Do you know, the UAE produces approximately 4 million barrels of crude oil per day as of 2023? Yes, they are in the top ten list of global oil producers. Not just this, the UAE exports about 3 million barrels of oil daily to Asian markets such as Japan, China, and India. All this is possible because of a robust and efficient supply chain management system. It doesn’t end here! The UAE is expecting the oil and gas supply chain market to grow at a CAGR of 5.5% from 2023 to 2030, by technological advancements and increasing demand for efficient and sustainable supply chain solutions. Now, you must have a clear idea how important is effective supply chain management in the oil and gas industry in the UAE.
It is the backbone that guarantees timely procurement of specialized equipment, the smooth flow of oil and gas products, and proactive responses to potential disruptions that could otherwise cripple operations. In this blog post we will discuss supply chain management and how it benefited the oil and gas industry. While scrolling down, you will get a section covering challenges faced by the industry and measures to be taken.
The oil and gas industry operates in extremely unpredictable environments, making procurement and supply chain management very complex. The fluctuating oil and gas prices have propelled oil and gas companies to rethink their procurement and supply chain management best practices, costs, and methodologies. While the implementation of the best practices differs by area, most industry players are implementing advanced technology, collaborative supplier relationship management, optimized inventory management, and so on to cut costs and increase efficiencies and customer services.
Oil and gas companies operate worldwide, dealing with different regulations, infrastructures, and political situations in each country. To manage a network of suppliers, partners, and logistics providers across the globe, these companies need to understand local details and adapt their strategies to each region’s unique challenges.
Oil and gas prices can change rapidly due to geopolitical issues, economic factors, and supply-demand changes. This volatility means companies must be flexible with their purchasing strategies, manage risks effectively, and adjust their sourcing and inventory based on current market conditions.
Exploring and producing oil and gas often takes place in remote, harsh environments, making it difficult to transport equipment and manage workers. Additionally, the risks involved in drilling and exploration require strong safety protocols and backup plans to handle potential disruptions.
Running pipelines, storage facilities, and transportation vessels requires careful planning to ensure oil and gas products flow efficiently across different regions. This involves maintaining infrastructure, preparing for disruptions like pipeline leaks or bad weather, and adjusting transportation routes based on market demands.
Refining oil and gas is complex, involving various raw materials and finished products. To maintain consistent product quality, manage maintenance periods, and comply with environmental regulations, companies must focus on operational efficiency, continuous improvement, and adapting to changing product demands.
SCM plays a role in streamlining operations, minimizing delays, and enhancing efficiency. This is especially crucial in the oil and gas industry where minor setbacks can lead to financial losses.
By process optimization and waste reduction, SCM contributes to lowering expenses. This proves essential in an industry where profit margins are often tight.
Given the risks in the oil and gas sector, SCM aids in identifying threats and implementing strategies to manage them effectively ensuring smooth business operations.
Effective SCM ensures timely product deliveries resulting in increased customer satisfaction levels. This is pivotal for establishing and preserving customer loyalty.
The UAE is planning to reduce its carbon footprint by 25% by 2030 through various sustainability initiatives, including optimizing supply chain operations to minimize environmental impact. Also, the country aims to increase its renewable energy capacity to 50% of its total energy mix by 2050. This shift will influence supply chain strategies, incorporating more sustainable practices. They can achieve their target by incorporating practices, minimizing carbon footprints, and adhering to environmental regulations within the oil and gas industry.
Amidst fluctuating oil prices and supply chain disruptions, it is imperative for oil and gas companies to establish sourcing strategies and partnerships to navigate through the business landscape successfully. Supporting functions play a role in determining profitability versus losses due to their low value order nature. By outsourcing maintenance, repair and operations (MRO), you will get a budget friendly approach to addressing the maintenance challenges encountered by plant operators in today’s industry.
To manage costs effectively and ensure efficiency in the run, entrust your MRO needs to The GET Global Group Services. By partnering with The GET Global Group, as your procurement and supply chain management (PSCM) consultant you can reap various benefits.
Also Read: Courses for Oil and Gas Jobs in UAE
