Logistic And Operation Oil And Gas For Global Powerhouse: Challenges, Opportunities, And Management

Discussion

Discuss about the Logistic and Operation Oil and Gas for Global Powerhouse.

The oil and gas industry is one of the leading sectors of the world, in terms of dollar value. It is highly regarded as the global powerhouse, which employs hundred thousands of the workers, all around the world. At the same time, it contributes a lot to the country’s economy by generating billions of dollars every year. The regions which house the major National Oil Companies contribute a significant amount to the country’s Gross Domestic Product (Jacobs, Chase and Lummus 2014). This particular industry is however, broken into three major segments, which are Upstream, midstream and downstream. The first component that is the Upstream is referred to exploration. This generally involves the need to search for underwater and underground natural oil and gas fields (Tako and Robinson 2012).

The organization chosen is British Petroleum, which is often abbreviated as BP and the report discusses about the mission, vision and goals of the company. The British Petroleum is a multinational oil and gas company which is headquartered at London, England. The vision and mission of the company is to be one of the world’s leading organizations, on the basis of market capitalization and revenue generation (Bp.com. 2018). It wants to widely recognized and successful on the competitive landscape. The company owns thirteen refineries which supplies commercial and retail customers. Moreover, British Petroleum is a vertically integrated company which operates in various areas including production and exploration, marketing and distribution, refining, trading, petrochemicals and power generation (Coyle et al. 2016). In addition to this, the report will provide some recommendations in relation to the identified issues and to ensure consistency.

British Petroleum is a reputed organization and the world’s largest oil and gas company, which is meeting the growing demand in a responsible and safe manner. However, the oil firm is best suited for oil operations and not best suited for gas operations. Therefore, the company is planning to expand their operations in the oil segment. On expanding the business the company will be facing some challenges in relation with logistics and operations. The major challenges are discussed in this segment of the assignment. Firstly, the ever growing population of the world and their demands is leading bringing in a change in the overall oil and gas companies (Dyckhoff, Lackes and Reese 2013).

Secondly, the growth of global economy is also leading to a great change for the overall success of the company. Thirdly, the energy consumption is growing and in the last two decades the energy demand grew around fifty percent. Moreover, it is expected to grow around forty percent in the next two decades (Van Wassenhove and Pedraza Martinez 2012). Therefore, it can be consider as a technical slowdown, which can prove to be a major challenge in terms of energy demand. Fourthly, the big challenge is that it will add to the global concerns regarding carbon, which will affect the oil and gas industry. The tensions and conflicts affecting the oil and gas producing industries will also pose to be a great threat for the company itself (Bosona and Gebresenbet 2013).

Challenges and Opportunities

In addition to this, lack of competencies within the organizations can be a major challenge, which is associated with outsourcing. Therefore, appropriate solutions must be taken in order to discover new oil as well as gas resources. In modern days, companies can certainly call upon the advanced seismic data which will enable them to determine the places better for drilling and getting best results (Monczka et al. 2015). Moreover, instrumentation should be installed for continuously monitoring the progress and wellbore in order to steer along the most beneficiary path throughout the reservoir.

Successful businesses often require efficient and effective planning and control over the management operations. The operations control or planning typically occurs in the manufacturing environment. Therefore, while expanding their operations, British Petroleum should consider planning and controlling the operational steps beforehand, to mitigate the challenges (Tayur, Ganeshan and Magazine 2012). The production planning however focuses on the steps like production management, operational plans and others, in order to expand the business successfully.

Inventory and capacity management is considered to be immensely important for the companies which are able to cope up with random interruptions related to supply as well as demand. It will help the company to cope up with the operations and enable the industry to produce products and services simultaneously. Inventory at times, takes up storage and space and therefore, the managers need to take business decisions in an effective manner. British Petroleum has worked very hard over the past years in order to improve their inventory management. It will help in reducing the lead times in getting the critical spare parts and reduce waste from the storage and purchase of excessive materials. In addition to this, the company has launched innovative projects and measures for improving its management further (Estampe et al. 2013).

Project Management will enable the organization to deliver large scale projects, which in turn will improve the organization’s supply chain management and logistics system. The ongoing organizational functions will also help the company to produce or supply products or services. For example; the production operations, Information Technology, manufacturing, service management as well as accounting operations (Tayur, Ganeshan and Magazine 2012).

British Petroleum should ensure that their products and services are ahead of their competitors at the marketplace, in terms of health, safety and quality. This is the key to their overall growth and by maintaining as well as improving the quality the company will be able to bring in continuous change within the organization. This should also cover the areas related to increased productivity, maximum output, quality control and also consumer satisfaction (Van Wassenhove and Pedraza Martinez 2012).

Planning and Control

The target market for British Petroleum can be the people that are involved in the car rental services or the aviation industry. The target market consists of people that own cars and try to maintain the sustainability of the environment. For this reason, it is necessary that the company provide a product such as natural gas, aviation fuels and motor fuels to the target market that requires its use on the field in which they work (Schwalbe 2015). The challenge that may be faced in the planning and controlling of the logistics includes identifying the required transportation for extracting oil and carrying it back to the main source. The challenge, however, is the lack of skilled employees that possess the experience to monitor as well plan the development of logistics.

