Case Study: Automate MRO Material Ordering With RFID

By Sarah Howland, Integrated Solutions For Retailers magazine, September 2008

Oil States International (OSI) is a $2.5B company that supplies products and services to the offshore and onshore oil and gas and defense industries. Oil States Industries (Oil States) is a $527 million subsidiary of OSI that manufactures products such as offshore pipeline connection systems. In addition to the direct supplies the company uses to create these products, Oil States orders MRO and other indirect materials such as welding supplies, safety equipment, chemicals, and shipping supplies.

In late 2004, Oil States' Houston branch began to find the number of purchase orders involved in ordering the MRO and other indirect items cumbersome and difficult to manage. Oil States was experiencing frequent stock outs because there was no real inventory system in place. To alleviate this problem, Oil States signed an integrated supply agreement with Groves Industrial Supply (GIS) to reduce its broad supplier base and consolidate its ordering and spending with a single supplier.

"Rather than us ordering and paying for each product, GIS would manage the MRO and indirect supplies that we needed, including offering some on consignment," says Joseph Kittle, procurement manager at Oil States Houston. In 2005, GIS installed CribMaster Toolbox vending machines in Oil States' tool and machine shops to organize and manage some of the indirect materials Oil States was using.