Like most industries, the oil and gas sector has experienced significant change and disruption in recent years. Political and economic factors, together with supply and price fluctuations, can cause heartburn for those with even the strongest constitution. Couple these factors with increased competition with renewables and a general dismissal of the industry by younger workers, and nearly every facet of the organization is affected.
Although there has been some recovery in price per barrel, there is nowhere near the price boosts and euphoria that were experienced in the early years of the current decade. However, as McKinsey notes in a recent article, the oil and gas industry may be able to take a page from other industries’ playbooks to ensure continued growth and profitability.
One key recommendation in the McKinsey article is deeper adoption of technology and digital solutions, especially those that result in more efficient and more effective procurement and supply chain processes. Digital procurement can enhance collaboration with and competition among suppliers and assist in streamlining paper-based manual processes. Whether procurement is involved in securing direct materials or products and services for maintenance, repair, and operations (MRO) or capital projects, the ability to synchronize the arrival of parts, materials, and people can avoid costly overruns and minimize required downtime. A supply chain collaboration solution can provide greater visibility across the multiple tiers of contractors and suppliers.
Collaborating with your ecosystem
Related to this is the need to better collaborate ‒ and even compete together ‒ as an ecosystem. Utilizing a business network to optimize supplier collaboration can not only result in better pricing but also in better relationships. When you are competing as an ecosystem and extending collaboration beyond your four walls, you can leverage intelligent supply chain planning driven by robust predictive power that incorporates the knowledge of your service partners, your field operations, and your suppliers. Managing projects collaboratively across the entire project lifecycle and ecosystem will reduce downtime by synchronizing supply availability with contract labor readiness.
Reimagining workforce management through partnerships
According to a McKinsey & Company study on improving complex business partnerships, you need to set a foundation and nurture your relationships with your suppliers and partners. This means focusing on alignment on entity objectives, building effective communication and trust, developing constructive governance processes, and clearly defining incentives and KPIs.
You may need to transform your thinking about how you manage your workforce. By collaboratively building statements of work with your subcontractors to jointly optimize schedules, you can manage projects in partnership across the entire project lifecycle and ecosystem. You can perform work more efficiently by creating a “digital twin” that enables new workers to arrive with the full knowledge of onsite workers and with proper access control. Similarly, by utilizing digital budgeting and staffing solutions and previous project data, you can better anticipate your workforce requirements and determine an optimal way to staff and equip the project.
SAP Ariba offers a broad swath of solutions to help the oil and gas industry better compete as an ecosystem and nurture your partnerships, including Ariba Network, Supply Chain Collaboration, and Strategic Sourcing.