Supply chain management for projects in the oil and gas industry involves managing the flow of goods, services, and information from suppliers to end-users. This includes planning, sourcing raw materials, manufacturing, testing, inspection, quality control, documentation, and logistics. In pipe system supplies, installation may also be included in the supply chain. It can require additional handling, machining, and testing before products are commissioned and complete their supply chain journey. Piping systems are often complex and need to handle different conduits under demanding conditions, with little to no room for errors requiring repairs or downtime. Compromised performance anywhere along the chain can result in quality concerns, costly delays, ripple effects on dependent tasks and supplies, as well as inefficiencies that can stop or delay progress and result in loss of profits or tie-up of capital. According to Accenture, this can add upwards of $15/barrel to the cost of production.
To optimize efficiency, reduce costs, and minimize or mitigate risks, supply chain managers need to work closely with their pipe solution suppliers to better understand and include their processes and risks with those of the overall project. This involves careful planning, attention to detail, and close collaboration with suppliers across functions and geographies. In the oil and gas industry where multiple suppliers are needed, supply chain managers need to have comprehensive information about their products at every step along the value chain. They need to address product availability in the materials that they need, production to the appropriate standards and specifications, as well as the flow of logistics across shipping, storage, and handling on land, sea, and air. In addition, products have to arrive on time and in coordination with other products, labor, and equipment within the project management timelines. On facilities such as offshore rigs, storage may not be an option, and delivering materials to site can only be accepted at its allocated delivery time.