A week or two ago, I read a quote from an equity research analyst who said something to the effect that the biggest danger to BP in the Gulf oil spill disaster was “British” in its name. In other words, it’s far easier to point a finger at the culprit in such a disaster given the political and geographic distance of the organization who appears to be the guiltiest party (it’s even easier when the chief executive shows up in front of Obama and Congress in a stereotypical and quintessentially British $3,000 Savile row suit). I question if the Obama administration and Congress would have had the exact same reaction if the rig in question was owned by Exxon Mobil, conveniently headquartered in Irving, Texas rather than BP, which we know is based across the Atlantic. After all, Exxon’s dividends are more likely to take care of US pensioners than UK ones.
But the purpose of this rant is not to play out “what if” scenarios regarding rig ownership, fault and government/citizen responsiveness. Rather, I’m most curious about the long-term supplier management implications of what the oil spill will bring. After all, BP did not service, build or manage the rig itself. Those other roles went to Halliburton, Transocean and Hydril (GE), among many other suppliers. Certainly, the fact that BP acted similar to Boeing with its long-delayed 787 project by becoming completely reliant on key supply chain partners is relevant here. I can’t help but wonder if there was greater vertical integration — or perhaps, a better managed supplier development program — within the offshore drilling supply chain that the problems that led to the rig explosion would have been caught (and acted on) before it was too late.
The Times Online published a story in May that provided a paper trail of corrective action requests to one of the suppliers in question. According to the story, “In June 2000, the oil giant issued a ‘notice of default’ to Transocean, the operator of the rig … The dispute was over problems with a blowout preventer, a set of iron slabs that should close out-of-control wells. It failed on the Gulf of Mexico rig, triggering the explosion and oil spill…
