Shell's Future Strategies and Innovations

This assignment explores Shell's strategic approach to adapting to the evolving energy sector. It examines Shell's initiatives to expand services at petrol stations, promote biofuels, develop hydrogen-powered batteries, and prepare for the rise of driverless vehicles. Students are tasked with analyzing these strategies and their potential impact on Shell's future success.

University
LOGISTICS AND OPERATIONS FOR OIL AND GAS
Student Name
Lecturer Name
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Table of Content
Introduction......................................................................................................................................3
1. To identify and critically assess the theoretical and practical aspects of Shell’s logistics and
operations management decisions with regard to the new initiatives..............................................3
2. To comparing and contrast Shell’s new downstream service and manufacturing retail
initiatives in terms of their differences and similarities...................................................................5
3. Shell’s methods of planning and coordinating its downstream manufacturing and service
retail network...................................................................................................................................6
4. Human behavioural issues and challenges Shell could face on the road to its
transformation’s journey and recommendations for mitigating those.............................................7
Conclusion and recommendations...................................................................................................8
Reference list.................................................................................................................................10
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Introduction
The business of oil and gas is one of the profitable business in the world in current scenario for
increasing amount of demand in different field. The power developed from oil and gas helps to
fulfil, the power needs of different vehicles, factories, batteries and much more. Royal Dutch
Shell is one of biggest retailer of oil and gas power in the world. It has almost 43000 service
station worldwide in which 25 million customers are served by half a million staffs. Royal Dutch
Shell is not only the oil and gas power supplier, but also it has different other kind of businesses
worldwide along with this. However, the upstream businesses of this organization has faced loss
but the downstream business has experienced profitability and for this reason, this organisation
initiated different changes to its business. In this assignment, different aspects of Shell’s business
management will be discussed.
1. To identify and critically assess the theoretical and practical aspects of
Shell’s logistics and operations management decisions with regard to
the new initiatives
Royal Dutch Shell has taken different new initiatives to cope up with changes of power needs of
the world and to gain profitability and for this reason, it needs to take logistic and operation
management decision accordingly. In 2015, the upstream operations of this organisation faced
37 percent loss compared to previous year but the downstream operations include retail
experienced triple profitability. The new initiatives are taken in order to gain the profitability
from different aspects of this business that also contributes to the customer demand. Low
inflation and interest rate enhance the fuel consumption on the road of Britain. Along with
different other competitors and demand of the customers, Shell initiated to focused on producing
alternative of fuel such as ethanol which is prepared from Brazilian sugar cane. It contributes to
the demand of power with environment friendly approach, which is producing 70 percent less
CO2 than regular petrol. Along with this, the Shell is working on hydrogen innovation to power
the hydrogen fuel care and batteries. A joint venture of Shell has planned to structure hydrogen-
fuelling pumps throughout Germany at 400 locations by 2023. Apart from this, the demand of
battery electric cars are growing in Holland and California and for this reason, Shell is also
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working on supercharging technology. According to Larsen et al. (2013) the demand of
alternative fuel powered vehicles are renewable energy are growing and in future those can be
capture a biggest part of power consumption. It is the reason, Shell is focusing on renewable
energy generation and in China one of its site is running by solar energy.
Along with this, Shell focused on changing the structure of its retail business by adding different
value added serves to it. According to Sari et al. (2017) in current economic scenario, retailers
need to work hard to attract customers, especially in petrol stations where location and price is
more essential than brand loyalty. Therefore, Shell takes decision to attract customers even if
they have no need of fuel for their cars. The customers often visits petrol station due to wash
their cars or only use the parking zone or only to purchase foods from attached stores. Shell
attached Costa coffee concession or Waitrose stores with many of its petrol stations to attract
customers who does not have to refuel their cars to gain more revenue. Shell has been
restructured 400 petrol stations throughout the UK and attached DHL pick points, add more
parking space and also make those stations more larger. It has planned to upgrade 50 more petrol
station in coming years. The sales enhanced from those restructured stores by 15 percent and
food sales enhanced by 49 percent for this upgradation. It started to make more money from
selling products rather than fuel for this reason. In Bangkok, Shell sell its highest quality fuel
named V-power with a luxury cafe. Customers get two attendants it that site for serving them
and servicing their cars.
