Transportation Optimization Opportunities in the Oil and Gas Industry
By Keith Richard, Vice President, Operations, Transplace
Oil and gas is a truly unique industry. From its world-class production technology to its incredibly diverse needs, those who work in oil and gas have seen many changes over the years. Most have probably faced some very unique supply chain challenges, such as having to make a delivery to latitude-longitude coordinates (sometimes deliveries can be miles into a vast ranch in a very remote area). And because the industry also operates 24/7/365, operators must sometimes secure equipment on a hot-shot basis due to the cost of operations, as it can be a tremendous loss if an oil well goes down. Unlike other industries, those working in oil and gas have to deal with constant, round-the-clock pressure.
In light of these particular challenges, one way the oil and gas industry can reap significant benefits is by embracing order management as well as planning and transportation management technology. Generally speaking, many companies in the oil and gas industry are not taking advantage of technology like a Transportation Management System (TMS) to manage their complex supply chain against different fields, plays and business units in North America.
One of the biggest benefits a TMS provides is compliance and visibility, which is critical for many oil and gas companies and can help lead to streamline supply chain operations including improvements in safety, service and costs. Oil and gas companies truly need a value-based, efficient and cost-saving offering that helps them control their transportation network and arms them with the tools to help them do their job more effectively. By utilizing a TMS, oil and gas companies are constantly supplied with critical supply chain data, ensuring that they’re using the right carriers at the right price every single time, while at the same time finding real opportunities to drive cost out of their network and improve safety.
And while there are a few outliers whom excel at the management and execution of their logistics networks, a majority of oil and gas companies understaff and woefully underinvest in important areas that make up their transportation and logistics function. Managing and optimizing a supply chain is also about commitment to continuous improvement and sustainability, not just spot rates or short term savings. Better supply chain management can benefit the oil and gas industry as a whole in several important ways:
- Better visibility to where materials are at all times and when they will arrive helps to achieve reliability through the entire supply chain. It provides oil and gas companies the flexibility to control their entire transportation process.
- Better access to data and business intelligence allows companies to achieve better carrier performance and compliance and reduce cost.
- Improved optimization, which also equals more capacity on the market. This is truly valuable during the current capacity and driver shortage. The expansion of the oil and gas industry has put a capacity strain on the market, making it all the more important for companies to ensure they’re leveraging technology to optimize their network.
- Enhanced safety, which is a huge concern in the oil and gas industry, but not just on the job site. The inability to provide trucking companies enough lead time to get the product to a well site has a significant impact on service and safety. Using a TMS system can greatly improve and enhance these areas.
- On-going leadership, management and oversight of the carrier contracting and procurement process. Using a collaborative model in working in conjunction “with” the field operations teams using an incumbency model with current providers while providing the operations staff with a routing guide and TMS application to manage the tender process.
- Flexibility and support of daily operational expedite environment. By using a TMS application in conjunction with control tower oversight, oil and gas companies will have the ability to “sustain and enhance” their supply chain process.
- Compliance and control. Using of state of the art business intelligence tools, companies will have analytics for measuring compliance to operational and tactical standards, as well as strategic thought leadership. The key is using a “non-intrusive” structure in supporting a dynamic operational environment.
To hear more about strategic and tactical best practices for the oil and gas industry, tune in to the Talking Logistics live episode on March 24th.
How are you leveraging technology or optimizing your supply chain network to reap both short-term and long-term savings?