Logistics and Supply Chain Management Challenges in Oil and Gas Industry

This article discusses the challenges faced by the oil and gas industry in logistics and supply chain management. It covers the challenges faced by the upstream and midstream sectors, products supplied by British Petroleum to Southeast Asian and West African B2B customers, service-related logistics management in Southeast Asian and African markets, and human behavioral challenges. The article concludes with recommendations for modernized supply chain and logistics frameworks.

Running head: LOGISTICS AND SUPPLY CHAIN MANAGEMENT
LOGISTICS AND SUPPLY CHAIN MANAGEMENT
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1. Introduction
Supply chain operations and management plays a major role in upholding th4e efficacy
of the operations relating to inventory management, production and distribution of the products
and services (Yusuf et al. 2014). The goal of undertaking the supply chain operations is to
maximize the rate of customers through lowest possible costs (Raut, Narkhede and Gardas
2017). The different modifications that are undertaken by the organizations in the supply chain
operations are reliant on the identification of the demand faced by the same in the different
markets. In this relation, British Petroleum has taken steps to supply products to the organization
in the Southeast Asia and West Africa. The discussion is based on identifying the different
challenges that might be faced by the organization while operating in accordance to the goals of
the supply chain management.
2. Main challenges facing Oil and Gas firms with global operations
The major challenges that are faced by the oil and gas companies while operating in the
upstream sector are related to the lack of explorative understanding of the origin of crude oil. In
this relation, the lack of proper information and management of exploratory study affects the
capabilities of the oil and gas companies while operating worldwide (Yusuf et al. 2013). On the
contrary, the utilization of the traditional supply chain models in the industry has affected the
capability of the same in upholding the operations in the modified business environment. Oil
industries such as ExxonMobil, Royal Dutch Shell, and ConocoPhilips utilized the vertical
integration model which required the involvement of the entire supply chain (Silvestre 2015).
The utilization of the outdated models affected the capabilities of the organizations in upholding
the smooth operationsof the operations in accordance to the growing demand. The lack of skilled

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personnel, inefficient marketing techniques and the volatility of the markets has caused serious
impact on the supply chain operations of the upstream sector.
The midstream sector of the industry aimed at supplying and storing the crude oil,
trading with the different organizations, marketing and retailing operations (Chardine-Baumann
and Botta-Genoulaz 2014). However, the sector also encountered significant issues, which
affected the operations of the businesses. The lack of sufficient corporate communication has
affected the capabilities of the industry while undertaking the smooth operationsof the businesses
(Hall, Matos and Silvestre 2012). Lack of suitable communication and promotional techniques
has hindered the growth of the midstream sector. The major challenge that is being faced by the
sector is reliant on the crude supply mechanism and the environmental safety standards, which
affected the capabilities of the organization in undertaking diverse range of operations for
strengthening the supply chains.
3. Products supplied by British Petroleum to Southeast Asian and West African B2B
customers
The products that are supplied by British Petroleum to the Southeast Asian and West
African companies are Petroleum. The product offerings of the organization followed a simple
version of the supply chain, which aimed at exploration and production of the offerings based on
the demand faced by the business (Dam and Petkova 2014). The production of the products is
succeeded by refining operations of the business, which is followed by marketing, and
distribution of the product to the companies in Southeast Asian and West African companies
(Raufflet, Cruz and Bres 2014). The petroleum is distributed to the Southeast Asian and West
African organizations through a study of the demand faced by the business. The agility of the