According to Galankashi et al. (2016) Due to enhancement of driverless cars, the service stations
are gaining its importance than fuel stations. Those autonomous cars take people from one place
from another and a good service station is required for those cars and people sitting in it.
Therefore, Shell has focused on developing this kind of service stations in the country in which
the autonomous cars are increasing. Those service station needs to relevant for the people sitting
in it and also service the car as soon as possible. Therefore, with the changing of power
requirement, the importance of petrol station is reducing eventually and Royal Dutch Shell needs
to change its logistics and operation management decisions accordingly.
Shell needs to take care of its different activities related to planning and controlling the logistics
more accurately. It needs to plan its operations perfectly so that every small thing can come
under it. It needs to sequence the operations correctly and schedule based on the requirements.
The activities can be before or after which depends on the operational needs. If Shell completes
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the planning process perfectly, then controlling the process becomes easy and the process will
provide greater outcome.
2. To comparing and contrast Shell’s new downstream service and
manufacturing retail initiatives in terms of their differences and
similarities
Royal Dutch Shell has wanted to develop fuel margin through the vehicles used in the gasoline
and diesel. This provides the firm with the maximum number of anticipation with the transaction
acceleration, which provides the clean form of energy. Shell has developed the first hydrogen
refuelling station in the country of U.K, that provides the installation of first electric vehicles.
Shell’s new downstream business and manufacturing retail initiatives includes with the refining,
retail, marketing, chemicals and trading. In the year of 2050, the company is expecting to
introduce new operations using a cleaner fuel that lies with the natural gas, which helps to reduce
the fuel. The downstream business of Shell implements the important source that helps to yield
maximum amount of profit from the downturn in the oil market for the last three years. There
includes with the growing of signs which provides the demand in diesel and gasoline which
assist the customers to switch a new mode of transport. The downstream business provides the
Shell Company to carry out the business in such a manner that includes with chemicals and
refining process. The net income of the firm has been made of $ 2.4 billion in a quarter that
contributes the total group of 63% of people. The oil and gas industry are divided into upstream
and downstream services carried out by the Shell Company (Twidell and Weir, 2015).
The downstream business sectors are involved with the refining of natural gas that could be
obtained in the upstream sectors as well as provide the distribution of products among the
customers. it includes with the refining, marketing of finished products and transport provided in
the retail facility. The manufacturing of the retail initiates includes with the global chain of
network in the service stations that includes with 43,000. It lies with the million staff members
that could able to service among customers around 25 million across 70 countries worldwide.
This makes the major similarities on the downstream business service and manufacturing retail
initiatives (Baziar and Kavousi-Fard, 2013).
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The main differences of manufacturing retails initiatives includes with certain activities that
makes the better form of exploration and production to enhance a better form of oil and gas
services. There is a high increase retail service offered in the service stations that helps to
introduce new model vehicles in the market. This vehicle provides the maximum amount of
advantage, which could be refuelled at a less frequency. The retail initiatives manufacturing
business has provided driverless cars among the customer to enhance a better services. Shell total
revenue has fallen from the 37 % to $272 billion in the year of 2015 that makes the operation in
upstream services. The main differences of upstream operation includes with the retail from
business that has been tripled in the last year to $ 10.2 billion.
Shell brand stations provide the major stations that provide the maximum number of attraction to
fill up the vehicles from the station. There includes with the luring of consumers that helps to
store of items and encouraging time to spend the maximum time of solve out the various
problems (Beck, 2016).
Shell needs to design the product or service perfectly before implementing in their business. The
product or service needs to be reviewed properly in order to find out any drawbacks. Shell needs
to work on the drawbacks to develop the service perfectly. In addition, Shell needs to adapt the
design and layout of its product or service to market it properly. It will be helpful for them to
develop an efficient business model using that product or service.
