02 October 2017
The global fuel industry, while still colossal in size, has endured a challenging few years of weak demand and low prices. Understandably, most oil and gas businesses are looking for ways to boost revenue and market share while reducing overall costs.
With thin margins consistently hindering growth initiatives, fulfilling these objectives is much easier said than done, but mergers and acquisitions aren’t the only ways left to build – supply chain optimisation must be considered too.
The world’s recent economic troubles are no secret, and the fuel industry is not alone in falling victim. It’s not fair to place all the blame on external factors, however – there’s plenty of improvement work that can take place within.
Among the biggest obstacles facing businesses in the fuel sector – especially when discussing supply chain optimisation – is legacy. Outdated organisational structures and attitudes have helped to create a disjointed supply chain comprising various segments. And this, put simply, is too inefficient. Problems exist only in their own siloes, with no single owner to take responsibility.
For the sector to continue moving forward, it must evolve. It’s crucial that businesses can introduce more consistency and consolidation to their supply chain processes, while using the huge volume of data they now have to its full potential.
A unique industry
Before suggesting possible solutions, it’s wise to remember that fuel as a sector is unique in many ways. First and foremost, the product in question is commodity-based and generally interchangeable; businesses competing within the same part of the supply chain can and often do trade together. This means it’s normal for inventory to move around more than an equivalent product in another sector – fuel could be traded several times before it’s consumed, for example; even by the same companies.
Gas and oil inventory is not as readily identifiable as the more conventional products traded in other industries. It cannot be packaged in the same way, which means it can’t be tracked as easily using barcodes or product identifiers.
Legal and environmental responsibilities must also be considered at every point of the supply chain, meaning accurate reporting on quality and safety is imperative throughout – this is one area where consistency can be particularly valuable.
These considerations really are only scratching the surface, but they give a good idea of the predicament fuel businesses face as they look to improve.
It’s not advisable for fuel companies to transform all their operations at once. Instead, smaller steps must be taken to introduce more consistency and efficiency at each part of the supply chain – all with the big picture in mind. The key is to start with a focus on information.
TouchStar is committed to helping companies across the fuel sector to use data more effectively.
We do this with a range of technologies – powerful mobile computing systems and sophisticated yet intuitive software designed to make the harvesting and application of invaluable data as simple as possible.
With higher quality information to hand, and a better understanding of how it should influence decisions, you’re better positioned to achieve those two main objectives we touched on earlier: to boost revenue and reduce overall costs.