Supply Chain Management in Petroleum Industry

As a sort of new management idea, supply chain management is still on the starting stage in our country. Some domestic enterprises or industries have attached importance to supply chain management gradually. In recent years, idea of supply chain management has been introduced to petroleum industry. The integrative management system which is from oil and gas exploitation to storage, refining, chemical industry, transportation, and sale, has been formed, but compared with more perfect supply chain system of overseas petroleum companies, it still has many problems to be researched home.

Along with the development of petroleum industry, each big petroleum company also studies the advanced management idea in the world, and introduces gradually the supply chain management into the enterprise management. In order to optimize the resources disposition, reduce the cost, and enhance the competitive ability, three big petroleum companies in our country are all pressing on with the supply chain construction. Each big petroleum company has already seen the benefit in reducing the cost and saving the expense by constructing their own supply chain. They optimize the sale network by implementing the supply chain management. They reduce the work strength simultaneously enhance the management efficiency. But in the petroleum industry, there are long industry chains, overfull correlative vocations, large enterprise scale and jumbled management. Additionally, in the process of oil and gas exploration and production, we must follow the rule that ground obeys underground. Risk and uncertain factors increase in the exploration course. All of these bring influence to the development of supply chain, and they also cause the supply chain of the oil-gas enterprise in the sub healthy condition. Therefore, it is heavy and far to optimize the supply chain management of petroleum industry. Supply Chain Management in the Petroleum Industry Synchronizing supply and demand is essential to successful competition in our volatile world markets, and SAP offers a number of applications to make that task easier. These include the SAP® Supply Chain Management application and the SAP Advanced Planning & Optimization component (SAP APO), as well as Duet™ software. The SAP Supply Chain Management (SAP SCM) application brings you that balance through responsive supply networks to facilitate interaction among customers, suppliers, and partners. The solution links business partners and processes with real-time information, enabling dynamic synchronization of demand-driven planning, logistics, and supply network execution. Through integration, automation, and comprehensive functionality, SAP SCM transforms supply chains from sets of linear processes into responsive supply networks. Customer-centric, demand driven companies share knowledge, adapt intelligently to market conditions, and respond proactively to shorter, less predictable product life cycles.

This modus operandi of considering their owns longitudinal supply chain construction only. system of gathering and processing the exploration information and so on. The level of sharing information should be enhanced. At present. They see the competition but neglect the cooperation. but neglecting the crosswise integrated procedure. It weakens the whole strength of petroleum industry. but neglecting the relationship between the crosswise supply chains. it mainly establishes three big petroleum companies. As a result. the investment burden of companies will increase. is disadvantageous to the development of the whole industry. As the renovation of the current business practice is usually necessary to fully realize the benefits of shared information. It compels companies to promote both core operation and non-core operation. For example. petroleum industry has already achieved a certain level in e-business. and the obtaining of information is not complete and accurate enough. This formed many logistics installation. The partial benefit thought is serious. ERP construction. increases the operational cost. (3) The holistic informatization degree of the supply chain is low. Degree of the general adoption of the market principle is low. transport company or large-scale motorcade. and affect the healthy development of the whole supply chain. the prior realization of the current business process and the desired future state is vital. the supply chain is constructed repeatedly. and the traditional logistics management pattern still exists in. and they don’t reforge the operation flow basing on the supply chain. EXISTING PROBLEMS IN SUPPLY CHAIN MANAGEMENT (1) The internal operation flow of the supply chain is not reasonable enough. CNPC & SINOPEC form excess inside competition in the finished oil product market. the scale superiority is insufficient. The core operation of enterprises is not prominent. Today collaboration between different companies in the chain is vital for the success of each chain. Especially in some corporations. and affects the international competitive ability of petroleum industry in our country. (2) The supply chain lacks the crosswise integration. The petroleum industry represents lacking the overall planning in the supply chain construction. and massive financial resources and physical resources are wasted. the management level is low. there has been a focus on integration to improve customer service at a lower cost. In the process of conformity and construction. The subsidiary companies or branch companies of each company have their own supply station. middle and downriver service integration of the supply chain to be not perfect enough. They hinder the seamless links among enterprises within one supply chain. But the informatization development of enterprise is not balanceable. These caused the supply chain of the whole industry represents the subhealthy condition of “the shape does not disperse but the spirit does”. and this wastes energy and resource of the companies. It causes that every company lacks the understanding on the “competition and cooperation” consciousness of supply chain management.Ever since the supply chain was envisioned. To the entire industry. each company adopts the longitudinal integration pattern of annexation and selfconstruction. no matter building new factories or investing proprietary. and represent some unordered phenomenon externally. The integration . causes the upriver. After the reorganization in petroleum industry. and constructs the supply chain of longitudinal integration.

and they emphasize on post analysis. The present organizational structure is disadvantageous to exert the coordination relationships among each link on the supply chain. the disparity is very big in some aspects such as management informatization. In addition. This causes the supply chain management to be limited largely. nor can estimate the run situation of the whole supply chain scientifically and objectively. It also causes difficulties to unify the upriver. the present estimate indexes of performance are mainly based on the department function. to forms the integrative competition predominance. (5) The present estimate indexes of performance have difficulty to adapt the needs of supply chain management. Compared with some international big petroleum companies and some international project work companies. but they neglect the dynamical equilibrium of the whole supply chain. As a so huge supply chain of the petroleum industry. and thereby to compare and appraise the achievement of supply chain management of companies. The mechanism of petroleum industry is not flexible enough. and then affect the competition ability and the competition predominance of the whole industry. it needs to establish effective and uniform estimate indexes. and decisionmaking informatization. Even if the exploration system and the exploitation system which are done well. . And then the industry development will be promoted. This will affect the decision-making ability of enterprise. and repeated construction bring enormous difficulties to the supply chain integration. the informatization degree of every nodal point on the supply chain is weaker. could benefit be distributed impartially in the scope of supply chain. Also. and to exert the coordination effect of industry chain. and this makes the logistics and the information flow anamorphic. to discover the links in which problems exist on the supply chain.level of application system is insufficient. The organizational structure of oil-gas enterprise is established on the basis of function. and it becomes a big barrier to optimize the supply chain management. the security and the stability of the net are not well enough. Each department pursues their own benefits. It neither can reflect the dynamic run situation of the supply chain. promotion and optimization. and the resources waste. However. middle and downriver enterprises in the supply chain. which are basically that partial and dispersive network have not formed the scale. It affects the systematization and integration of the whole supply chain construction and management. the lack of overall arrangement. It caused the storage of the entire supply chain increases. Simultaneously. It has not formed proper automated management system. the current organizational structure is illogical. It is not fit the performance estimate of run flow in supply chain. and the coverage range. (4)The organizational structure is disadvantageous to the supply chain management. and its ability of adapting the market change is weak. the database construction and the synthesis development still have differences. the speed. it cannot satisfy the effective information communication and information share among each enterprise. Only in this way. optimizing the management flow. the distribution of expense that relates to logistics in the cross-function field is not reasonable. during the process of informatization construction. Every function department maintains their own benefit as possible as they can. Therefore.

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