The oil and gas sector is one of the most dynamic, where companies who operate within its confines face intraday fluctuations in supply and demand a constantly changing geopolitical atmosphere and increasing regulatory oversight. These complexities, in addition to the obvious and underlying difficulty of the exploration and production of oil and gas that companies in this sector are faced with make it a necessity to implement a supply chain management system to help overcome the hurdles. However, the supply chain must not stop at the product that a company produces, it must go further into ancillary supply chains that are required to produce their product such as materials, equipment and service providers.
The Harvard Business Review  pegs the percentage of purchases and services paid for by oil and gas producers at more than 50% of company expenditures, meaning that even a few percentage points in either direction can make a world of difference on a company’s financials. We are nearly seven years from $120 barrels of oil and with the current prices being less than half that today producers are still feeling the effects of the oil price crash.