3. Shell’s methods of planning and coordinating its downstream
manufacturing and service retail network
The company of shell provides a better way of planning and coordinating the entire process in
the downstream and service retail networks. Shell team requires an experienced candidate with
high leadership skills for enhancing of downstream service and retails network services among
the customers. The company depends on the talented people that could able to display
commercial, engineering, technical, economic form of expertise (Baziar and Kavousi-Fard,
2013). This form of planning in the recruitment process helps to minimise the problem and carry
out the better of operations in the company of Shell. There includes with the economic expertise
to tackle the financial problem. The proper form of coordination and planning helps the Shell
firm to maximise the efficiency and enhance maximum amount of profit from the supply chain.
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The firm maintains the entire work in such a manner that enhances the maximum amount of
productivity in the downstream and service retail networks (Villasenor, 2014). The organization
Shell has made a better form of planning that makes the expansion in the retail network, which
provides the licensing on the 2,000 fuel stations. The planning includes with the proper form of
land acquisition that makes the better running process of retail stations. The Shell Company is
trying to expand the retail network that could help to supply the products among the customers.
The planning process includes with the enhancing of marketing planning in the retail outlet of
2,000. The currently operation lies with around 74 retail outlets with a better form of planning.
The dedicated staff members make the entire process in a systematically manner to provide
proper downstream service among the existing customers (Galankashi et al. 2016).
The company of Shell has developed new three products that hydrogen fuelled pumps and
battery powered cars, battery electric car and attached costa coffee and waitress stores with
petrol stations. The three services that has been provided by the downstream sectors includes
with the better luxury cafe, highest quality fuel and largest petrol station. This downstream
services provides unique features in enhance a better services among the customers (Gorawski et
al. 2015). The company could enhance the maximum amount of profit from the petrol station
that arise from the services in downstream and service retail network. The Shell firm needs to
focus of the better way of planning and coordinating at helps to increase the productivity.
The supply chain of the Shell is main vehicle to gain sustainable competitive advantage because
it’s larger range of products and services. In order to grow the business, the company focuses on
developing its business by adding different products and services with it. Therefore, it needs to
review its supply chain and find out different drawbacks to mitigate those. It will helpful to
maintain the supply in order to meet the demand and enhance the level of service quality. IF
Shell configures and coordinate the supply chain properly, then it will provide sustainable
competitive advantage over its competitors.
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4. Human behavioural issues and challenges Shell could face on the road
to its transformation’s journey and recommendations for mitigating
those
The requirements of power is always increasing with enhancement of people and industries.
According to Wei et al. (2015) the oil and gas cannot meet the power requirement in future and
for this reason, people need to focus on different other sources to generate power. Royal Dutch
Shell has both upstream and downstream business in oil and gas field. However, with changing
demand, it needs to focus on different other aspect to develop its business. The issues faced by
this organisation is not only related to power supply, but also the behavioral changes of people is
also a big concern in its transformation journey.
The challenge for Royal Dutch Shell is to how to make changes for a world of ‘lower forever’ oil
price, growing environmental concerns and enhancement of autonomous cars. These are the
reason that Royal Dutch Shell faces a loss in their upstream business in the year of 2015. Low
interest and inflation rate enhance the fuel demand in the Britain but the price of petrol falls 2.7
percent. Therefore, to reduce the loss, Shell should focus on providing additional; benefits to the
customers in their petrol stations. It can attach food stores, cafe with its petrol stations where
customers can take rest and have foods. It should add more parking space for the customer's cars.
As stated by Wang et al. (2014), there can be many customers who can capture the parking space
and sit in the cafe or food store for long time. This becomes problem for other customers and for
this reason, Shell can take fees as hourly basis for parking the car. Any customer cannot sit in the
store or cafe without food or drink more than 20 minutes. However, Shell should provide more
facilities to the customers to attract them in their petrol stations. Shell should develop
supermarkets that is attached to their petrol stations that established in populated areas.
Customers can visit those supermarket, park their car in the parking of Shell and reful the cars if
needed. In that case, the parking should more large with no parking charges. The parking could
be placed underground to meet the need of space.
According to Weitemeyer et al. (2015)Environmental concern is the big reason that people are
more focusing on the cars that use biofuels or hydrogen fueled batteries. Therefore, the
customer's demand is changing eventually and for this reason, Shell should focus on different
innovate biofuels more and work on hydrogen power technologies. Apart from this, it should
focus on different renewable energies more such as solar power, wind energy and others. A lot of
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organisations are working on renewable energies nowadays and Shell should focus on this more
to get enhance its operation range and to meet the demand of powers.
