Logistics & Supply Chain Management Case Study

This assignment requires students to analyze various case studies related to logistics and supply chain management. The analysis should delve into the intricacies of managing resources, optimizing operations, and addressing challenges within the context of these specific cases. Students are expected to demonstrate their understanding of core concepts in logistics and supply chain management while applying them to real-world scenarios.

LOGISTICS AND OPERATIONS FOR OIL AND GAS

Operations and logistics 1
Table of Contents
Introduction...........................................................................................................................................2
Digital technology and their impact on the profitability of the firm......................................................2
Role of digital technology.....................................................................................................................4
ERP system...........................................................................................................................................5
Logistical and operational issues and challenges...................................................................................7
Availability of proper information.....................................................................................................7
Difficulty in managing multiple supply chain....................................................................................7
Over production of some fuels...........................................................................................................8
Difficulty in identifying the sources of extraction.............................................................................8
Forecasting of demand and supply....................................................................................................8
Pollution............................................................................................................................................8
Refinery capacity...............................................................................................................................8
Supply...............................................................................................................................................9
Digital technology helped to overcome all the challenges as well issues in operations and logistics of
Exxon Mobil..........................................................................................................................................9
Human behavioural issues.....................................................................................................................9
Conclusion...........................................................................................................................................10
References...........................................................................................................................................12

Operations and logistics 2
Introduction
Oil and gas industries comes in leading primary sector. Turnover of these companies are more
than $1.7 trillion per year which is higher than the metal industries (Javaherdashti, Nwaoha, and
Tan, 2016).Despite of this there are many problems that this sector has to face such as gathering
information on time, evaluation of new projects, availability of raw material, and many more.
Now the companies are developing digital platform so, they can easily overcome all these
problems. Also, there is an increase in the usage of internet which help them to trace the issues on
time and to make a proper time table on the basis of which, they guide their employees to work.
Apart from this, digitalization has brought changes in the working of human resource, marketing,
supply chain management departments (Ash and Benner, 2016).
New technologies are develop to perform hazardous task such as, High Tec machines, which are
operated from computers and Big data is the another technology which help in performing the work
efficiently (Schönsleben, 2016).
Exxon Mobil is the largest company which produces petroleum. All the operations of the
organisation are first planned and then performed, to reduce the chances of mistakes. In this report
discussion will be carried on logistics and operations for oil and gas, digital technologies that help
to increase profitability, ERP system and supply chain logistics and operations.
Digital technology and their impact on the profitability of the firm
Oil and gas industries are moving towards digital world. There are many digital technologies
used by the organisations to reduce their unnecessary work and earn profits (Laudon and Laudon,
2016).Three main digital technologies are-
 3-D seismic
 Linear program modelling of refineries

Operations and logistics 3
 Advanced process control for operations
Linear program modelling of refineries
Main work of this model is to assure that everything that happens within the refinery, should be
according to the schedule and planning. This refinery include several processing units, materials,
finished products and so on.
3-D seismic
It provide us 2, 3, and 4 dimensional information. The information may be related to earth
surface, different layers found in mountains, fluids present in rock and many more. Further this
data so collected is entered in the computer and at the end they are used by geophysicist. (Thurber
and Rabinowitz, 2013).
Figure 1 growth rate

Operations and logistics 4
This figure clearly show increase in profits experienced by the organisation after adopting digital
technology.
Advanced process control for operations
Every oil and gas industry focus on reducing cost of transportation, production, and risk factors
(Lipták, 2013).This can be attain by exercising control on basic work with the help of some control
operations, apart from this all these digital technologies helps to increase the profitability by
reducing downtime, optimizing production, improvement in margin, easy and early excess to data
and information.
Role of digital technology
Cost reduction – In 2016, company had to invest more for getting digitalised which helped
them in getting information on time. Affordability of operational and digital techniques made IOT
(internet of things) less expensive and affordable for the organisation.
Improving jobs – Technologies are very helpful for the employees. It helped them to perform
their jobs in better way by providing them information on time, performing task as per the set
schedule, develop more accurate projection which eventually reduce the chances of mistakes and
provide them proper support in their operations.
Operational safety and supply chain management – There are chances of volcanic eruption
which can be easily rectified with the help of technologies, results in safety in operations
(Monczka, Handfield and Giunipero et al, 2015).
Digitalization in supply chain helps the organisation in using BIG DATA, with the help of
which Exxon Mobil can identify the risk in the form of signals present in supply chain. Once they

