The Oil and Gas Industry is dynamic and ever changing, with varying degrees of uncertainty from day to day. This, coupled with more competition and increasing customer expectations, puts Oil and Gas companies under even more pressure to ensure that their supply chain is functioning optimally.
The core of this is the management of supply chain planning and the need for real-time visibility and responsiveness to any unplanned disruptions, which is why many businesses have turned to innovative software solutions to answer these needs. One such software is the SAP IBP (Integrated Business Planning) for Supply Chain management.
What challenges are affecting the Oil and Gas industry?
The Oil and Gas industry is complex and filled with uncertainty relating to demand, pricing, and competition, adding to this complexity is the management of the overall supply chain, especially in relation to transport and distribution operations. Other challenges facing the industry include:
Unpredictable demand
Supply and demand changes pose a significant risk for Oil and Gas companies. This is primarily due to the capital required and time taken to adjust operations to unpredicted changes. Many supply chain operations are unable to respond quickly enough to changes, and as a result, incur financial losses.
Operational complexity
The Oil and Gas supply chain is made of several different moving parts. The complexity lies in the integration and control of all of these systems and processes, which need to be managed effectively to ensure productivity, profitability and customer satisfaction.
Low visibility
This is one of the biggest challenges experienced by operations and supply chain teams. Without an eagle-eye view of the supply chain operations that include demand, supply, inventory, distribution and transport systems, you will be unable to identify possible issues, problems or risks and manage them proactively. This ultimately puts you on the back foot and can negatively impact your profit margins.
Cost pressure
The Oil and Gas industry is no stranger to price fluctuations and the impact this has on supply and demand. This cost pressure affects every aspect of the business, including supply chain operations. Companies in this industry need to continually look at cost-saving opportunities and ways to reduce operating costs to enhance profitability in relation to cost pressure.
Each of these challenges impacts the responsiveness, flexibility, and overall productivity of the supply chain and business. To answer these challenges, many Heads of Operations have turned to innovative software technology to create a digital supply chain that optimises demand planning and operations management. One such solution is the SAP IBP for Supply Chain.
Taking a more in-depth look at SAP IBP for Supply Chain
SAP Integrated Business Planning (IBP) powered by SAP HANA enables companies to respond to the above challenges and new market expectations. This cloud-based software solution aims to make supply chain planning more productive, responsive, and strategic by providing real-time insights into demand and supply.
This technology provides you with cloud deployment, planning processes, real-time scenarios and simulation, social collaboration and powerful predictive analytics, which will assist your business in:
- Increasing customer service levels
- Ensuring the timely delivery of product
- Agility to overcome any supply chain disruptions
- Decreasing inventory levels through inventory optimisation
- Anticipating the market demand for planning and forecasting purposes
One of the main features of the SAP IBP software is Intelligent visibility. This enables businesses to be more flexible and agile in the face of disruptions and challenges. When there is an unexpected disruption, this software provides you with real-time insights, data and information necessary to adjust supply chain planning and activities. This ensures that these disruptions have minimal impact on performance and profitability and that you are still able to meet customers’ demand and supply requirements.
SAP IBP Components
The SAP IBP software is a modular system that allows you to implement different components relating to your business needs and requirements. These components include:
Integration with SAP Supply Chain Control Tower
This component provides you with end-to-end visibility of your supply chain which will allow you to implement fast corrective action to unexpected delays or challenges. Enabling you to ensure on-time delivery performance, despite disruptions to the supply chain. It also allows you to decrease overall inventory levels while reducing risk and aims to boost supply chain agility and reduce costs.
Sales and Operations Planning
This planning application aligns sales and operations plans to increase profitability and market share. This is done through several innovative tools that aim to balance demand and supply, increase the speed and agility planning, improve forecasting accuracy and on-time delivery.
Demand Management
Provides full transparency with features for demand sensing and short-term, mid-term and long-term forecasting. This ensures quicker reaction times on short-term demand changes and more accurate statistical forecasting.
Inventory Optimisation
This component provides inventory targets that not only meet or exceed customer service levels but that also reduce working capital. This tool maximises the efficiency of inventory and working capital, automates and standardised planning processes, enables more competitive inventory target-setting cycles, and ultimately reduces product and distribution costs.
Response and Supply Planning
Allows you to adapt quickly to the changes in demand. This is done by considering the impact across the entire supply chain. This component examines operations relating to production, distribution, and procurement, it then allows for strategic, tactical, and operational supply planning within a single solution. Enabling you to plan effectively by using simulations, what-if scenario, pegging and predictive analytics to optimise profits and enhance customer service.
Conclusion
The SAP IBP solution for the Oil and Gas industry plays a significant role in ensuring that your supply chain can adapt to challenges and disruptions by providing real-time supply chain management and visibility. This software solution enhances the flexibility and agility of your supply chain demand planning and operations, providing you with business planning tools that allow you to examine different scenarios and situations in order to answer any challenges and disruptions that may arise proactively. Adapt IT Energy is an official SAP Partner and offers the complete SAP IBP solution to assist in optimising your transport and distribution processes. Let Adapt IT Energy drive your supply chain to new heights with SAP IBP.