Enhancing Resilience in Oil and Gas Supply Chains

The oil and gas industry faces a complex array of challenges, with supply chain resilience becoming increasingly critical. Companies are exploring various strategies to enhance their supply chain capabilities amid global disruptions and evolving market demands.

Technological Advancements and Supply Chain Optimization

Optilogic has introduced DataStar, a new tool aimed at optimizing supply chains. This development addresses the pressing need for resilient and cost-effective supply chains in the oil and gas sector. The focus on category depth, vendor management, and spend visibility is crucial for navigating supplier scarcity and increasing competition. Having depth by category enhances supplier options, and the availability of multiple qualified suppliers is essential for just-in-time needs.

Lost time in the supply chain directly translates to lost revenue, with inspection services often delayed by 5-9 days and reports taking 1-2 weeks. Paper-based systems contribute to inefficiencies and delays, whereas real-time visibility can enable proactive cost management. The shift towards connected systems and data is seen as a way to improve supply chain resiliency, with vendor networks, processes, and data access being key pillars in this endeavor. Real-time data by project and category is now a necessity.

Challenges and Strategic Derisking

Supply chain visibility is seen as the execution engine in an environment where disruptions are constant. Leadership instability poses a threat to supply chain resilience, with a mild decline in logistics growth observed in November. Operational resilience has decreased by 4% from 2018 to 2024, with 69% of C-suite executives identifying adaptability issues and 88% anticipating intensified disruptions. The average autonomy of supply chains is only 21%, and this limited autonomy is a barrier to operational resilience.

Fast, agile, and sustainable supply chains are necessary, with advancements in AI critical for adding lasting value. Autonomy levels vary across industries, and operational resilience has been declining since before the pandemic. Real-time flexibility in operations is becoming a new benchmark. Trade uncertainty continues to pose challenges, alongside emerging trends in logistics technology and AI driving a new era in the field.

Geopolitical Risks and Supply Chain Derisking

The ongoing global uncertainty has led companies to implement derisking strategies, focusing on local and hyperlocal supply chains to reduce risks and strengthen resilience. Sustainability and customer expectations are at the forefront, as volatility becomes the norm. Labor shortages and disruptions add to the challenges faced by supply chain leaders, with two-thirds expecting geopolitical risks to increase costs.

Four distinct derisking strategies have been identified, one of which is decoupling to create independent operational ecosystems. Strategic derisking balances resilience, cost, and growth, enhancing resilience against geopolitical shocks. Diversifying operations outside target markets helps balance risk and cost efficiency, particularly in volatile environments. Regulatory uncertainty, however, complicates these changes, and talent shortages further hinder execution in new markets.

Adapting to a Changing Landscape

With 61% of companies pursuing nearshoring and diversification, derisking strategies are aligning with business objectives, focusing on long-term growth and sustainability goals. Companies are assessing market importance, viable alternatives, and evaluating financial, regulatory, and labor impacts. Mapping current network vulnerabilities and engaging cross-functional teams for assessments are part of the process. Pilot projects for derisking strategies are being conducted in targeted areas.

AI and automation are playing a significant role in shaping global trade, with lessons being learned from global to hyperlocal supply chain shifts. The oil and gas industry's efforts to enhance supply chain resilience will likely continue to evolve as they adapt to these new challenges and opportunities.