Interviews with industry experts and energy professionals expose a need for implementing an integrated supply chain and supplier management model
WESTERVILLE, Ohio (Oct. 24, 2013) – As energy business projects become more complex and supply chains lengthen, an investment in a more specialized understanding of supply chain management that includes a global perspective of best practices is now required. According to a new white paper, “Managing Your Indirect Supply Chain,” published today by Exel, the North American leader in supply chain management and a Deutsche Post DHL company, supply chain challenges validate the need for energy companies to partner with a third party logistics provider (3PL) that will be able to provide strategic solutions and simplify processes.
The white paper is part three in a four-part series based on interviews with energy experts and energy professionals (upstream and downstream) in procurement, supply chain and materials management roles. The four reports reveal the most salient issues facing the MRO professionals in the energy industry.
According to the report, energy professionals are facing four major supply chain challenges that are driving the need for stronger supplier management:
1.Rationalization of Vendor Bases: Work is now taking place in markets where knowledge of supplier capabilities and understanding of supply chain practices is limited, and vendors in remote locations may not have experience serving the energy industry. As a result, energy professionals often mention consolidation of vendor bases as a critical challenge. Delegating overall responsibility of vendor management to a 3PL, with the experience and networks to become a partner across multiple sites, would be an ideal solution.
2.Standardization Across Sites: Oil and gas professionals are looking for ways to replicate effective processes and introduce best practices from one region to another. However, there is a major cultural challenge for these businesses to get their suppliers to conform to a common standard. Companies should seek a 3PL that will assist with these transitions and has plans for cost reduction, efficient supply chain management and high standards of compliance and safety across multiple sites.
3.Supply Chain Expertise, Merged With Industry Understanding: Oil and gas professionals are looking to partner with a third party that is able to combine different types of expertise, such as logistics support and distribution. Energy companies should begin a relationship with a 3PL in one or two service lines, then gradually expand interaction to cover as many areas as possible so supply chain management is effectively outsourced to a few trusted partners.
4.Trusted Partners, Rather Than More Providers: The oil and gas industry has two conflicting trends in relation to vendor management. Businesses are moving toward alternate extraction methods that require more specialized and external expertise. Simultaneously, they face pressure to reduce supplier spending and struggle managing complicated supplier relationships. 3PLs that demonstrate end-to-end supply chain management are essential to meeting these needs.
“Oil and gas companies have realized that a consolidated vendor base is an important best practice for succeeding with MRO,” said Ed Smith, Exel’s Vice President, Business Development Energy in US and Canada. “As a result, companies are looking to partner with 3PLs that are willing to justify their expertise not only in terms of indirect material management, but the value they bring to client businesses.”
The white paper also discusses how 3PLs offer alternative solutions to energy companies, which help to address these new supply chain challenges.
“When businesses partner with 3PLs, supplier efficiency improves, high standards of compliance are guaranteed, and assistance with vendor rationalization is offered,” said Smith. “With a 3PL responsible for the end-to-end supply chain, energy professionals will be able to focus their attention on their priorities, reassured that their supply chain is in safe hands.”
More information can be found in the white paper, which can be downloaded here. To learn more about Exel’s supply chain solutions for the energy industry, visit http://www.exel.com/exel/exel_energy.jsp.
Exel is the North American leader in contract logistics, providing customer-focused solutions to a wide range of industries including automotive, consumer, retail, engineering and manufacturing, life sciences and healthcare, technology, energy and chemicals. Exel’s innovative supply chain solutions, skilled people and regional coverage bring together all aspects of contract logistics in addition to a wide range of integrated, value-added and specialist services. Exel is a wholly owned entity of Deutsche Post DHL, the world’s leading logistics group. For more information, visit www.exel.com.