Non-Hydrocarbon Supply Chain Analysis

Emerging Non-Hydrocarbon Supply chain practices in Oil & Gas Industry

Introduction:
Annual energy outlook (IEA 2009) indicates there are sufficient oil and gas reserves left in the world which to meet the production demand for a substantial amount of time to come. The major challenge being faced by the oilfield industry in this regard is to tap the existing oil and gas reserves and deliver the products to end users at the lowest possible cost which cannot be achieved without an efficient and solid SC in place under an active super vision.. In such a competitive environment, the SC plays a precarious role. Oil and Gas companies are well aware of the complexity of their space, be it the challenges of functioning in a highly competitive market,

1.2 Porter’s Five Forces Analysis of Oil & Gas Industry
Evidently from Porter’s five forces analysis, the trend of competitive advantage in recent times has been towards increased rivalry and toughening entry barriers. The outcome has been a relatively flat and mature industry with diminishing returns and increased price of end products for consumers.

Evolving competitive Landscape:
Energy sector industries (Oil & Gas) need to focus not only on their product supply chains, but also on the non-hydro-carbon supply chains that handle the parts, materials and services required to run the business. Non- hydrocarbon supply chain is critical to delivering the equipment and services required to find, produce, refine and market oil and gas. Quite a few high performance research and recent survey of oil and gas company professional indicate that the industry is missing clear opportunities to drive significant improvements in the non- hydrocarbon supply chain. Such developments can have an all-embracing impression. Accenture's latest research has found that effective supply chain management can play an important role in helping companies build distinctive capabilities that differentiate them in the current market-

Traditionally oil and gas industry uses many KPIs to track performance but due to non- standardised processes and systems these metrics are inconsistent across businesses and geographic locations. This creates problem in comparing and evaluating performance on a standardised scale. Moreover, most of the times the KPIs are not strategically aligned with the business strategy and priorities. Consequently companies are now using metrics such as percentage of capital expenditure / number of projects to track progress or delay which eventually drives action and