Operations and logistics 5
are identified steps can be taken within the specific period to overcome them (Ahiaga-Dagbui,
Love, Whyte, and Boateng et al. 2017).
ERP system
Planning refers to a process of thinking in advance what is to be done in future. It is the first step
taken by any department. Whereas, coordination focus on developing relationship between the
employees working in different sections so that they can feel free to share information with each
other (Khoury, et al. 2016).
Both planning and coordination are very important for establishing efficient operations network.
There are different methods of coordination such as, direct contact, meeting, direct formal and
informal contact and many more (Amekudzi, et al. 2016). Similarly there are few methods of
planning such as, analysis of socio- environment, thinking future course of action, analysing
problems and solving them.
ERP stands for enterprise resource planning. There are number of activities included in this,
such as planning of product and production, inventory and material management, financial
activities and so on.
ERP provide us upgraded information in the form of data base management system by
maintaining complete record of all the orders, cash and inventory (Ihlen, 2011). Once the
information is recorded, different departments can assess it as per their needs and requirements.
Main aim of the system is to develop automatic back office which has no relation with customers.
It also include e commerce and e business which has taken oil and gas industries to the new
heights whereas, cloud base ERP is much better for small and medium scale enterprises because it
has less upfront cost which further helps in reducing overall expenditure.

Operations and logistics 6
Cloud ERP helps in improving supply chain of oil and gas industry of Exxon Mobil in following
ways-
 Holistic planning – business strategies should be converted into operational directives so,
that the organisation can easily forecast the demand of oil and petroleum with the help of S&OP.
This system will further helps in maintaining balance in cost, growth rate and stock throughout the
supply chain.
As Exxon Mobil deals in multiple supply chain of oil, petroleum, fuel and gas so, with the help
of cloud ERP, optimum master extraction plan can be prepared across the entire operation. This
will overall help the organisation to take the decisions such as what to extract and how much
extraction should be there as per the realistic demand in the market.
 Combining different supply chain – establishing collaboration in multiple chains of Exxon
Mobil helps to draw transparency between dealers and the suppliers. As both of them can keep an
eagle eye on different stages of fuels, current status of the orders, and amount of input and so on.
With the help of EDI information can be send immediately which helps to develop flexibility in
business.
 Way to final destination – digital supply chain will help in creating contact with suppliers,
customers, refineries workers and so on. If everything goes well in the automatic chain then it’s
easy to respond changes.
Digitalisation has become necessary for every organisation not only to compete with
competitors but also to reduce cost and earn reasonable amount of profit (Wieder, et al.2011).

Operations and logistics 7
Logistical and operational issues and challenges
Oil and gas industries over the period had faced many challenges, but it is difficult to identify
the areas where these issues occurred (Daud, et al.2016). There is high demand of oil and gas for
domestic as well as commercial goods because of which it has become booming industry.
Figure 2 stages of extraction
In order to survive, every organisation have to find out ways to deal with the issues. Information
technology is one of the way used by the oil and gas industries (Javaherdashti, Nwaoha and Tan,
2016).Exxon Mobil deals in the marketing products of petroleum as well as chemicals. Some
challenges face by upstream as well as downstream industry are-
Availability of proper information – company have to face many geopolitical issues and in order
to overcome them, there is a need of proper knowledge and skills. Apart from this proper efforts
should also be made to face challenges.
Difficulty in managing multiple supply chain – as Exxon Mobil is involve in marketing of
petroleum as well as chemical products so, sometimes cluster may occur because of multiple
supply chains (Rushton, Croucher, and Baker, 2014). In order to overcome these problems there is
a need to maintain proper management information system (Christopher, 2016).
MIS helps to maintain all the records in systematic order which reduce the chances of
misunderstanding and wrong decisions.

