Garry Farquhar, Director/Dogsbody, Vector Supplies UK
Garry Farquhar, Director/Dogsbody at Vector Supplies, describes the company’s basic procurement principles, the impact of increased investment on the UKCS for business, and how the company copes with the human resource challenge the market currently faces.
Five years ago, Vector Supplies’ 10-year goal was to develop closer relationships with its major clients, and provide an even better and more comprehensive range of services. Where does the company currently stand in this 10-year plan?
With some of the major clients we now have special agreements in place on certain aspects, such as the price and range of products that we supply. This eliminates the clients needing to go out and get multiple quotations. We inform them of the prices for the next year and that makes their procurement systems much easier to operate. Nowadays, many clients just send us their orders without asking about the prices. From this point of view, the relationships are indeed closer.
The same clients that we’ve dealt with for the past 25 years tend to come back to us even if the specific personnel we used to work with have moved on. When personnel do move on, it’s often to competitor companies or different geographical locations that we also supply so the relationship is restored.
2013 marked record high capital investments of 13.5 billion USD on the UKCS. Has this increase in economic activity translated into more business for Vector Supplies?
The new levels of investment are bound to translate into new opportunities. Nevertheless, much of the expenditure is actually being targeted towards hardware for the field after the exploration work has been completed. Unfortunately, we’re more focused on the exploration end of the business, with the testing of oil and gas wells in places such the Clair Ridge.
The rentals part of the business has experienced a big upturn because of the high levels of demand. That is probably as a direct result of the increase in investment. Our rentals business is, of course, local; whereas our other work tends to be much more global. Rentals have to be local. It makes no sense to ship a small test unit all the way to South Africa when the same units can be acquired in regional markets.
Do you see more revenue coming from your distributorships, supply contracts or rentals division?
Our revenue is still based on our basic procurement principles. We are an integral part of the supply chain of our major clients and this is why they have been with us for so long. There’s no reason for that to change. We are always ready to adapt to suit the needs of our clients if they have specific requirements. We will also always do our best to hold more stock, and bridge the gap between long deliveries. This can only be achieved by talking with the clients and finding out what their requirements will be for the next year. In the end, a balance must be struck between being able to respond quickly to a client’s needs and having excess stock taking up space. What sets Vector Supplies apart from other companies is the foresight to predict what people are going to need and when they are going to need it and then making sure that we have the right levels of stock at the right time.
Over the last few years, the biggest demand has been for newly built equipment. Some of the bigger companies have come back into the well testing market and they didn’t have the necessary equipment because they sold it years ago when they exited the market. One or two of these big companies are building new equipment and that’s created a big increase in business. The equipment may be being built out in the Middle East or the Far East, but that doesn’t matter because it requires the same sort of instrumentation: ball valves and control valves. What we do is supply all these bolt on pieces. So we’ve certainly seen a significant increase in that side of the market.
In 2008 you said that Vector doesn’t have to be based from Aberdeen, and could operate from anywhere with good transportation and logistics infrastructure. Is the same true today?
Actually, we don’t have the same input into the logistics of orders that we used to have. The reason for this is that most major companies have entered into global agreements with a third party, such as DHL Global, which now looks after their logistics.
In the early days, we were responsible for supply and would cover the cost of the transportation before invoicing the client. Now, we just notify the client that the equipment is ready and they will collect the order via a third party. In that sense we have lost control over the shipping and have little to do with how the equipment reaches its final destination.
One unfortunate by-product of this arrangement is that we can end up with orders sitting in our warehouse a full two to three weeks after we have notified a client that their order is ready for collection. This is something that we have no control over and can represent a significant problem.
In general, Aberdeen remains a good place to be, but the reality is that if we were in Dubai we would be able to do exactly the same thing from over there.
How is Vector dealing with skill shortages in the market? What is your strategy to attract the best talent?
One of our biggest challenges has been finding the right people. A strategy that we have tended to use and has been relatively successful has been to build the company from within. We have promoted personnel who have been here for the past six to seven years and given them their own client accounts to manage.
The demand for skilled workers is so intense that you will find people who will change jobs for an additional couple of thousand pounds. The big players always have the ability to pay a little bit more than the rest and can attract talent away from smaller companies. Turnover in personnel at certain levels is definitely high. When we are recruiting, the last thing we want to see on a prospective candidate’s CV is that he/she has held six jobs in the past couple of years.
We are operating in a niche and our workers are focused on certain types of equipment so it takes time for them to learn. We do provide a certain amount of in-house training. Our staff can of course learn about the equipment from people like me because some of us used to operate that same equipment.
In 2017 Vector Supplies will be celebrating its 30-year anniversary. What would you like to have achieved by then, a buy-out perhaps?
One should always be open to options, but I’d like to think that in 2017 the company would still be Vector Supplies Ltd. By then, I would also hope to have improved facilities or even purpose-built facilities. Apart from the difficulties in recruiting skilled labour, we have found the lack of office space to be restrictive to expansion of our operations. The demand is certainly there for expansion, but we cannot take on further work without extra workers and increased office space. At the moment, our focus is on our long-term clients who have helped grow this business, providing them with the standards that they’ve become accustomed to.