Logistics and Operations Management Challenges Faced by Sahara Group

This report evaluates the major challenges of the logistics and operations management faced by Sahara Group, a leading oil and gas company of Africa working in the upstream and midstream operations in the Southeast Asia and West Africa. It also reflects the human behavior challenges faced by the company and their implications on the business operations.

Running head: LOGISTICS AND OPERATIONS MANAGEMENT
Logistics and Operations Management
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Executive summary
Sahara Group is a leading oil and gas company of Africa working in the upstream and midstream
operations in the Southeast Asia and West Africa. The company is facing few technical and
human behavior challenges in the supply and logistics operations that are hampering their
productivity and causing delays that is reducing their profitability. The company also supplies
lubricant oil to the B2B customers, that is, manufacturing firms for their machineries and
inefficient logistics is affecting their business. This report evaluates the major challenges of the
company and makes a comparison of its activities and challenges in two different regions. It also
reflects the human behavior challenges faced by the company and their implications on the
business operations. Based on the discussion, some recommendations are provided to address all
types of challenges and improve the logistics and operations of Sahara Group and increase
profitability.

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Table of Contents
1. Introduction..................................................................................................................................3
2. Identification of challenge and critical assessment of the logistics and operation management
implications......................................................................................................................................4
3. Critical assessment of configuration and coordination of lubricant oils to manufacturing
companies including its overall economic and environmental performance...................................5
4. Comparison and contrast of the service related logistics and operations management
implications of delivering the lubricant oil to the clients in both South East Asian and African
markets.............................................................................................................................................6
5. Human behavioural challenges facing the staffs and subsequent implications for the operations
.........................................................................................................................................................7
6. Conclusion and recommendation................................................................................................8
References......................................................................................................................................11

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1. Introduction
Sahara Group is one of the reputed firms operating in the Oil and Gas industry in the
Southeast Asia and West Africa. The company operates both in the upstream and midstream
section of the Oil and Gas industry in both the regions. Along with that, it also operates as a
downstream company and provided power and infrastructure (Sahara-group.com 2019). Under
the upstream operations, Sahara Group is engaged in the Exploration and Production (E&P)
activities, such as, exploring the oil fields, drilling the oil and gas wells and separating the gas
and crude oil till it is exported (Agerton et al. 2017). Under the midstream operations, the
company is involved in transportation of the oil from the oil platform to the refineries of the
crude oil and distributing and selling the end products, including the natural gas (Gülen 2016).
The company has almost 80 counterparties for trading in the midstream operations across
Europe, Asia and Africa (Sahara-group.com 2019). The operations and logistics are very crucial
for achieving the competitiveness of the company. An efficient logistics help the company to
satisfy the demand of the products through proper and cost effective delivery of the goods and
services, and hence, the logistics operations account for customer contracts, buffer level
management, supply, transportation, and storage activities (Ulrich 2017). Thus, as an upstream
and midstream oil and gas company, Sahara Group faces challenges in the operations and
logistics which need to be addressed to improve the business performance. This report will
highlight the challenges faced by the firm with global operations and a critical assessment will be
done to address the challenges. The report will also mention a critical evaluation of the
configuration and coordination of the supply chain of the lubricating oils supplied to B2B
customers, such as, the manufacturing companies, followed by a comparison and contrast of the
service related logistics and operations regarding delivery of the lubricating oils to the customers

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in both South East Asian and African markets and lastly, the report will also contain the impact
and implications on the behavior of the employees and on the operations.
2. Identification of challenge and critical assessment of the logistics and operation
management implications
The major four challenges faced by Sahara Group as an upstream and midstream oil and gas
companies are as follows:
1. Increasing the sources and production of liquid fuels
2. Establishing efficient management and information to have coordination between
upstream and midstream operations, that is, improving the collaboration with the oil field
services for improving the logistics
3. Cost overruns affecting the profits in the midstream logistics and
4. Creating networks for knowledge transfer for maximizing operational excellence.
It can be said that as an upstream business operating in the Southeast Asia and West
Africa, it is one of the major challenge for Sahara Group to increase the production of oil and gas
in those regions by exploring the oil fields. In the Southeast Asia, the major reserves are in
Vietnam, Indonesia and Malaysia, which are already getting explored (Worldenergy.org 2018).
In the West Africa, Nigeria has the maximum oil and gas reserves, followed by Cameroon
(Oecd.org 2018). With many companies operating in this business in these regions, there is a
tough competition to explore new sources.
Secondly, to have efficient logistics operations there should be excellent collaboration
between the upstream and downstream operations and as the company operates in two different
regions, it often faces challenges to have an efficient network between the regions. Poor

