The management of inventory in the oil and gas industry is pretty demanding. On the upstream side of oil and gas, both time and effort are consumed to plan and organize the availability of proper equipment and suitable tools whenever the need arises. Missing anything essential can delay the whole job and can cost heavily.
Vendor Managed Inventory (VMI) is a smart solution to inventory management that can help companies bring down costs and avoid stock-out problems. Let us review what VMI really means, how it operates, and why it could be a good solution for an oil and gas company.
What is Vendor-Managed Inventory and How Does It Work?
Vendor Managed Inventory means your supplier manages the inventory for you. Without going through the usual stock checks on their own and ordering parts when needed, your vendor can carry out an inventory check and replenish stocks.
In the case of the drilling team using a high amount of spare parts, the supplier would track usage and make sure those parts get replenished in time-without you having to do anything.
This is very valuable to the companies working on the upstream side of oil and gas, as every minute spent as downtime can generate huge losses.
Why is Inventory a Big Challenge in Oil and Gas?
Because oil and gas jobs depend on equipment that must work all the time. If something breaks or runs out—like a valve, sensor, or tool—it can stop the whole operation.
Also, upstream oil and gas work often happens in remote areas or offshore, where it’s not easy to get quick deliveries. So, you either keep too much stock (which wastes money and space) or risk running out (which delays the work).
Both options aren’t great—and that’s why VMI can help.
How Can VMI Save Money?
VMI can help you save costs in many ways:
No need to overstock – You don’t have to keep extra items “just in case.”
Fewer emergency orders – You won’t need last-minute deliveries that are often expensive.
Better planning – The supplier watches what you use and keeps the right stock ready.
Less waste – Old or unused items won’t sit around and go to waste.
When the supplier manages your inventory, you only keep what’s needed, and that helps reduce storage costs too.
Is VMI Suitable for Every Oil and Gas Company?
Not always. VMI works best when there's good communication between you and the supplier. The supplier must understand your work, your location, and what items are critical.
But for many companies in the upstream oil and gas industry, VMI is a good option—especially for sites where space is limited or where delays can become very expensive.
What Are the Risks of Using VMI?
Like any system, VMI has a few risks too:
Sharing data – You need to share your inventory details with the supplier.
Supplier errors – If the supplier makes a mistake or doesn’t refill in time, your work may suffer.
Setup time – It takes some planning to start using VMI the right way.
But don’t worry—you can start with just a few important items. Once it works well, you can expand it to more products.
How to Start Using VMI in Oil and Gas?
Starting with VMI is simple if done step-by-step:
Choose the right items – Start with items you use often or can’t afford to run out of.
Pick a reliable supplier – Choose someone who understands the oil and gas business.
Set up communication – Share stock reports, usage patterns, and clear expectations.
Check the results – Track how it’s working, and make changes if needed.
The goal is to work together with your supplier to make sure you always have what you need, without the stress.
Can VMI Make Jobs Easier in Oil and Gas?
Absolutely. Good inventory management means all the field workers, technicians, or warehouse staff need never worry about missing parts or delayed deliveries.
Inventory management in the oil and gas business means smoother operations and fewer interruptions. And when your crew is not stressed, they will perform better and safer.
Conclusion
Every second counts in the upstream oil and gas sector. Anything that delays a project due to missing items or poor planning will affect your timeline and budget.
Vendor Managed Inventory (VMI) is a smart, simple way to avoid these hurdles, cutting down on your costs and wasting no time or space in being ready or keeping things rolling.
So, if last-minute orders have become your trademark, or you perhaps have too much stock lying about that is not used, it may be a sign that Vendor Managed Inventory should be given a shot. It might just be the shorty that your team has been waiting for.
