Commonly known as DistributionNOW (DNOW), NOW Inc. has a rich history. The company has been providing oil- and gas-related products and services for more than 150 years, starting in 1862 as Oil Well Supply. Over time, events such as mergers and going public changed the makeup and identity of the company. Today, DNOW is a global energy and industrial distribution company comprised of more than 300 locations in 20 countries, servicing more than 90 countries with more than 5,000 employees.
Thanks to its more than 300 locations worldwide and more than 150 years of industry expertise, DNOW can be committed to serving the upstream, midstream, downstream AND industrial market segments. The company says it believes that it represents a complete package in this industry, no matter which market a customer may represent. This has helped the company to become a leading provider of products and services in all major market segments of the industry including chemical processing, drilling, exploration and production, industrial manufacturing, midstream, refining and petrochemical, and utilities and gas distribution.
As one of the leading energy MRO distributors in a fragmented global market, DNOW’s customers touch virtually all facets of the energy value chain. In addition, the company provides products to EPCs and general contractors that are hired by an operator for either MRO or capital project work. Its products and services are also sold to industrial and manufacturing customers that may or may not have customers within the energy value chain.
“Our customers choose to do business with us for a variety of reasons,” CEO Robert Workman says. “But the one thing they do have in common is their expectations. They require high-quality customer service and product availability, quick order processing and delivery and a general ease of doing business.”
DNOW is a global distributor of pipe and tubing, manual and actuated valves, fittings, flanges, gaskets, fasteners, instrumentation, power transmission products, mill and janitorial supplies, hand and power tools, machine cutting tools, safety products, personal protective equipment (PPE), electrical products, artificial lift equipment, pumps, drilling and production products, and industrial paint and coatings. DNOW believes it is important to provide customers with the flexibility to choose the best service model and solution for their individual needs. This flexibility differentiates the company.
DNOW’s category management group is composed of product specialists, directors and buyers who are responsible for developing and maintaining its relationships with manufacturers and suppliers. They are also responsible for the quality assurance aspects of the relationships, including the resolution of any issues with suppliers, with the assistance of DNOW’s quality department. The company’s strategy is to provide quality products at the lowest overall cost to customers, utilizing global sourcing and measurement to continuously improve our product offering and service.
The company maintains an extensive approved manufacturers list (AML) of U.S. and global suppliers that have been thoroughly vetted through its supplier evaluation program. The company says its AML is one of its most powerful benefits to customers, some of whom have chosen to adopt it as their own, while others collaborate directly with DNOW. Manufacturers are subject to the same rigorous approval and audit processes, which allow DNOW to deliver quality products that meet customer form, fit and function requirements at the lowest total costs of ownership. DNOW’s AML includes best-in-class suppliers who meet the company’s ISO 9001:2008 standards for quality of product and service.
DNOW’s implementation process includes analysis of customer usage and on-hand inventory to evaluate opportunities for standardization of materials, eliminate unnecessary duplications, and to identify opportunities for cost savings. Additionally, product documentation such as specifications, safety data sheets (SDS), and mill test reports (MTR) are stored electronically at the branch level and may be reviewed at any time by customer request.
Beyond its high-quality product offerings, DNOW offers a wide range of supply chain solutions to reduce customer costs and increase efficiency. The company says it is committed to meeting customer expectations while delivering value through reduction in capital employed, through decreased total cost of products and operations, and through improvements in process efficiency.
Solution offerings include everything from artificial lift solutions, export solutions, industrial vending, innovation and technology, machine tool and manufacturing solutions, project management and RigPAC to RigStore, safety services, supply chain services, tubing reclamation, valve actuation solutions, and warehouse and inventory management. DNOW also supports product and solution offerings with accurate, timely and powerful analytics, allowing customers to monitor the performance of their suppliers, carriers, customers and employees from a central dashboard interface. It works with customers to determine the key performance indicators that most effectively support the objectives of the relationship between DNOW and its customers.
Whether servicing from an offsite branch location, onsite with a customer or through its multiple export groups, each location manager determines the specific inventory and service level required to meet the customer’s needs.
“This leads to having the right product on hand when our customers require it,” Workman says. “The complexity lies in the vast number of SKUs we carry to satisfy our customers’ demands. We have honest conversations with our customers around their expectations so we can meet or exceed them in the agreed timeframe.”
To improve and enhance its services, DNOW is engaged in efforts such as actively seeking to acquire high value-added product lines, solutions and services that will bring value to its existing customers. It also continually provides training to employees on processes, technology, products and customer service. Beyond those efforts, it actively measures and seeks feedback from customers through its “customer priority one initiative.”
“We continually enhance our order management and delivery systems to provide as much information at the fingertips of our employees to help our customers find the right product in a timely fashion,” Workman says. “We have also deployed numerous point of service locations to provide efficiency and self-service. This provides customer access to products in the most efficient manner, minimizing the expenses burdened by customers to manage their supply chain, reducing product costs and minimizing their inventory investment through the deferment of working capital.”
Managing relationships with customers and vendors is another top priority. Customers range from transactional relationships to integrated supply partnerships. DNOW employs customer relationship managers who are assigned to key customers to drive the benefits the company can bring from its scale, technology and knowledge.
“When we have a strong commitment and clear objectives, it enables us to achieve remarkable benefits for our customers,” Workman says.
With regard to suppliers, DNOW manages an approved manufacturers list of vendors. It is more than just a sourcing and procurement relationship.
“We use a managed category approach where our category directors meet frequently with vendors to discuss opportunities, perform quality assurance audits and provide feedback from our customers,” Workman says. “This leads to evolutions in product quality, improved features and benefits and improved demand forecasting.”
To help the company grow, DNOW has been allocating capital toward acquisition of higher value-add product lines and solutions to further support and grow areas such as process solutions, electrical, valve actuation, artificial lift and integrated supply businesses. These investments have been made in the United States and Canada, as well as in Norway, the U.K., Mexico and the Philippines.
Organically, DNOW has been investing in training and developing people. Tools and programs include talent management, on-site branch manager training, a yearlong HIPO program, DNOWU and its Supply Chain Management Intern (SCMI) program.
“SCMI is a rotational-based program designed to attract, hire, train and retain high-potential supply chain employees and expose them to various business groups within DNOW,” Workman says. “We also continue to refine our network optimization, to make our supply chain service solution more efficient through LEAN methodology and to add new tools to better optimize our inventory. And we’ve implemented software to better understand our customer purchasing patterns so we can better serve them.”
As it seeks growth through acquisitions of not only high value-add products, services and solutions – as well as geographic expansion of supply chain and energy operations – DNOW should find sustainable competitive advantages by creating significant value to customers. These will further differentiate the company, increase barriers to entry, form bonded customer relationships and promote cross selling into its core energy operations.
Additionally, oil and gas customers are struggling with managing capital and supply chain service providers while focusing on core operations, whether it is drilling, producing, delivering or refining oil and gas. DNOW is working to refine its supply chain business models and educate customers on how it can drive waste and cost out of customers’ overall supply chains. This integrated model enriches its total value to the customer, providing new business opportunities and marketshare growth.
“We will continue to focus on managing our business through this cycle, growing our customer penetration both through acquisition and organically, developing our employees and maintaining a strong balance sheet to support growth during an eventual upturn,” Workman says. “In the meantime, we must prepare to make significant inventory investments, ensuring that we have the right material at the right cost to meet customer demand as the market turns around.” mt