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collaboration and communication slow down the projects and delivery of the goods and services
resulting in inefficiencies.
Thirdly, due to poor collaboration between two types of operations, there are delays in
projects and overrun of the costs, resulting in decreasing profits for the company and wastages of
investments and lastly, the company needs to focus on creating a network for knowledge transfer
regarding the activities of the upstream and downstream to maximize the efficiency in operations
and reducing delays and profit losses.
3. Critical assessment of configuration and coordination of lubricant oils to manufacturing
companies including its overall economic and environmental performance
Among many products, one of the major products that Sahara Group supplies to the B2B
customers is the lubricant oil. In the Southeast Asia and West Africa, ABC supplies lubricant oil
to many manufacturing firms for running the machineries smoothly. The supply chain network
for lubricant oils to the factories involves efficient upstream as well as midstream operations. An
efficient supply chain management requires proper planning, information integration, source or
supply of the product, inventory, transportation and return (Hugos 2018). An efficient supply
chain management results in earning profit for the companies by reducing delays in supply and
managing inventories efficiently so that wastes can be reduced. Moreover, by applying green
technologies, the environmental footprint can also be reduced (Centobelli, Cerchione and
Esposito 2018). Thus, supplying lubricant oils to the B2B customers, that is, some
manufacturing companies, requires efficient planning regarding supply and inventory
management followed by efficient transportation and return of faulty products.

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In both the regions, Sahara Group faces the challenges in proper planning under supply
chain management for supplying the lubricant oil for the machineries. There is mismanagement
of inventories and delays in supply. This leads to increase in costs of operation and distribution.
Fall in the exploration and production of oil and gas though has sustainability impact on the
environment, however, it has a negative impact on the economic performance of the company.
The delays in supply of oils due to fall in production and uncoordinated transport system lead to
fall in profit and increased competition in the market. Lack of expert professionals and expert
knowledge results in improper planning and information integration and inefficient inventory
management for Sahara Group in both the regions of operations.
4. Comparison and contrast of the service related logistics and operations management
implications of delivering the lubricant oil to the clients in both South East Asian
and African markets
While operation management deals with the production process and business operations
with goods and services, logistics operation is a segment of operation management. Logistics
mainly deals with the planning and transportation of the goods from the suppliers to the units that
demand those goods (Christopher 2016). Thus, logistics is a vital part in the supply chain as well
as in the operation management of a company. Being an upstream and midstream company
operating in Southeast Asia and West Africa and supplying lubricant oil to the manufacturing
companies, Sahara Group must ensure an efficient logistics as well as operations management.
However, it has been seen that the service of transporting and delivering the lubricant oil to the
manufacturing companies in the Southeast Asia is more efficient than in the West African
regions. The reasons can be attributed to the developed economy and infrastructures in the
Southeast Asia than in West Africa. In the West Africa, only Nigeria is the most economically

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developed country with improved infrastructure that supports the efficient production and
transportation of the product, while in the Southeast Asia the service delivery is more efficient
due to better infrastructures in the regions. According to Varathan (2018), the economic growth
in the Southeast Asia has occurred significantly in the past few decades in a much larger way
than in Africa. In 2016, it was found that an average Asian earned almost 80% of an average
global citizen, while an average African made little over 40% of the worldwide average, which
indicates that the Southeast Asia is more economically developed than the West African regions.
There are much improvement, development and investment in almost all aspects of business and
economy in the Southeast Asian region, which also help the oil and gas companies to ensure
better service delivery through better infrastructure and supply chain logistics. On the other hand,
in the West African region, apart from Nigeria, the other countries have lower economic growth
and the level of investment is also lower than in the Southeast Asia (Baten 2016), as well as less
scope for oil and gas exploration and production causing a delay in the midstream activities and
delay in logistics and supply chain operations for supplying lubricant oils to the manufacturing
companies. Thus, improvements in the logistics for Sahara Group, that is, transportation and
supply of the product require efficiency in both the regions of operations.
5. Human behavioural challenges facing the staffs and subsequent implications for
the operations
As identified in the challenges, Sahara Group has issues in the network of excellence and
knowledge transfer for maximizing the operational excellence. Upstream Oil and gas companies
face safety challenges, which often affect the motivation of the employees. The exploration and
production activities often involve hazardous environment and affect the safety of the employees
(Michalski and Ficek 2016). Thus, Sahara Group also faces these issues in both the operating

