How a Permian Operator Cut Stockout Hours by 73% with Consignment

The problem

Ad-hoc procurement was costing this operator an average of 14 stockout-hours per rig per month. Across a 12-rig program, that worked out to roughly 168 lost rig-hours every 30 days — call it a quarter of a million dollars in deferred production at a conservative day-rate.

The pattern was the same every time. A pumper would call out a torn elastomer or a chewed-up valve, the company man would phone the local supply house, somebody would drive a part out, and the rig would idle until it landed. Multiply by every rig, every month.

What we changed

We installed a consignment locker at the yard nearest each pad cluster — three lockers total — and stocked them with the operator's actual consumption history pulled from the prior 18 months of POs.

Inventory remained TIBRSupply's on the books until a part was scanned out. The operator paid only for what came off the shelf, billed weekly. Counts ran every Friday by our field team. Reorder thresholds were set per SKU using lead time + a one-week safety buffer.

The numbers, six months in

• Stockout-hours per rig per month: 14 → 3.8 (a 73% reduction)
• Average wait time when a part was needed: 2h 40m → 22m
• Inventory carry on the operator's balance sheet: down ~$340k
• Emergency hot-shot deliveries: down 81%

The remaining 3.8 hours of stockout were almost entirely on long-lead specialty items we had explicitly chosen not to stock — typically engineered castings with 6+ week lead times. Those we now flag separately and pre-position against the rig schedule.

Why it worked

Three things, in order of importance.

First, the SKU list was real, not aspirational. We seeded the locker from the operator's own purchase history, not from a generic "rig consumables" template. That meant the parts on hand were the parts actually needed, not a vendor's wishlist.

Second, counts were physical and weekly. Software-only systems drift. A field tech walking the locker every Friday catches miscounts, mis-scans, and the occasional "borrowed" part before they compound.

Third, billing was weekly, not monthly. The operator's accounting team could match consumption to specific rigs and AFEs in near-real-time, which kept procurement and operations aligned.

What it cost

Setup was a four-week implementation: site survey, locker install, data load, and a soft-launch month with paper backup. Ongoing program fee is roughly 4% of consumption — paid for itself inside the first month on stockout savings alone.

Want the full deck

We pulled the redacted version of the case study into a PDF, including the SKU breakdown and the count cadence. Email sales@tibrsupply.com and reference "Permian consignment case study."