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February 02, 2017
Achieving profitable growth in oil and gas through digitally-powered supply chain networks
By: Matthew Geiger and Mehul Jain

The oil and gas industry continues to face intense pressures on margins, necessitating a laser focus on lower-cost yet agile supply chain networks. Fortunately, digital advances are making the process of capturing, storing, and analyzing data exponentially more cost effective.

Building on their major investments in enterprise resource planning (ERP) systems, oil and gas companies now have opportunities to add digital tools enabling optimization of their networks. Paving the way are solutions enabling:

  • Integration of large data sets for analysis. Reducing the reliance on spreadsheets, technology at the front end eases gathering and cleansing of data required to execute network optimization, thereby setting the stage for statistical analysis of large data sets. Digital solutions help organizations manage and manipulate immense amounts of data in repeatable ways faster than ever.

  • Frequent modelling to improve network performance. Rapid integration of data accelerates the modelling process. Scenarios can be based on real-time data and run frequently to improve planning and pursue tactical gains. Downstream leaders in oil and gas—and in oilfield service businesses as well—can model optimization scenarios monthly, or even weekly.

  • Visualization of findings to share across functions. Gaining improved visibility into inventory, along with sharper capabilities for forecasting and logistics, sets the stage for better sales and operations planning (S&OP). Statistical results—visualized in graphs and charts—can be shared between supply chain and commercial organizations to encourage collaboration that can drive out unnecessary cost and improve on-time-in-full (OTIF) performance.

Delivering significantly greater value—in terms of revenue growth, and increased asset utilization and working capital—is possible. To realize the potential, however, oil and gas companies will need additional talent to replenish their extremely lean organizations after years of staff reductions.

Industry leaders are likely to look for students in top university programs that combine data-modelling coursework with industry and business training. To expand the capabilities of current employees, a mix of classroom-based instruction in analytics and hands-on experience can help to supplement skills and years of industry knowledge.

With new tools, additional talent and cross-functional teamwork, organizations will be in better position to determine ways to serve customers in various regions more profitably. Improved S&OP collaboration from end to end is necessary for effective pricing, and to drive out unnecessary cost and delays.

The time is right for companies to add advanced digital tools to their robust ERP systems, implementing affordable solutions to improve planning and operations. Analytics-powered insight can help oil and gas industry organizations reduce the total cost-to-serve while also improving the customer experience.

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