Oil and Gas: 5 Best Practices for Improving Supply Chain Management
It's no secret… The Oil and Gas industry is in an era of volatility and change.
The global landscape is constantly evolving. Current geopolitics with Russia-Ukraine and the Middle East, the new tariff regime in the U.S., and the increased emphasis on sustainability and the future of our planet, are heavily impacting Procurement, Supply Chain, and Trade Compliance functions.
Every organization is either discussing these challenges or actively working to mitigate the associated risks.
So, what can you actually do to get ahead of the continuous churn of change? How can supply chains become more resilient? How do you make sure you're adhering to all the right rules and regulations? These are the questions being asked by organizations across the sector. Let's explore five areas of focus, to get things started.
1. Collaboration
We've all heard it – collaboration is key. Integration and visibility between your teams, management, and the tools you use is critical. Coordination between your internal teams and external parties is necessary for an efficient and resilient supply chain.
The questions to consider are:
- Are we effectively collaborating?
- How can we improve collaboration?
- Are the tools we are using being utilized to their full potential?
Establishing whether your organisation is at the top of the game with communication and collaboration is the first step to ensuring a more efficient and effective process.
Why it's important: Effective collaboration reduces errors, prevents miscommunications, and accelerates decision-making. In a complex sector like Oil and Gas, where multiple teams and external partners are involved in large capital projects, poor collaboration can lead to delays, cost overruns, and compliance risks.
How to audit collaboration: Start by mapping communication flows and identifying handoff points between teams. Assess whether tools are being fully leveraged for real-time updates and information sharing. Surveys, interviews, and reviewing project outcomes can reveal gaps in coordination. Establishing whether your organization is excelling in communication and collaboration is the first step toward creating a more efficient, transparent, and accountable supply chain.
2. Definition and Documentation
Traditionally, project definition and subsequent execution has been a pain point for the Oil and Gas industry. Different teams and personnel are responsible for various project dependencies, and this means that losing information during handover processes is a big risk. This has knock-on effects for decision-making, problem-solving, and crisis-management.
Your teams' knowledge of the end product, project aims, goals, milestone gates, and status across project phases is essential for an accurate and holistic view of what you want to achieve and when, especially in large-investment capital-projects of this scale.
Lacking knowledge and subsequent improper classifications lead to problems. Your teams' need to have awareness across the project to ensure efficiency, effectiveness, and proper documentation.
"Documentation is always key. Making sure all communications relevant to the export, requests for quote, purchase orders, export license applications and authorizations, and other documentation related to the export are maintained as required by applicable U.S. law." – Julie David, Trade Compliance Expert and Senior Learning Partner
Why it's important: Clear project definitions and thorough documentation prevent miscommunication, reduce errors, and provide a single source of truth for all stakeholders. In Oil and Gas, where capital projects are large and complex, missing information can lead to costly delays, compliance breaches, or operational risks.
How to audit/implement: Review project documentation for completeness and accessibility. Track handoffs between teams to see if critical information is lost. Conduct spot checks or audits of records, including RFQs, purchase orders, and export compliance documents, to ensure all necessary details are captured and standardized.
3. Tracking and Monitoring
The effective tracking and monitoring of projects using data tracking software is key to improving and managing supply chain complexities. In order to utilize this data effectively, teams must be trained on thetools they have been given.
Why it's important: Visibility into project status, inventory, and processes allows organizations to identify bottlenecks, optimize resources, and proactively manage risk. Without proper tracking, supply chain disruptions and regulatory non-compliance are more likely.
How to audit/implement: Use dashboards and data analytics tools to monitor progress and exceptions. Evaluate whether teams are using the tools effectively by tracking update frequency and accuracy. Conduct regular reviews of KPIs, milestone completion, and compliance metrics to ensure tracking is meaningful and actionable.
4. Exploring New Suppliers
Lowering costs and modernizing your processes can be delivered by joining forces with new Engineering, Procurement, and Construction partners (EPCs). In a market of constant change and unexpected surprises, making cost-effective decisions is critical for increasing your organization's resilience and agility.
Modern, tech-enabled, EPCs are often cited as a way to increase supply-chain visibility, make more efficient technological decisions, and factor in issues such as Sustainability – but how do you make sure your Procurement teams are aware of the best methods for choosing new partners and the factors that impact these decisions?
The answer to this question changes as often as new challenges arise. From the criticality of denied parties screening to aligning new partnerships with key business goals; the number of considerations and their varying degrees of importance is numerous. Agile and consistently updated courses and content is not only recommended for your talent, but necessary, so that Procurement teams can achieve their full potential and make the best decisions for the projects at hand.
Why it's important: Engaging with new suppliers and EPC partners increases flexibility, can lower costs, and enhances resilience. Carefully selected partners also ensure alignment with sustainability goals, regulatory requirements, and business priorities. Poor supplier selection, on the other hand, introduces risk and inefficiency.
How to audit/implement: Establish a formal supplier evaluation framework that includes financial stability, compliance records, sustainability practices, and technology capabilities. Review procurement decisions periodically and perform risk assessments for each supplier relationship. Ensure teams are trained to use these evaluation criteria consistently.
5. Intelligent Analytics
New technology and software also factor into our final best practice: utilizing intelligent analytics. Combining the power of tech with the knowledge of your people enables your organization to better predict costs and service opportunities, streamlining operational efficiency.
In a world where Plan A can become Plan B, as quickly as Plan B can become Plan C, successful wide-scope analysis allows your talent to quickly pivot to the next-best course of action – if they're trained for agility and resilience.
Why it's important: Data-driven insights enable better forecasting, risk management, and operational efficiency. In volatile markets, predictive analytics help organizations pivot quickly and make informed decisions that protect margins and ensure compliance.
How to audit/implement: Audit the quality and completeness of the data feeding analytics tools. Evaluate whether teams can interpret insights effectively and take action. Track decisions made using analytics versus outcomes and adjust models or processes to improve predictive accuracy and operational impact.
Implementing and Achieving Best Practices
So, if you know the best practices, and the areas of focus for improving performance, how do you go about implementing change to achieve this?
Knowing where to get started isn't easy, but to improve and better deliver capital-projects during such a chaotic time for Oil and Gas, the first step is to focus on your talent.
"Having the best tools won't count for much if you don't know how to use them." – Adrian Preston, Head of Supply Chain Development
The chaos is expected to remain as we head towards 2030 and perhaps beyond. This is why Skill Dynamics helps put your organization under the microscope – an initial conversation with the team means that together, we can shed some light on your supply chain's strengths, and how the weaknesses can be improved. Ensuring that improvements are made in the short-term, and continually into the future.
Best practices need to be implemented from the ground up and across roles, with relevant information and training provided to the relevant people in your organization to reduce time-wasting and redundancy with catch-all courses.
Fortifying the Oil and Gas Workforce
The best training for the talent you have invested in, is personalized, holistic, and designed for retention. It is role-relevant – you don't want your HR and Finance Executives receiving the exact same information as your trade compliance practitioners – that's not an effective use of time or money. Which is why the Skill Dynamics Platform uses personalized, continuous learning for driving real results.
The Skill Dynamics Platform offers comprehensive courses across our three academies: Supply Chain, Procurement, and Trade Compliance. With subjects including collaboration, communication, goal-setting, analytics, and crisis-management practices, plus in-depth content on U.S. export regulations, the UK Bribery Act, sustainability, cybersecurity, and more, your teams are in safe hands.
Bolstering your teams knowledge has never been easier… and with reports revealing that ransomware attacks on the Oil and Gas sector have increased rapidly by more than 900% year-on-year, the latter has never been more important too!