To protect margins, NOV must configure products correctly the first time. As many of its product experts neared retirement, how could NOV replicate their expertise?
To capture its product line managers’ and engineers’ expertise before they retired, NOV deployed an automated, rules-driven approach to product configuration using IBM® Sterling Configurator.
Capturesdecades of product configuration expertise in an automated platform
Generateshighly complex product configurations faster and more accurately
Cutsthe risk of costly configuration errors and helps safeguard margins
Business Challenge Story
High accuracy cuts costs
Drilling for oil and gas demands complex solutions with thousands of interconnected components. In business for over a century, NOV provides the rig technologies, wellbore technologies and completion systems that support every area of drilling and production.
Kelsey Hulett, Director, Sales Operations at NOV, explains: “We’re an organization with a broad and technical product offering. In recent years, the need to weather a volatile economy has pushed cost-efficiency to the top of the agenda, both for ourselves and our clients.
“To help our clients tackle the challenge, we’ve begun developing automated, analytics-driven rig technologies to help minimize the cost of their drilling operations. Because our orders are often valued in the millions of dollars, configuring them accurately is crucial to control our own costs and protect our margins.”
With many of its product-line experts and engineers approaching retirement age, NOV realized it needed to act quickly to capture their knowledge before they left the business.
“Many of our product-line experts have been working in their fields for more than 20 years, and their insight into our products plays a crucial role in building accurate configurations for our clients,” Hulett continues. “To ensure a seamless continuity of service as a new generation of employees entered the business, we wanted a way to simplify onboarding of these new hires and automate as many aspects of the product configuration process as possible.
“In the past, we relied on a home-grown platform to generate configurations and quotes, but it lacked the scalability and sophistication we needed. To achieve our goal, we looked for an enterprise-class solution.”
Distilling decades of expertise
NOV selected IBM Sterling Configurator, which is part of the IBM Configure, Price, Quote offering, as its strategic solution for product modelling and configuration.
“We held a summit to capture requirements from teams across the business,” recalls Hulett. “Of all the vendors who presented to the leaders of our global organization, we were most impressed with IBM.
“Not only did the IBM team make a major effort to understand our business, they proactively sought out ways to customize their solution to meet our unique needs. Throughout the decision-making process, we had many collaborative design discussions with IBM, which gave us the confidence that they could deliver the capabilities we were looking for.”
NOV decided to develop quotation, costing and pricing management systems in-house, and integrate them with IBM Sterling Configurator further downstream. Working together with IBM, NOV deployed IBM Sterling Configurator and began mapping out the new product configuration rules.
“Early in the process, we received some valuable consulting from IBM around best practices for our product models,” says Hulett. “Our IBM consultant immersed himself in our business. He recommended that we establish a special project team with expertise in IBM Sterling Configurator modelling, and work together with product line managers and engineers across the business to convert their domain-specific expertise into rules-based configuration models.”
She continues: “Our project team — named the Compass Configuration Center of Excellence [CoE] — is now responsible for coordinating with our engineers, product line managers and product administrators to build models that meet the needs of our sales organization.
“The CoE has been a great success, and over the last three years we have successfully modelled around 80 percent of our land drilling product lines. The Visual Modeler component of IBM Sterling Configurator has proven extremely versatile, which enables us to accommodate the complexity of our latest generation of analytics-driven product lines.”
Getting it right first time
Today, NOV is distilling decades of product-management expertise into IBM Sterling Configurator, helping it shape a fast, accurate and cost-efficient quote-to-order process.
“Our rules-based solution enables us to break down highly complex product configurations into bite-sized questions,” explains Hulett. “Even if a member of our sales support team isn’t familiar with a particular set of components, IBM Sterling Configurator makes it straightforward to make the optimal choice for each client.”
She continues: “We can now configure products that don’t require customization faster than before. And because our product models are designed by experts, we can translate configurations into orders with the confidence that the finished products will work correctly every time. Without a doubt, the ability to turn around quotes quickly and accurately gives us an advantage in many sales situations.”
For more complex orders, NOV has integrated an additional digital approval process into its configuration workflow.
“Any time we need to perform substantial re-work on an order, we increase our costs, so configuring orders correctly the first time around is vital to protect our margins,” says Hulett. “IBM Sterling Configurator integrates seamlessly with our digital approval process, which helps ensure that the relevant engineering support groups review and approve customized quotations before we release them to the client.”
She adds: “By transferring exclusive ownership of our product models to the CoE, we’ve added an extra line of defense against configuration errors. The new approach maintains robust quality and change control processes, and insures that there is no need for our sales support personnel to edit models themselves, giving them more time to focus on building quotes for our clients.”
As it continues to roll out the IBM solution across the business, NOV is confident that it will drive additional cost-efficiencies.
“Currently, we use IBM Sterling Configurator in our land drilling business, but based on the positive results to date, we predict that we’ll also see advantages in enhanced accuracy when we introduce the solution to our offshore drilling group,” Hulett concludes. “In a turbulent economy, operating cost-efficiently is vital. Thanks to IBM Sterling Configurator, we’re enhancing the accuracy of our quotes and reducing the risk of costly re-work.”
About National Oilwell Varco
Founded in 1841 and headquartered in Houston, Texas, NOV is a worldwide leader in the design, manufacture and sale of equipment and components used in oil and gas drilling and production operations, and the provision of oilfield services to the oil and gas industry. With 900 locations in 70 countries, NOV is organized in three business divisions: rig technologies, wellbore technologies and completion and production solutions.