Supply Chain Role in the Oil and Gas Industry

Troy Rock

Florida Institute of Technology

Research Paper

Supply Chain Process in the Oil and Gas Industry.

MGT 5069

June 18, 2016

Introduction

The definition of supply chain management, it is described as being the set of processes in a firm that

are implemented to maximum customer satisfaction while operating at a lowest cost possible to achieve

maximum profits. In the oil and gas industry supply-chain, the profitability of a firm is hinged upon its

upstream suppliers and its downstream distributors as various forms of raw materials such as oil, fossil

fuels, equipment, resources, finances, and information flow through from the top-tier parties all the way

down to the customer. The customer is not only the average member of the public that is pumping fuel

into their vehicle, but it can be airline companies, cruise-ships, plastic item manufacturers, independent

gas stations, etc. Regardless of who is the end-user customer of the oil and gas firm, processes must be

put in place to ensure that the supply chain surplus is maintained for all links in the supply chain, from

the upstream drillers, down to the points of purchase for the consumer. Currently the price of oil has

sharply dropped in the year 2015 and 2016 due to an overabundance of supply, and though a fear of

scarcity was once a concern, that is not the case now. The main objective the oil and gas firms face are

delivering the abundance of raw materials, going through the various production operations, meeting all

of the consumers’ needs, and managing to survive this period of low gas prices and reduced profit. Every

oil and gas company wants to find and produce oil, but with regards to the environment, locations and

the respective trade lane they are facing more challenges and obstacles. Therefore optimal logistics and

supply chain solutions have to be applied in order to find the best way from the reservoir to the refinery

and to keep the supply chains as smooth and visible...