Operation Management Report: Supply Chain Optimization in Petroleum

This report focuses on the critical need for supply chain optimization within the petroleum industry, highlighting its importance for reducing costs, minimizing waste, and achieving sustainability. The study draws on research from various sources, including Ahmad et al. (2016), Pan, Liu & Li (2017), and Gardas, Raut & Narkhede (2019), to explore key aspects such as operational risks, energy security, and the role of collaborative green logistics. It underscores the significance of preparedness in achieving sustainable supply chain management, addressing issues of over-capacity, and the impact of regulatory pressures. The findings emphasize the need for proactive organizational culture, team collaboration, and strategic petroleum reserves to mitigate supply disruptions and enhance overall performance. The report concludes that optimized supply chain networks are essential for establishing sustainable practices in an industry facing volatile fossil fuel supplies and energy security uncertainties.

Running head: OPERATION MANAGEMENT
Article Research on ‘The suggestion on optimizing the supply chain management in petroleum
industry'
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1OPERATION MANAGEMENT
Optimization of supply chain network is highly necessary in all type of industries as that
would help in reducing production and operation cost for the companies and at the same time,
reduces unnecessary wastages and increases sustainability. In the petroleum industry, the
importance for optimized supply chain is increasing for achieving sustainability and for this
purpose, almost all the operational segments under supply chain management must be made
efficient. As stated by Ahmad et al. (2016), to enhance the sustainability of the supply chain in
the oil and gas industry, preparedness is more significant than the commitment to establish
sustainability. As the dependency on the oil and gas and petroleum industry is continuously
growing, the need of sustainable supply chain activities is growing too. The authors found that
among the measures of preparedness, the operational risks of the supply chain management are
the most crucial for achieving sustainability, but not for the production management practices.
The findings also showed that internal factors like proactive organizational culture and team
collaboration are important to use as preparedness measures in the oil and gas industry to
implement the effective sustainability measures.
Another aspect was highlighted by Pan, Liu & Li (2017) by exploring the oil supply
chain in China and that was the issues regarding over-capacity and energy security. The authors
found that China’s refining industry faced the challenge of severe over-capacity extent and the
present petroleum supply chain is able to deal with a 180-day disruption. The quantitative study
found that the strategic reserve for petroleum and the ability of the supply chain to deal with the
supply risks like disruption are important for capacity planning on how to react in case of sudden
supply disruption. Optimization of supply chain can lead to resolution of the issues of energy
security and over-capacity in the petroleum industry of China and it is expected to be effective in
other countries as well.

2OPERATION MANAGEMENT
Gardas, Raut & Narkhede (2019) pointed out that while the global economy substantially
depends on the oil and gas or petroleum sector, the industry has a very severe negative effect on
the environment, as well as on the society. Optimized supply chain network can result in
sustainability and that can address some social and environmental issues. Through a quantitative
study by applying Interpretive Structural Modeling (ISM) and Structural Equation Modeling
(SEM) methodologies, the scholars found that there are multiple determinants for the
optimization of supply chain, such as, the regulatory pressure (RP) and forward and reverse
collaborative green logistics, which play a significant role in achieving a sustainable and
optimized supply chain in the petroleum industry. These determinants significantly affect the
operational and business performance (OPR) of the oil and gas companies through
interrelationship. Thus, it can be said that optimized supply chain network is highly essential for
establishing sustainable practices in the petroleum industry, which deals with a volatile and
depleting supply of fossil fuel and lack of sustainability. This causes risk to uninterrupted supply
of oil and gas, causing uncertainties to energy security and thus, for implementing sustainability
measures, it is important for achieving an optimized supply chain network.

3OPERATION MANAGEMENT
References
Ahmad, W. N. K. W., Rezaei, J., Tavasszy, L. A., & de Brito, M. P. (2016). Commitment to and
preparedness for sustainable supply chain management in the oil and gas
industry. Journal of environmental management, 180, 202-213.
Gardas, B. B., Raut, R. D., & Narkhede, B. (2019). Determinants of sustainable supply chain
management: A case study from the oil and gas supply chain. Sustainable Production and
Consumption, 17, 241-253.
Pan, L., Liu, P., & Li, Z. (2017). A system dynamic analysis of China’s oil supply chain: Over-
capacity and energy security issues. Applied Energy, 188, 508-520.