Digital transformation is one of those popular terms that is often included in conversations relating to the oil and gas industry, specifically supply chain management. This term refers to the use of technology and digital software solutions to enhance how the supply chain runs, is used to optimise operational and business processes, reduce costs, and increase business profitability. There are several factors affecting supply chain technology and digital transformation including competition and costs, demand forecasting and planning, talent shortages and more. For supply chain technology to be effective, it is essential to have a solution that fits your specific business needs, giving your business the competitive edge needed to drive ROI and productivity.
Why is supply chain technology essential?
Supply chain technologies have become a strategic tool used in both small and large companies to provide a competitive advantage and meet consumer expectations. Today, technology is visible in every possible area in business, from processing and tracking transactions, planning, scheduling, routing, transport, distribution, product management and storage. Supply chain technology is used to integrate, optimise and ensure visibility in the supply chain, which has a monumental impact on business profitability, especially in identifying opportunities for reducing operational costs. Supply chain management technology aims to:
- Simplify business and system processes, reduce timelines and enhance productivity
- Manage every aspect of the product movement process with ease and efficiency
- Implement automated support and maintenance solutions to streamline processes, enhance performance and save on time and money
- Enhance your capabilities and increase ROI by implementing effective advanced planning, transport and distribution solutions that help effectively manage logistics and supply chain processes.
In the oil and gas industry, these technologies optimise every stage of the supply chain. The benefits of these supply chain technologies are seen in the following areas of the business:
Procurement processes
Supply chain management technologies play an important role in the procurement and sourcing processes within a business. These technologies often provide the data needed to identify problem areas and opportunities for cost savings. The use of these technologies provide a 360 degree view of your suppliers, giving you the insight needed to negotiate pricing, contract and payment terms. These technologies ultimately assist the Head of Operations with sourcing from suppliers, saving and costs, reducing industry pressure and more.
Distribution channels
These technologies allow you to effectively manage and automate your supply chain planning, forecasting, routing, scheduling and fuel distribution. They provide you with access to insights and accurate up to date real-time inventory information which assists with proactive decision making.
Improve workforce
These technologies also streamline complex tasks and allow employees to manage their workload effectively. They aim to reduce errors and ensure that clients have the product they need when they need it, positively impacting customer satisfaction levels.
There are many benefits to using supply chain technologies, but in order to delve deeper into how they can impact your business, we need to look at different trends that contribute to supply chain complexity and performance.
Trends that contribute to supply chain complexity and performance
The supply chain is made up of many different moving parts, systems and processes and the management of each of these is a complex task. This complexity has resulted in several trends being identified to meet the growing need for supply chain management technologies. These trends include:
- Industry 4.0 – this is often referred to as the fourth industrial revolution and talks to the shift taking place in manufacturing and the process of digital transformation. Industry 4.0 uses a combination of cyber-physical systems, the Internet of Things and the Internet of Systems to make the idea of a smart factory a reality. In this reality, computers and systems are connected, smart machines support the supply chain process and provide access to more data which ensures that operations are more efficient, productive and less wasteful. Ultimately, a connected supply chain can adjust and accommodate when new information is presented. For example, if a weather delay ties up a shipment, a connected system can proactively adjust to that reality and modify priorities.
- Globalisation – has created an opportunity for businesses to venture into new markets, cross borders, expand supplier basis and to build businesses, thereby extending and interconnecting global supply chains. With this opportunity, comes many challenges that include changing consumer demands, increasing regulatory and sustainability requirements that need to be managed effectively for businesses to be profitable. The answer to these challenges is the development of innovative software technology.
- Customer Software Integration – is essential for supply chain management. To effectively manage the different moving parts of a supply chain, you need to have an integrated software solution that provides visibility over the whole downstream supply chain. This visibility enhances the flow of information within the company, making it easier to measure and adjust operations when needed. This increases business flexibility and allows the business to adapt to client requests, competitors’ actions, and events within the industry while reducing waste and lowering costs.
These trends have created a demand for more advanced software features and capabilities to help businesses make better data-based decisions to enhance the overall downstream supply chain. But there are several factors that affect the supply chain technology and software that need to be taken into account
Factors affecting supply chain technology in the oil and gas industry
The factors affecting supply chain technology within this industry, include:
Competition and Costs
More and more businesses are seeing the benefits of supply chain technology and understand that SCM is essential to ensuring fast and reliable delivery of orders and healthy profit margins. With this comes an increase in the number of software technology suppliers and differentiation in costs, often leaving customers confused and overwhelmed. It is vital to look at a software solution that fits your business requirements and specific needs, one that is flexible and scalable and can grow with your business.
Demand Planning and Forecasting
Demand planning and forecasting technology and software are vital to the success of supply chain management (SCM), but companies and employees who often have this responsibility are caught between the need to generate better forecasts and develop consensus planning and the limitations of the tools at their disposal. The success of supply chain technologies lies in choosing the right solution for your business to efficiently generate better forecasts, provide positive and timely customer experience, and ensure supply and demand.
Staff competency and talent shortage
The skills gap is something that specifically affects supply chain technology. Not having access to staff that are experienced and knowledgeable about supply chain management technology can directly impact how your supply chain runs. With the oil and gas industry being so specialised, it is necessary to have staff that are competent and able to use, understand, interpret and manage the software to drive business productivity and reliability.
Outsourcing
Outsourcing supply chain management has become popular within the industry for many reasons which include the above-mentioned staff and talent shortage as well as competition and costs. Many businesses are looking at third-party logistics providers to take over the hassle of managing their supply chain. These businesses are often unaware that there are specific supply chain technologies that can be implemented to enhance business profitability without outsourcing. It is all about finding a software provider that is knowledgeable and has experience in the industry, to find a solution to fit your businesses specific needs.
Customer-centric approach
Many businesses are looking for a more customer-centric approach and technologies that support this. This approach drives both interest and investment in cloud-based planning tools with integrated Artificial Intelligence (AI), machine learning, and analytics. This creates opportunities for innovation, a better meeting of customer expectations, rapid customisation and configuration, and the ability to monetise product and asset performance.
Conclusion
There is no doubt that technology is essential to the management of your supply chain, especially when looking at the effects of globalisation and Industry 4.0. But there are a number of factors affecting supply chain technology within the oil and gas industry that are a concern for businesses. These factors include staff and skills shortage, outsourcing, demand forecasting etc. For businesses to find a technology solution to fit their specific needs, they need to turn to a provider with experience and knowledge in the oil and gas industry, such as Adapt IT Energy. Adapt IT Energy assist in delivering supply chain software solutions that are scalable, can grow with your business and ultimately ensure that your downstream supply chain is optimised. By utilising supply chain technology effectively you can drive your business forward.