As a key driver of the economy with downstream linkages with a multitude of businesses, supply chain efficiencies hold the key to maintaining growth momentum for the oil & gas industry itself and other stakeholders. Moglix Business enables oil & gas companies to break barriers of legacy supply chain design and simplify procurement.
The supply chain in the oil & gas industry has been traversing the trajectory of increased production driven by increasing demand in Southeast Asia. Rapid industrialization in emerging economies and rising volumes of domestic and global trade have contributed to surging volumes in the last two decades. The emergence of lucrative niche markets with limited capacity to absorb oil & gas supplies is likely to provide occasional support to oil & gas prices. Contemporary and positive supply-side shocks from the production of shale oil in the United States of America. After an initial downward spiral of prices, shale oil prices have remained range-bound and is likely to hover around the floor of USD 50/bbl, thereby lending stability to volatile markets. The rise of Asian and Middle Eastern players to a global scale coupled with state-owned companies in Saudi Arabia and Russia prioritizing volumes over margins is also likely to enable oil & gas prices to maintain the status quo, despite a rise in supplies. Moving forward, the on-going drive of oil & gas companies to consolidate capital expenditure is likely to create new avenues of efficiencies and safety cushions for margins in the intermediate-term.
Despite the opportunities for growth in volumes, supply chains in the oil & gas industry are likely to continue witnessing high-cost pressures due to global competition. Disruptive supply-side shocks owing to cost-efficient innovations like shale oil in the United States of America are likely to pose downward pressure on prices in the markets of Europe and China. Adding further to the volatility to the oil and gas prices is the scope for review of existing production restraint agreements between OPEC nations and the Vienna Agreement Allies thereby retaining elbow room for price swings of 8-10%. Shifts in long-standing rules-based engagements and the consequent migration of value and margins across the global oil & gas supply chain are likely to raise risk profiles of supply chains in the oil & gas industry globally. At the microeconomic level, complex operations requiring collaboration with multiple stakeholders, high frequency and rising costs of drilling operations and fragmented supply chains encompassing diverse geographies are likely to have a negative bearing on oil & gas supply chain efficiencies.
Oil & gas companies look forward to streamlining their supply chains and exploring new avenues of efficiencies by leveraging technology for data management, materials monitoring and purchase management. Deployment of predictive analytics and artificial intelligence for proactive identification and resolution of risks can enable greater visibility, traceability and management of supply chain. Collaboration with contractors to galvanize discrete purchases of materials and onsite machinery into bulk orders and electronic data interchange can remove asymmetries of information in the supply chain and make for faster, cost-effective and safer procurement decisions. Vendor consolidation for equipment purchase can enable oil companies to reduce resource engagements, optimize asset utilization and reduce costs on bulk project material spend as much as up to 30 percent, thereby broadening the cushion for price volatilities owing to global cues.
The Moglix Advantage
At Moglix Business, we are dedicated to enabling oil & gas companies to reimagine supply chain management and procurement with our portfolio of supply chain consulting services, SaaS offerings and collaborative enterprise offerings of packaging, cataloging and vendor consolidation.