What is Supply Chain Management? Importance & Benefits

Supply Chain Management

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.

Supply Chain Management in Oil and Gas Industry

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. 

Key Elements of Supply Chain Management in the Oil and Gas Industry

  • Procurement: One crucial aspect involves acquiring materials, equipment and services for oil exploration and production. Effective procurement strategies aim to obtain top notch materials at prices.
  • Logistics and Transportation: Another essential component is the transportation of oil from extraction sites to refineries. Then to distribution hubs. Managed logistics ensure timely deliveries, cost savings, and prevent delays.
  • Inventory Control: Monitoring inventory levels is vital in the oil and gas industry. Proper inventory management prevents stock or shortages ensuring smooth operations.
  • Production Scheduling: Planning production activities is key to meeting demand. This includes scheduling extraction and refining processes to ensure no disruption in the supply chain.
  • Distribution: Final products must reach end users efficiently. Effective distribution methods guarantee delivery to customers within the said time.

Five Reasons Why Supply Chain Management is Crucial for Oil and Gas Companies

1. Managing Global Operations

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.

2. Handling Market Fluctuations

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.

3. Overcoming Exploration Challenges

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.

4. Managing Midstream Infrastructure

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.

5. Streamlining Downstream Refineries

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.

Advantages of Supply Chain Management

Enhanced Efficiency

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. 

Cost Effective

By process optimization and waste reduction, SCM contributes to lowering expenses. This proves essential in an industry where profit margins are often tight.

Improved Risk Mitigation

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.

Elevated Customer Satisfaction

Effective SCM ensures timely product deliveries resulting in increased customer satisfaction levels. This is pivotal for establishing and preserving customer loyalty.

Promoting Sustainability

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

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