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regions, that is, Southeast Asia and West Africa. As stated by Frederiks, Stenner and Hobman
(2015), the best safety programs should take into account the impact of emotional decision
making on the human behavior. The safety programs should be designed to work with the human
behavior and emotions and not against it. Thus, while Sahara Group faces different issues in the
logistics and operations management in two different regions, those affect the motivation and
productivity of the employees also. When the economic performance of the company gets
affected, it affects the employees also in terms of wage cut, reduction in bonus and incentives
and sometimes loss of jobs. Thus, to keep the employees motivated, Sahara Group should
identify the needs of the employees before decision making and implementing those decisions
for improving business performance in both the regions. Among all measures, the safety
measures should be prioritized most as the upstream oil and gas activities involves more risks for
the staff.
Once the human behavior challenges, that is, willingness and motivation of the
employees to enhance their skills, competencies and knowledge, and improve their productivity
are identified and the root causes are analyzed, the company can make decisions to improve the
working conditions of the employees. If the employees are not motivated, the efficiency in the
operations cannot be achieved. Although technological issues also challenge the efficiency of the
systems, the human resource is another crucial factor that helps the company to achieve efficient
production and service delivery (Khan et al. 2015).
6. Conclusion and recommendation
From the above discussion it can be said that Sahara Group faces challenges in the
logistics and operations management in both the Southeast Asia and West Africa due to technical

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as well as economic factors combined with human behavior challenges. The company faces
issues like delays in logistics, that is, transport and delivery of lubricant oils to the manufacturing
companies in both the operating regions. However, the efficiency of operations differs between
the regions as Southeast Asia is more economically developed than West Africa and thereby
have better infrastructure for transport and production activities. Apart from that, being an oil
and gas company, it faces challenges like safety issues for the employees and lack of expert
knowledge and knowledge transfer, which affects the overall efficiency of the business.
Based on the findings of the challenges, the following recommendations can be provided
to Sahara Group:
 The work safety measures should be improved for the employees to minimize the
accident risks and health hazards.
 There should be training programs to increase the knowledge and expertise of the
employees and the reward programs should be improved to increase employee
motivation.
 Technology for exploration and production should be upgraded to increase production of
oil and gas.
 The transport facilities should be improved to reduce the delays in delivery of the product
to the clients for the midstream logistics and operations.
 Inventory management should be improved in both Southeast Asia and West Africa to
reduce wastes and improve overall operational performance in a global environment
 Expert professionals should be hired to manage the project cost in an efficient manner
and reduce the losses that occur due to delays and mismanagement of funds.

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 Lastly, the company should invest more in the research work to find out more fields for
exploration and production of oil and gas.

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References
Agerton, M., Hartley, P.R., Medlock III, K.B. and Temzelides, T., 2017. Employment impacts of
upstream oil and gas investment in the United States. Energy Economics, 62, pp.171-180.
Baten, J. ed., 2016. A history of the global economy. Cambridge University Press.
Centobelli, P., Cerchione, R. and Esposito, E., 2018. Environmental sustainability and energy-
efficient supply chain management: A review of research trends and proposed
guidelines. Energies, 11(2), p.275.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Frederiks, E.R., Stenner, K. and Hobman, E.V., 2015. Household energy use: Applying
behavioural economics to understand consumer decision-making and behaviour. Renewable and
Sustainable Energy Reviews, 41, pp.1385-1394.
Gülen, G., 2016. Importance of Midstream in Oil and Gas Resource Development. Current
Sustainable/Renewable Energy Reports, 3(1-2), pp.23-27.
Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons.
Khan, F., Ahmed, S., Yang, M., Hashemi, S.J., Caines, S., Rathnayaka, S. and Oldford, D., 2015.
Safety challenges in harsh environments: lessons learned. Process Safety Progress, 34(2),
pp.191-195.
Michalski, R. and Ficek, A., 2016. Environmental pollution by chemical substances used in the
shale gas extraction—a review. Desalination and water treatment, 57(3), pp.1336-1343.

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Oecd.org, 2018. Oil and Gas. [online] Oecd.org. Available at:
https://www.oecd.org/swac/publications/38798400.pdf [Accessed 25 Apr. 2019].
Sahara-group.com, 2019. Sahara Group | Bringing energy to life. [online] Sahara-group.com.
Available at: http://www.sahara-group.com/ [Accessed 27 Apr. 2019].
Ulrich, M., 2017, May. The Use of Motion-Based Technology in Oil and Gas Supply Chain
Logistics. In Offshore Technology Conference. Offshore Technology Conference.
Varathan, P., 2018. The recent history of the global economy, in one chart. [online] Quartz.
Available at: https://qz.com/1183308/the-economic-reversal-of-asia-and-africa-in-one-striking-
chart/ [Accessed 25 Apr. 2019].
Worldenergy.org, 2018. South East Asia & Pacific. [online] Worldenergy.org. Available at:
https://www.worldenergy.org/data/resources/region/southeast-asia-pacific/oil/ [Accessed 25 Apr.
2019].

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