The disruptions and challenges that affected the oil and gas industry over the last decade have increased in frequency, magnitude, and diversity. They covered a wide range of challenges across social, economic, political, and environmental issues; and included the pandemic, the war in Ukraine, trade wars, labor disputes, and logistical hub bottlenecks. In addition to operational stresses, pressure from consumers, regulators, and shareholders to increase sustainability further exasperated global value chains, impacted bottom-line profits, and affected the cost and availability of capital for growth.

Regardless of their type, the key learning from responding to these exceptional circumstances made it clear that they can no longer be treated as exceptions, and everybody along the supply chain, from exploration through to the final delivery to the consumer, needs to shift mindsets from fire-fighting to building robust supply chains that can withstand stronger tremors impacting the overall business landscape. Companies need to shift from lean supply chain operations designed to meet stringent customer expectations (while aggressively bringing down costs and reducing inventories), to building resilience into their value chains to be able to withstand the stresses from the disruptions that they can expect to face in the new global reality.

A New Paradigm

Supply Chain Resilience in Pipe Systems

Moving forward, oil and gas companies can expect disruptions in operations from the business fallout of sustained global inflation, geopolitical developments in Europe and Asia, and increasing economic headwinds. However, industry leaders agree that of all the urgent challenges they face, supply-chain uncertainty is the most pressing.

The challenge will be finding the appropriate balance between resilience, sustainability, responsiveness, and cost. These goals often have polar outcomes. For example, a supply chain that is 100% resilient will have a detrimental impact on costs. There will always be trade-offs, and the balance will vary for every company, but by following some simple strategies, the final result should be a more robust supply chain able to withstand stress tests, reduce costs, improve delivery times, and increase profit margins.

Strategies for Building Resilience

Conduct Situation Assessments and Contingency Planning

To secure the supply chain, and shift from lean to resilient, sustainable, and responsive—all while still maintaining cost competitiveness – oil and gas companies need to begin by conducting comprehensive situation assessments across their supply chains to identify and understand potential risk sources and their impact on the availability, cost, and delivery times of their supplies. Given the complexity of the operational parameters, material requirements, and logistics networks involved, this needs to happen in collaboration with all the parties involved. Through rigorous risk assessment, contingency planning, and testing, operators can better understand, manage, and mitigate supply-chain risks across their value chains.

Leverage Technology and Data Analytics

Supply Chain Resilience

Today’s digital technologies have the potential to optimize virtually every link in the supply chain. Companies need to utilize technologies that give them 360-degree visibility across their supply chains, apply real-time data analytics to understand and predict contingencies, implement smart automation systems, as well as integrate solutions, and collaborate across networks and platforms to optimize their supply chain network through informed decision-making.

Optimize Inventory Management and Logistics Operations

At the heart of supply chains are logistics and inventory management. With the advent of Industry 4.0, companies need to boost their digital capabilities to rebalance their supply chains toward resilience, sustainability, and responsiveness without taking an untenable hit on cost or efficiency. To bolster resilience, machine learning and other digital tools to improve demand forecasting, inventory management, production scheduling, factory/warehouse automation, and early detection of supply chain disruptions need to be implemented in cooperation with interdependent suppliers, logistics operators, regulatory authorities, and customers. Effective deployment of these technologies can no longer be treated as optional. They are cornerstones in the implementation of a strategic approach towards a resilient supply chain.

Field Experience

At Gerab National Enterprises, our experience in supporting our clients in the oil and gas sector through the disruptions of the past two decades has demonstrated that a robust and resilient supply chain can help to anticipate, weather, and thrive in turbulent circumstances. We have shifted away from the typical cost-reduction mindset to a robust bottom-up strategy informed by market intelligence, expert input, and risk analysis to better mitigate supply-chain reliability risks. Through transparent cooperation with all parties involved, we have been able to manage relations with diverse manufacturers from across the globe to balance inventory costs with supply security to affect as near as possible just-in-time deliveries while maintaining safety stocks, balancing inventory costs, and mitigating gaps in global logistics disruptions. Maintaining meticulous safeguards against supply risks allowed us to operate with predictable lead times, maintain operational and capital planning, and manage volatility across functions.

To speak to Gerab about how we can help secure your supply chain, contact us and talk to one of our experts.