In this regard, it can be said that British Petroleum aims to continue with the manufacturing and selling of petroleum by itself. According to Christopher (2016), this is mainly because of the fact that the company is reputed all over the world and in the modern days, vehicles are used heavily for travelling to one place to another. The private cars and public cars requite excess petroleum and it is necessary that British Petroleum live up to its name and continue to be the main manufacturer of the product. The product that the company can outsource is the petrochemicals (Mangan, Lalwani and Lalwani 2016). This is because petrochemicals can be used for conducting scientific research that is done all over the world. Petrochemicals can be used in space stations such as NASA and thus, British Petroleum can outsource this product (Bp.com 2018).

According to Prajogo, Oke and Olhager (2016), supply chain management requires proper equipment and transportation facility. The target market for British Petroleum includes the people owning cars and people from the aviation industry. The first tier clients of the company are the people that own private cars. The private car owners require petrol and motor fuels to maintain the cars for a long run. Organisations need to keep in mind the inventory so that excess amount of products are not manufactured or purchased. The capacity of an organization can be determined from the available resources it has and the space required for managing the resources. The challenge in maintaining proper inventory is that the managers need to maintain records of the number of products they have in the organization.

Inventory and Capacity Management

In the case of British Petroleum, the challenge includes the excess storage capacity of the organization. It becomes problematic for the organization to manage the inventory and keep in mind the capacity it has in storing the product. In the modern world, project management is considered as a challenge due to excess time required. Normally the extension in the length of a project is due to lack of employees or lack of materials. In the case of British Petroleum, the concern for the organization in managing project is the fact that projects undertaken can cover long grounds. Thus, the lack of experienced and skilled employees along with improper planning can lead the company to fail in the management of the projects.

Hence, the suppliers of the company need to be the people that provide proper equipment to extract the petrol and fuels from the grounds. In the words of Stadtler (2015), the equipment for this purpose needs to be supplied by organizations that manufacture the equipment. Thereby, the suppliers of the company are the equipment manufacturer that develops high tech equipment for the extraction of the product. At the same time, retail organizations that manufacture and supply health and safety equipment also need to be the suppliers of British Petroleum (Bp.com 2018).

Transportation modes include the manner in which passengers and freight are carried from one place to another. In the words of Strobl, Bauer and Matzler (2018), the transportation of goods and suppliers need to be done in a manner that serves its purpose in a quick and subtle manner. Therefore, the transportation mode for British Petroleum can be the use of roadways. However, in the case of outsourcing the products like the petrochemical the use of airways can help the company. Therefore, the transport lane may include:

Product Number	Description	Mode of transport	Start date	End date
Product06475	Test item	Road	23.02.18	28.02.18
Product12769	Test item	Air	25.02.18	26.02.18

Table: Product lane

(Source Created by author)

The rationale behind choosing the product mode and the target market for British Petroleum is due to its popularity in the global market and the manner in which the company can utilise its product fully for gaining profit for the market. In this regard, it can be said that to maintain coordination in the supply chain management system, it is necessary that British Petroleum maintain proper communication methods between the suppliers and the clients. McAlexander, Koenig and DuFault (2016) stated that the product and service supply chain management system is different in terms of the market demand and the response time needed for scheduling the process. However, the similarity is that both the processes are directed to safeguard the interest of the customers and satisfy their demands.

Project Management

In companies such as British Petroleum, it is necessary that health and safety of the employees be maintained. The quality of the product is also an important aspect for the company due to its reputation in the industry. However, the challenge, in this case, may come in the form of lack of safety gears. With over 75,000 employees, British Petroleum may not possess safety gears for every person. At the same time, it is also necessary that the quality of the products served by British Petroleum be managed by proper monitoring. The challenge in this can be the fact that the excess amount of products manufactured by the company may pose problems for maintaining the proper quality.

The products and equipment that are newly adopted by British Petroleum may pose certain threats to the organization. For example, the introduction of equipment that is required for the proper drilling of the products may be dangerous as the employees may face threat in using the product effectively. Thus, the physical health of the staff may be under threat, as the company does not have enough equipment to help in protecting the employees. The reactions of the organization, in this regard, may include job rotation among the employees. Armstrong et al. (2015) stated that the job rotation policy could help employees to break free from continuing with a monotonous line of work. In this case, the employees can use the safety equipment of the company alternatively with the job rotation. Latest technologies such as drones can help in improving the human-machine interaction (Turkle 2017). This can be done as employees can control the machine with the help of drones by avoiding being physically present in front of the equipment.

Conclusion and Recommendation

It can be concluded that British Petroleum needs to undertake a proper logistic management so that the issues and challenges in the organization can be solved. As such, some of the challenges that British Petroleum may face is include the lack of planning and controlling can be due to the absence of employees in the organizations. The movement of equipment and resources in an organization need to be done smoothly so that an organization like British Petroleum may continue its dominance in the market. It can be recommended that in order to ensure that the company does not feel vulnerable in the use of new equipment, proper training can be provided and more finance can be spent to purchase safety equipment for the employees.

References

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