Newalta’s supply chain operations play a critical role in helping the company through a decline in the market it serves. By Jim Harris
Newalta’s focus on cost reduction within its supply chain, as well as its dedicated staff, are helping the company rise to the challenges of a difficult marketplace.
The company in recent months has identified several areas for consolidation and cost savings within its operations in response to falling oil prices. Calgary-based Newalta provides engineered waste management and environmental solutions to the oil and gas exploration and production industries. “We’re looking to our supply chain for opportunities for true savings to our bottom line,” says Paul Kleinen, senior vice president of engineering and technical services.
One of the supply chain categories the company is looking to for savings is its vehicle fleet. The fleet serves 45 facilities geographically spread out across Canada and the United States. Sites range in size from two to three employees up to more than 100 staff members. Newalta has operations in major oil basins in the United States and Canada including the Bakken Shale and Permian Basin, as well as the Alberta Oil Sands.
After carefully evaluating its fleet needs, the company recently consolidated its truck leasing to Enterprise instead of using multiple vendors. By doing this, the company has a single source for data such as truck availability. “By integrating our leasing to a single company, we’re making sure we’re paying the right price per truck and ensuring we have our trucks in the right places,” Kleinen says. “We want to make sure we aren’t buying new trucks if one is available for reassignment.”
Newalta is also looking for opportunities for savings in its use of heavy equipment such as loaders and excavators, as well as its use of process chemicals. “We want to do more business with fewer suppliers, and in return get better prices and service,” he adds.
The company has also consolidated its supply base in several other spending categories. Newalta uses SAP’s enterprise resource planning (ERP) system to align its purchasing from approved suppliers. “Our focus is on making sure we’re working on areas that give us the biggest bang for our buck, then tracing those savings to our bottom line,” Kleinen says.
Newalta’s services include waste processing, waste emulsion treating, water disposal and crude oil recovery. The company operates collection sites as well as processing locations where it separates liquid waste materials generated from oil exploration activities into water, solids and oil. The oil can then be sold or traded back to customers for use as drilling fluid or other purposes.
“Waste management is not just a ‘how much per gallon or barrel’ business, it can be a lot more complicated than that,” Kleinen says. “We have a big picture in mind where reusing, recycling and reducing waste generation is a part of the solution.
“The crudest thing we can do is collect 10,000 barrels of waste and just dump it into the ground,” he adds. “Instead, we treat that waste as if it contains a valuable byproduct, which we collect and prevent from being dumped. We want to recover usable oil from our customers’ waste and reuse it.”
The company tracks the data associated with its processing and collection activities and provides that to customers. This includes information such as the amount of reusable oil extracted from a waste deposit. “We’re not just tracking quantities of materials we’re picking up, but laboratory and other data as well,” Kleinen says. “By capturing that information, we can demonstrate to our customers that we have cradle-to-grave control of our processes.”
‘Doing the Right Thing’
Supply chain improvement is a critical part of Newalta’s overall corporate strategy and vision. The vision has three main components: cost reduction, incremental revenue improvement and performance improvement.
Newalta’s supply chain staff plays an important role in the company’s fulfillment of its vision as well as the way it handles ongoing change in the industry it serves. “I’m proud of how resilient and creative our people are,” Kleinen says.
The company’s staff is not only helping it overcome the challenge of falling oil prices. Newalta recently worked to help the community of Fort McMurray, Alberta, recover from the wildfire that swept through forests in the region in early May. The company continues to donate time, effort and funds to recovery efforts spearheaded by the Canadian Red Cross. Newalta, who has operations in the area, also worked closely with a local industrial council to determine whether sites there should close or remain open during the emergency.
“The way our people responded in the operational sense as well as in the community sense of helping others makes me proud and reminds me that business is not just about dollars and cents – it’s about people and doing the right thing,” Kleinen says.