Clay Constein
Country Manager for Distribution
National Oilwell Varco
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View from the Top

Distribution Challenges for OEM Suppliers

Wed, 01/25/2012 - 11:31

Q: What is the main focus of NOV Distribution in Mexico?

A: Our main focus is to service the oil and gas industry in all aspects within the country. In NOV Distribution, our core competency is supplying OEM (original equipment manufacturer) material or OEM spares, as well as MRO (maintenance, repair and operations). We import goods from the US mainly, but we also have a significant number of local Mexican suppliers. Our goal is to be a one-stop shop that is available 24 hours a day for all oil and gas customers, whether it is a rig down situation or they need an extra roll of toilet paper.

Q: NOV is an oilfield service provider with a distribution division. How does that compare with distribution companies with an oil and gas division?

A: DHL for example moves goods from the US to here, and does not stock goods here. They are being approached to ship something from point A to point B. Our goal is to eliminate our customers’ needs to have to ship from point A to point B because we have it here available for them. We have stock across the country, a mixture of OEM and MRO available for our customer’s needs. We strive to eliminate the long lead times as well as the costs that our customers incur from importing goods across the border. We strive to be that one-stop shop where our customers can call us and rather than waiting 10 weeks for a product, we have it available on the shelf.

Q: What are the main logistical challenges in Mexico?

A: The main challenge is the roads. We move 99.9% of our stock via land across the border. Luckily, we have very strong infrastructure that allows us to have consistent shipments from the US border and that helps us to eliminate stockout situations. Rather than waiting on a container to arrive by sea, and then ship, we are doing three shipments per week to all of our locations. We have the ability to get something from Laredo or Hidalgo, Texas (which is where we cross the majority of our goods) within 48 hours. That is something that we always strive for, so that if our customer needs something, we have the ability to get it for them very quickly.

Q: How does Pemex’s approach to distribution and having spare parts readily available compare to international best practices?

A: The dierence with Pemex is that we are the OEM manufacturer of many of the products that we move. Therefore, we are not necessarily competing with other companies. We are striving to provide our products, which are the superior products on the market, by entering into contracts with Pemex for the supply of spares and our portfolio of OEM equipment.

We are able to oer logistical solutions from the manufacturer to the end user very quickly and very eciently. Currently, we don’t do MRO business with Pemex. This is a very broad market with many local Mexican companies that can provide alternative solutions. Our goal with Pemex is to make sure that they have access to our OEM equipment and material, so that they can have those products available to them at all times.

Q: Where do you see the potential for the growth of your Mexican activities in the future?

A: The area around Poza Rica and Chicontepec is a new market for us. I expect the market there will continue to stabilize. Pemex’s investment infrastructure is in a state of change, with projects such as the new field labs, and this is also changing the way we do business in these regions, supplying parts to an increasing number of companies. In the Poza Rica region and the Chicontepec field, we had great success with NOV Monoflo equipment, of which NOV Distribution is the exclusive distributor in Mexico. It has allowed us to provide products not only to Pemex, but also to some of their direct contractors and we feel that this has been a key in the success of increasing production levels.