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process is based in the needs of the customers while upholding the operations in accordance of
the needs of the businesses (Raut, Narkhede and Gardas 2017). The assessment of the needs of
the customers assisted the organization in upholding the productivity and transportation of the
final product through pipelines. The upstream sector acts as an important checkpoint for
undertaking the exploration and excavation of the petroleum (Urciuoli et al. 2014). The
midstream sector stores the petroleum until the gross demand faced by organizations grows. The
downstream sector helps in distributing the finished product to the customers. In this connection,
the concerned organization has taken steps to develop the processes of supply chain management
in order to provide the Southeast Asian and West African companies with the product (Chardine-
Baumann and Botta-Genoulaz 2014).
4. Service related logistics management in Southeast Asian and African markets
The service related logistics of the organizations are reliant on the smooth operationsof
the different operations (Kimani 2013). In this relation, the smooth operationsof the supply
chain operations helps an organization in upholding the efficacy of the operations in accordance
the needs of the business. Kimani (2013) stated that the efficacy of the supply chain and logistics
operations of an organization helps the same in upholding the efficacy of the operation aimed at
making the product available in the markets. In this relation, the concerned organization has
taken steps to develop agile methodology for upholding the service related logistics in Southeast
Asian markets (Subramanian and Gunasekaran 2015). It assisted the organization in upholding
the efficacy of the operations while operating in accordance to the needs of the client
organizations (Subramanian and Gunasekaran 2015). On the contrary, the concerned
organization has taken steps to facilitate the lean management concepts while undertaking
service related logistics in the African markets.

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The development of the supply chain strategies is based on the demand faced by an
organization in the respective markets. Therefore, the concerned organization has taken steps to
develop their service based logistics resources according to the demand faced by the same in the
Southeast Asian and West African companies. The development of the resource base is reliant on
the smooth operationsof the systems in accordance to the needs of the organization while
operating in the diverse markets. The differences in the supply chain strategies are reliant on the
evolution of the service company needs. Garcia, Lessard and Singh (2014) stated that the
different modification in the managerial operations and the execution of the supply chain
strategies are based on the needs of the service businesses. In this relation, the suitable relation
of the organization with the suppliers and the market assessment of Southeast Asia and the
Western Africa have helped the concerned organization in distinguishing between the strategies
(Urciuoli et al. 2014).
5. Human behavioral challenges
The human behavior related challenges that are faced by the concerned organization are
based on the change in the expectations of the same relating to remuneration and incentive
structure. The different modifications in the remuneration related expectations have affected the
capability of the organization in adhering to the needs of the employees. On the contrary, the
development of workplace safety and health related regulations has enhanced the rate of
expectation of the employees from their employers (Raufflet, Cruz and Bres 2014). The most
unusual challenge that is faced by the concerned organization is reliant on the lack of skilled
workforce. It has affected the capabilities of the concerned organization in upholding the
efficacy of the operations in accordance to the sustainability needs of the firm. The change in the
behavioral pattern of the skilled or the semi- skilled workforce relating to their expectations, in

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this context, affects the capabilities of the organization in facilitating the production, refining and
transportation related operations (Dam and Petkova 2014). The different modifications that are
undertaken by the concerned organization are based on the assessment of the needs of the
employees and adherence to the standards that are being laid through the regulations (Silvestre
2015). It assisted the concerned organization in upholding the efficacy of the operations in
accordance to the sustainability needs of the firm. However, the increasing demand of the
employees related to work- life balance and the remuneration has affected the capabilities of the
organization in facilitating the smooth operationsof the supply chain management.
6. Conclusion and recommendation
Therefore, from the above assessment it might be stated that the different challenges that
are faced by the oil and gas sectors, specifically the upstream sector and the midstream sector,
are reliant on the different aspects of environmental and regulatory modifications. The different
strategies that are undertaken by organizations while facilitating the smooth operationsof the
systems are being enumerated as a part of the study. The different issues that are faced by the
organizations might be mitigated through suitable advertisement and marketing of the product in
the different part of the world. On the contrary, collaboration with different supportive sectors
would help the oil and gas manufacturing organizations in supporting the smooth operationsof
the business units. Lastly, the oil and gas sectors must take steps to design modernized supply
chain and logistics framework in order to facilitate the adaptive nature of the organization
correlating to the ever- changing business environment.

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