Operations and logistics 8
Over production of some fuels – It is very difficult for the organisation to store liquid fuel
although demand is high as these fuels are widely used in many industries, machines, vehicles and
so on. Exxon Mobil can overcome its problem by keeping updated records of demand in the market
and maintain its inventory as per it.
Difficulty in identifying the sources of extraction – Downstream industries have to invest huge
amount and time to decide the place for extraction of raw materials. Sometime their assumptions
are good but this does not happen all the time. These issues can be solved by identifying alternative
sources from which oil can be extracted.
Forecasting of demand and supply – Exxon Mobil with the help of experts analyse future
demand of their chemical products in the market. But sometimes the analysis conducted may be
wrong, because of which company have to face huge loses (Expósito, Gomez-Exposito and Conejo,
2016) this problem can easily be overcome by adopting high end data management system.
Pollution – There is increase in demand of fuels and to fulfil the demand Exxon Mobil being the
leading industry have to indulge in more extraction activities. This extraction can be done from
water, mountains and many more but all these thing are harmful for the environment.
Government has made it mandatory for all the oil and gas companies to plant trees around their
manufacturing units in order to reduce the component of carbon dioxide and harmful gases from
the environment.
Refinery capacity – Every refinery has its own capacity but the capacity can be increased with
the help of robotic system, development in instruments, minimising the wastage of resources and so
on.

Operations and logistics 9
Supply – Distribution activities are very important for oil industries. Without proper planning,
several problems may occur in distribution of oil and its products. Digital technology helped to
overcome all the challenges as well as the issues in operations and logistics of Exxon Mobil.
Human behavioural issues
Exxon Mobil had to face many issues at the time of adopting digital technology. It is not easy to
satisfy each and every person working within the organisation but if, the organisation wants to
attain its goals then it should understand that human resource is the main asset of the company.
They cannot attain there goals alone (Sundel and Sundel, 2017).
Gradually it is necessary to introduce new technologies and adopt changes with the organisation,
to lead and to maintain position in outside competitive world. Sometimes companies may find it
difficult to introduce such changes because of the fear that the staff will not adopt them.
Old and large organisations like Exxon Mobil had also faced these challenges. When the
company sanctioned deal with Microsoft organisation, it faced many difficulties because of
difference in culture, way of thinking, transformation into IT, and increase in use of computers,
programming language, and so on.
Employees which were working for long time with the organisation were against it because of
many fears. Biggest fear was that they will lose their job. Some of them do not know how to use
new technology, some do not want to learn because of their rigid nature and the one who wants to
learn were not that much educated to understand digital world.
So many things were there in the mind of employees as no one was there to answer them, which
results in the reduction in working capacity, irritation, frustration, and so on. In starting top leaders
were not able to understand the reason behind the downfall but soon they analyse the problem and
came out with the measures to overcome (Ching, Kee and Tan, 2016).

Operations and logistics 10
Organisation after understanding problems of its employees came out with some measures such
as-
Experts – higher authority decided to hire experts. These are the people who excel in their fields.
Proper training was given to the employees under the supervision of experts. They were given right
to ask questions and clarify their doubts.
Training session were divided so that employees do not feel overburdened and can daily apply
what they had learned in the sessions. This provide the staff members a sense of security, provided
them a chance to brush up their skill, learn new things and so on (Svalin, et al 2017).
Appointment of new staff – as there were few people who were working in the organisation
from long span of time and they were not interested to learn new things. Exxon Mobil cannot fired
them considering the time they had given to the firm. So, organisation decided to allow new blood
to enter into the organisation. These new employees possess skills, knowledge, competencies and
courage that helped industry not only to maintain its position but also in attaining new heights.
Conclusion
From the above analysis it can be concluded that digital technology plays very important role in
oil and gas industry. It not only helps in reducing overall cost of operation but also helps in
managing supply chain more efficiently and effectively. Exxon Mobil has experienced tremendous
growth in its business after getting digitalised. As of now, IS is used to gather information, record it
in organised way and take decisions.
Expansion of business made the supply chain more complex but still it was easy to manage
everything with the help of skilled employees. Initially every one faced problem but gradually they
find it easier as, there was no need to gather data and analysis it because now complete information

Operations and logistics 11
can be availed with the help of MIS. Apart from this, employees will also get chance to learn new
things which will help them in further career development.
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Challenges of Offshore Oil and Gas Decommissioning in the UK North Sea. Journal of
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