ECS Eclipse News

Petroleum News - Think Transparent, Vertical Supply Chain

January 19, 2010 (comments: 0)

The first part of the 2010 year suggests that petroleum oil is well supplied and demand is still relatively mild.

The Energy Information Administration report for January shows Gasoline demand fell 330,000 b/d to 8.74 million b/d.

This got me thinking about the vertical “visibility” or lack thereof of the whole supply chain.

As larger Legacy Oil Companies (Exxon Mobil, BP, Motiva, etc) sell off their Retail Gasoline Stations, I think an unexpected consequence is a “loss of visibility” of inventory, and often times, requires carrying of additional inventories at the retail sites to best serve customers and avoid costly “Run Outs”.

A better forecasting and real time transparency of the inventories at the retail sites would provide for optimum distribution business model.

The only real way to improve the “visibility” in such a non-integrated distribution model is to treat it and act as if in fact it is fully integrated. The way to do this is through enabling of technology.

The way to implement this is through sharing of information of parties throughout the “distribution chain”, Both upstream as possible as well as downstream…all the way to the tip of the fuel nozzle.

This type of synergy created will allow the whole logistical components to be stronger and better serve all the sum of its parts. While providing for real time transparency for inventory levels, just in time deliveries , predictable models and reasonably priced supply contracts will be the fundamental components of a strong vertical, integrated chain, and depending upon where your organizations sits in this chain, one should be able to maximize the value of the real time data to better position one’s company from its peers. Upstream business can be at a more strategic level while at the micro level, (the corner gas station), can now wield information which ultimately can add a few more percentage of margins to their petroleum consumption/retail operations.

Go back


Add a comment