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Oil and Gas Crisis Requires Effective Collaboration for Supply Chain Transformation

The topic that is on most people’s minds in the oil and gas industry is the fact that crude oil went from $120 a barrel to under $50 a barrel. The drop in gas prices may have some excited when they go to fill up their cars at the gas tank, but has many concerned about what the industry’s future looks like.

In April, I had the pleasure of going to the Oil and Gas Supply Chain Forum 2016, where practitioners working in the oil and gas industry shared solutions to transform their supply chains and improve efficiencies during this downturn in the oil and gas industry. Oil and gas organizations are looking for the best execution techniques for operational excellence by being very strategic about communication and collaboration in distribution, planning, and scheduling phases.  It was clear from the majority of the speakers that establishing collaborations will help create an effective supply chain ecosystem. 

One of the keynotes was given by Paula Northern, GM Sourcing, Subsea and Drilling at GE Oil & Gas. She spoke about GE’s supply chain productivity journey. Paula pointed out that organizations must harness the power of digital to increase availability and longer field and asset life, lower operating costs with greater efficiencies, and lower operations and financial risk. She also noted that adopting technology could lead to greater operational control yields profits. This is all necessary to be operationally fit with crude less than $50 a barrel.

GE is driving outcomes for customers by optimizing across the lifecycle to aid collaboration among engineering, sourcing, manufacturing, and services. One area of optimization that stood out was in the manufacturing space, where industry leaders are using advanced manufacturing technologies to create a new level of interconnectivity among devices, people, and organizations that can help transform the supply chain. GE is using methods like integrated design, which offers virtual manufacturing that helps with open innovation. Advanced fabrication is used to accomplish additive manufacturing, agile tooling, and advanced machining. Brilliant factors with sensor-enabled automation and predictive maintenance help with real-time process optimization and real-time bottleneck detection. 

Oil and gas organizations have to really evaluate their processes to better streamline the tasks and activities that are occurring within their supply chains.  As this industry continues to deal with the crisis at hand, they can evaluate their downstream and upstream processes using the APQC Process Classification Framework® (PCF). This will ensure that each area of the business is speaking the same language. Once processes are examined then technologies to help with the process can be added to help further optimize processes. 

The PCF is available to members and nonmembers of APQC, however it will require you to sign in or register to APQC’s site. APQC membership gives you access to so much more. See if your organization is a member and register today!

Stay up to date with our upcoming supply chain management and product development research, webinars, and more by visiting our expertise page.

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