area), (2nd joint) lay down full stand.

Pull out of hole changed bit & run-in hole

9-Apr-18 24 d
to shoe after washout.

Observed human machine interface for

controlling tripping speed not working.
10-Apr-18 Decided to repair the same meanwhile 2.5 d
kept string in cased hole and work on
human machine interference.

Pull out of hole to 2,835 m. Lay down

13-Apr-18 12 e
washed out joint.

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Total hours of
Date Event description Cause of event
NPT
Internal blow out preventer leakage, pull
out of hole 40 stand, replaced Internal
16-Apr-18 4 e
blow out preventer & Run-in hole to
bottom.

2-Jun-18 Top drive system main breaker tripped. e

Drill string parted while working on stuck
17-Jun-18 d
string.
Drill string parted while working on stuck
18-Jun-18 7.5 d
string.
Drill string parted while working on stuck
19-Jun-18 24 d
string.
Drill string parted while working on stuck
20-Jun-18 24 d
string.
Drill string parted while working on stuck
21-Jun-18 24 d
string.
Drill string parted while working on stuck
22-Jun-18 24 d
string.
Drill string parted while working on stuck
23-Jun-18 24 d
string.

Top drive system tripped due to resistor

25-Jun-18 24 b
grid heat up. Wait for cool down.

Top drive system internal blow out

28-Jun-18 preventer leaked from crank. Pull out of 15 a
hole to shoe for changing.
Top drive system IBOP leaked from
crank. Pull out of hole to shoe, changed
29-Jun-18 22 a
internal blow out preventer & Run-in hole
back to bottom.

Pull out of hole from 3582 to 3505m.

Installed circulation head. Changed upper
12-Jul-18 internal blow out preventer & press tested 34 b
at 3000 per square inch - ok. Washed
down to BTM.

Draw works sprocket cracked. Rig shut

4-Aug-18 5 d
down. Arranged the same from oversees.

Draw works Sprockets cracked. Rig shut

4-Aug-18 290 d
down. Arranged the same from overseas.

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Rig 2
CAM followers of the top drive system
7-Feb-18 internal blow out preventer were 5 a
replaced.

Top drive system electrical motor breaks

down. Replaced the same by arranging it
9-Mar-18 5 b and c
from sister rig. Preventive maintenance
not done due to lack of spares.

Prior job safety meeting. Install, rig up

and function test Top drive system.
17-Mar-18 168 b and c
Pressure test rotary hose and stand pipe to
4500 per square inch - OK.

One main engine # break down. Shut

down operation. Repaired the engine and
27-Mar-18 restarted operation. Poor preventive 80 a
maintenance due to unavailability of
engine critical parts.
During run in hole observation one of
hydraulic hoses of Top drive system
9-Apr-18 15 c
leaking. Waiting on to arrange hose from
sister rig.

Top drive system hydraulic motor

stopped functioning. Spare not available.
9-Apr-18 194 c and d
Lay down top drive system. Arranged to
mobilize the spare motor from oversee.

Prior job safety meeting, change dead line

14-Jul-18 10 e
anchor load cell.
Wash pipe leakage. Lack of preventive
maintenance due to spares back up. Pull
30-Jul-18 14 a
out of hole to shoe and changed the wash
pipe.

29-Aug-18 Blow out preventer tilt due to bop hoist. 8 e

30-Aug-18 Blow out preventer tilt due to bop hoist. 1.5 e

During bop test annular bop did not

8-Sep-18 function. Rig shut down. Arranged 234 c
replacement from oversees.
Rig 3
Draw work motor energizing issue. Back
14-Feb-18 165 c
up motor not available on site.
5-Mar-18 Drill line over wrapped. e

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Standpipe union seal leakage. Seals not in

7-Mar-18 50 c
stock. Borrowed from sister rig.

Observed relay was not working properly

& Zener diode was shorted of draw-
11-Mar-18 22 c
works -rectified after getting spares from
sister rig.
Rig move excess time due to wait on for
21-May-18 82 c
damaged block raising lines.

Silicon current rectifier # 3 one phase of

reactor was ground and giving ground
24-May-18 fault. Spare reactor mobilized from sister 22 c
rig. Rectified after replacing the reactor
with 2 10 mm/80mm jumpers in parallel.

Top drive system power loop cable got in

25-May-18 e
contact with the torque tube.
Observed leakage in bell nipple. Rectified
5-Jun-18 10 e
the same.
Mud pump piston issue. Waiting on mud
10-Jun-18 40 c
pump parts shipment.

Observed engine # 2 heated up + water

flowed from radiator + fan belt broke
22-Jun-18 down & tripped. Transformers heated up c
and burnt out. Rig power shut down.
Meanwhile pick-up string to 2186 m.

Step down transformer of Silicon current

22-Jun-18 c
rectifier burnt.

Step down transformer of Silicon current

rectifier burnt. Arranged the transformer
from Schlumberger, mobilized and
23-Jun-18 21.5 c
installed. Meanwhile pull out of hole to
shoe. Tested rig equipment at different
parameters. Run in hole back to bottom.

Mud pump suction module cracked.

5-Jul-18 Spare not in stock. Replaced the same 75 c
after receiving from sister rig.

Worked on mud pump # 01. Continue

6-Jul-18 circulate with mud pump # 02 & a
increased mw to 1.35 specific gravity.

Worked on mud pump # 01 & replaced

6-Jul-18 a
piston on mud pump # 01.

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Replaced wash pipe. Meanwhile rotate

thru rotary table & circulate. Pressure test
6-Jul-18 a
wash pipe at 300 psi low & 3000 high -
ok. .
10-Jul-18 Cont'd worked on mud pump # 01. a
Rig power shut down due to engine # 1
11-Jul-18 e
trip.
Observed mud pump # 01 seats washout.
15-Jul-18 Spares not available. Arranged from sister 35 c
rig.
Observed leakage from seal suction
16-Jul-18 module of mud pump # 01. Rectify the 10 a
same.

Observed leakage of oil from generator #

17-Jul-18 01. Replaced the gasket. Meanwhile a
circulate & slowed down the pump.

Suction module of mud pump # 3 washed

out. Spare module not available in stock.
17-Jul-18 45 c
Had the module repaired in Karachi
workshop and replaced the same.

Worked on mud pump. Change piston #

17-Jul-18 a
02 of mud pump # 02.
Rig power shut down due to faulty
electrical module. Repaired the same on
18-Jul-18 48 c
register and replaced. Spare module not in
stock.
During bop test, upper rams not holding
pressure, poor preventive maintenance
2-Aug-18 33 b
due to unavailability of spares. Replaced
the packer element.

a. Due to insufficient inventory, preventive maintenance couldn’t be done to avoid this

failure.
b. Due to no inventory, preventive maintenance couldn’t be done to avoid this failure.
c. Inventory was not available. Logistics of inventory from other locations/suppliers led
to non-productive time.
d. Due to no inventory available, replacement of defective part couldn’t be done to save
time.
e. Not related to inventory.

Source: Company documents and interviews.

18

This document is authorized for use only in Dr Saadia Irfan's Fundamentals of Financial Management Fall 2022 at NUST - National University of Science and Technology from Nov 2022 to
May 2023.