Logistics and Supply Chain Management Challenges in Oil and Gas Industry

Running head: LOGISTICS AND SUPPLY CHAIN MANAGEMENT
LOGISTICS AND SUPPLY CHAIN MANAGEMENT
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1LOGISTICS AND SUPPLY CHAIN MANAGEMENT
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The utilization of the outdated models affected the capabilities of the organizations in upholding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

2LOGISTICS AND SUPPLY CHAIN MANAGEMENT
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