The increasing number of driverless cars reduce the petrol needs tin different big cities in the
world. Those cars refuel less compared to general transports and take customers from one point
to another. These types of cars need a service station along with a refuel station which is
comfortable for the customers riding in it. Shell should focus on the cities where autonomous
cars are increasing nad build ample amount of service centers for those cars. It is helpful for
them to balance the profitability from those cities in which profitability form selling petrol is
reducing for autonomous cars.
The demand of customers will change more along with time and Shell needs to structure its
operations accordingly. The behaviour of customers could bring challenges with the change but
shell should make up with it to run its business efficiently.
The service and product quality also be the higher concern of Shell in order to maintain
profitability. If the quality of the product or service decrease, then customer will not avail those,
which will eventually, decrease the profitability of the company and in long term, it will prevent
its growth. Therefore, it is important for Shell to manage quality of its products and services.
Conclusion and recommendations
Royal Dutch Shell is one of the largest oil and gas power supplier in the world. It has many
petrol stations in different cities in the world that serves billions of customers every year.
However, this organisation has faced a loss in their business in different business units due to
changes demand of power and for this reason, it needs to take various initiatives to meet the
needs to customers. Shell has gone through structural changes of its different petrol stations in
the world by adding more parking space, cafe, food stores and more. It helps to gain number of
customers even without the requirements of refueling. Apart from this, Shell focuses on proving
biofuel more to meet its demand and it also working on hydrogen powered batteries. Along with
this, number of driverless cars are increasing in different cities in the world an Shell initiated to
construct service station for those types of cars in those cities with refuel station.
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Reference list
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management of renewable micro-grids including storage devices. Renewable Energy, 59, pp.158-
166.
Beck, A.S., 2016. Driverless Cars: A Revolution For Persons With Disabilities.
Galankashi, M.R., Fallahiarezoudar, E., Moazzami, A., Helmi, S.A., Rohani, J.M. and Yusof,
N.M., 2016. An efficient integrated simulation–Taguchi approach for sales rate evaluation of a
petrol station. Neural Computing and Applications, pp.1-13.
Galankashi, M.R., Fallahiarezoudar, E., Moazzami, A., Yusof, N.M. and Helmi, S.A., 2016.
Performance evaluation of a petrol station queuing system: A simulation-based design of
experiments study. Advances in Engineering Software, 92, pp.15-26.
Gorawski, M., Skrzewski, M., Gorawski, M. and Gorawska, A., 2015, November. Neural
networks in petrol station objects calibration. In International Conference on Algorithms and
Architectures for Parallel Processing (pp. 714-723). Springer International Publishing.
Larsen, G.K., van Foreest, N.D. and Scherpen, J.M., 2013. Distributed control of the power
supply-demand balance. IEEE Transactions on Smart Grid, 4(2), pp.828-836.
Sari, Y.K., Shaari, Z.H. and Amar, A.B., 2017. Measurement Development of Customer
Patronage of Petrol Station with Convenience Store. Global Business and Management
Research, 9(1s), p.52.
Twidell, J. and Weir, T., 2015. Renewable energy resources. Routledge.
Villasenor, J., 2014. Products liability and driverless cars: Issues and guiding principles for
legislation.
Wang, X.F., Xiao, Y. and Wang, X.L., 2014. Study and analysis on supply-demand interaction
of power systems under new circumstances. Proceedings of the CSEE, 34(29), pp.5018-5028.
Wei, F., Zhang, L., Liu, T., Lu, X. and Mori, K., 2015, March. Autonomous Community
Architecture and Construction Technology for City Petrol Supply Management System. In
Autonomous Decentralized Systems (ISADS), 2015 IEEE Twelfth International Symposium on
(pp. 109-113). IEEE.
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Weitemeyer, S., Kleinhans, D., Vogt, T. and Agert, C., 2015. Integration of Renewable Energy
Sources in future power systems: The role of storage. Renewable Energy, 75, pp.14-20.
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