A shaky recovery is building pressure on oil and gas companies to continue to streamline their operations . Now, many are taking cues from their manufacturing counterparts to make investments in the digital oilfield, and specifically, the supply chain.
What is it? It means integrating the disparate processes of the oil and gas supply chain, from production and exploration to refining to eventually, the customer. The advantage of digitizing and managing these processes is not only in being able to restructure workflows and eliminate the inefficiencies of paper processes, but also increasing visibility into the supply chain itself and empowering managers to make data-driven and reality-based (not employee manual-based) decisions. Hybrid supply chains, relying on a mix of digital and paper processes, also lead to supply chain silos where communication and information lags between different processes. The paper-based information, only available locally, also potentially cuts managers and executive team members off from crucial insights. Hybrid models also naturally lend themselves to disconnected IT applications, causing redundancies in data and inefficiencies in IT efforts.
Their peers will get left behind out in the field as well, not able to, for example, capitalize on the contextually aware and real-time features of mobile devices for driver tracking, or lose out on key production inefficiencies without RFID scanning. The oil and gas supply chain is relatively unique and complex, compared to say a traditional retail operation: hundreds of vendors potentially touch the chain along the way, from oilfield services to rigs. Creating a comprehensive and global supply chain organization also aligns these activities with the business units and sets common standards across the supply chain.
The payoff from the digital supply chain presents a compelling business case in today’s environment. For example, one bottling company saved 505 dollars per invoice by switching to e-invoices— and that’s with a significantly more straightforward supply chain. Another study out last year showed that the digital supply chain would generate more just-in-time sourcing and reduce the order-to-stock.
Here’s the underlying benefits driving those cost savings:
- Remote monitoring of materials and assets reduces labor costs in travel. Equip your remote workforce with a powerful mobile app to enable real-time access to data, reducing the additional minutes spent per work order in dissecting the data on the asset.
- Digitize work orders to reduce errors and “approval friction.” Rather than relying on sign-off for work orders manually, a mobile app that sends push notifications for approvals can completely transform the process. No more time wasted waiting on approvals or finding the right person on-site.
- Make your sales team more efficient with digital sales enablement. Rather than rely on the sales team to manage updating their own files or pulling recent versions, sales enablement tools empower the team with the most recent version automatically. The marketing team can get the insights they need into what files are being used more often and when— critical information for when they create more sales documents.
- Enable dynamic scheduling to manage transportation of the product more effectively. All of your customers need their deliveries on Fridays in time for the higher business on weekends. What if you gave some customers the opportunity to save money by opting for deliveries during on Wednesday? In addition, pursuing a vendor-managed inventory approach can help customers manage their inventory more efficiently.
- Align business units with the supply chain. With a hybrid, localized supply chain, business units fall into silos from the supply chain, and from each other’s efforts. Digitization of the supply chain lends itself to a central supply chain organization, and tying the supply chain into the business units.
- Enforce higher quality standards. Acquiring, integrating and reconciling refinery data in real-time can cut down on the manual paper reporting. Some warehouses have to pay someone specifically to just compile all of the regulatory paperwork. Enforcing materials tracking and quality standards, powered by digital technology, becomes a much more efficient process than trying to manage this with paper at each stage of the process. Higher product quality translates to higher customer retention and fewer product rejections.
The key is to lead digital transformation with the supply chain from the top and with the right strategy. Download our latest ebook to find out why and how many of your peers are doing this with mobile applications.