4 Strategies for a Sustainable Oil and Gas Supply Chain

Oil and Gas Supply Chain

New technology is being developed and new market trends are arising.

This is forcing the O&G sector to abandon their traditional ways of operating and embrace new approaches.

It’s not just the market that’s changing but also consumers themselves, as well as the entire industry environment.

Without a new solution, O&G companies will face more and more difficulties. One of the most important aspects is certainly the supply chain.

Up until now, the entire supply chain for O&G wasn’t properly optimized.

The goal for these companies is to achieve optimum exploitation, production and processing and that is simply impossible to achieve without vast improvements to the supply chain.

Fortunately enough, new technologies and new market trends can provide O&G companies with a reliable solution for this matter and help them achieve better efficiency throughout every business operation.

With that in mind, here are a few strategies for a sustainable oil and gas supply chain.

Reducing the costs

The O&G industry grew fond of high prices that have been growing over the years. Now the necessity to cut costs, in order to save the failing revenues came as a shock to the entire industry.

In the past, the industry experienced a period of cost inflation. During that time the expenditure per barrel kept rising between 5% and 15% every year starting back in 2009.

Nowadays, a new opportunity to cut down on the costs has presented itself. The fact of the matter is that operators are indeed becoming more efficient.

As an example, the U.S. independent contractors onshore have managed to improve production per well while reducing the cost per barrel.

The main reason is that they started using improved horizontal drilling techniques. This resulted in longer well with more frac stages alongside super fracking where more sand is injected into the wells by the drillers.

However, new techniques that will ultimately cut down the costs require modern supply chain solutions.

Better equipment

oil and gas photo

New and modern equipment must now be integrated into the supply chain. If efficiency and cost reduction in one of the objectives for O&G companies, then modern equipment must be included.

For example, the new service of logging while drilling, where data about the well is gathered during the drilling process requires an appropriate drill collar.

The O&G companies must equip themselves with proper equipment that can flow seamlessly throughout the supply chain and be readily available when needed.

The equipment must be able to reach the sites from manufacturers through warehouses to wells efficiently.

Otherwise, the costs that result from delays and inappropriate equipment may start to increase drastically.

Warehouse inventory management

warehouse photo

Inventory management within the warehouses is one of the most important aspects of the supply chain.

Labeling, storing, packaging and even transporting equipment needs to be seamless and efficient if the company wants viable and positive results.

Modern technology provides and solution that will vastly improve inventory management.

As a matter of fact, warehouse management software solutions can provide a digital approach that’s powered by the latest AI (Artificial Intelligence) and its machine learning capabilities.

This approach can bring a whole new level of organization to warehouse management while drastically reducing the chances of errors both human and otherwise.

The solution can also help companies improve their supply and demand planning, transportation and logistics, as well as any other supply chain strategy.

Improving visibility

Visibility photo

Visibility throughout the supply chain is very important for any company, not just for O&G ones.

The fact of the matter is that a company needs to have insight into factors, such as the supplier, project, customer and overall business, among other things.

One of the surest ways to achieve better supply chain visibility is by leveraging the TMS (Transportation Management System) technology.

That way the O&G companies can enjoy quite a few benefits. As an example, here are a few of the advantages that TMS can provide:

  • Shorter order cycles,
  • Lower ordering and purchasing costs,
  • Shorter inbound supply lead times,
  • Reduced safety stock inventory levels.

Compliance

standards photo

In order for the supply chain to be sustainable, seamless and effective, the O&G companies must remain compliant with all the domestic and international standards.

Regulations are prone to changes due to government policies, which is why it’s important to be up to date with any changes in regulations.

The main reason is that oil and gas products are dangerous by nature and thus have to be highly controlled and regulated.

This is especially true for the global import and export of goods.

That said, having an expert consultant regarding regulation, compliance and the supply chain itself might be a good idea.

Aside from that, the supply chain consultant can also help O&G companies improve efficiency and reduce costs throughout various aspects of the supply chain.

Having a sustainable supply chain is vital for O&G companies these days. Without an efficient supply chain, the costs keep rising while the profits start going downhill.

Fortunately, with the help of modern technology, the oil and gas supply chains can be modernized, improved and revolutionized to provide much better results.

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