Digitising the Supply Chain in the North Sea
Digitalisation seems to be the word on everyone’s lips in the North Sea supply chain at the moment. Therefore, it is important to understand how the supply chain models in the North Sea could evolve towards more efficiency, what models are in place in other industries that the supply chain industry could take lessons from, and what is essential for supporting the transition.
Digital transformation is the integration of digital technology into all areas of a business - fundamentally changing how you operate and deliver value to customers. However, it's also a cultural change that requires organisations to constantly challenge the status quo, to experiment, and to get comfortable with failure.
It is important for businesses to undergo digital transformation in order to keep up with the evolving industry trends and the expectations of the digital customer. But despite the decades of innovation and engineering firsts, the offshore oil and gas industry has been slow to embrace digital technology compared to others, such as the automotive or aerospace industries.
Embracing a digitally enabled supply chain could transform the offshore oil and gas industry in the way that “innovators” like Amazon, Uber and Netflix have in their respective industries.
The North Sea
The decline of oil prices over recent years has made it a necessity for oil and gas companies to examine their operations and associated costs. Greta Lydecker, Managing Director at Chevron, has pointed out that operating procedures such as fully-automated drilling operations, autonomous inspection of pipelines and the rig-less plugging and abandonment of wells have become common practise in the oil and gas industry. Other advances are also happening in subsea processing systems, intelligent wells technologies, real-time monitoring, robotics and augmented reality. However, the opportunities for robotic process automation, predictive reliability, maintenance analytics and self-learning reservoir modelling still remain considerably untouched.
Although oil and gas companies in the North Sea have made progress integrating digital technologies with their industrial procedures, they need to make further changes in their methods to adapt to the ongoing digital revolution.
Other Industries and Digital Supply Chain Models
Stephen Ashley, Digital Transformation Solutions Manager at the OGTC (The Oil and Gas Technology Centre) noted that supply chain management has undergone an unprecedented revolution in relation to the offshore oil and gas industry.
As already mentioned, companies such as Amazon, Airbnb and Uber have disrupted their industries in ways that were unimaginable only a decade ago. The OGTC argues that a digitally enabled vision of the supply chain in the offshore oil and gas industry and a similar level of transformation are required to achieve results.
Looking ahead, the centre predicts more emphasis on the use of robotics, smart warehousing, drones, self-driving trucks, 3D printing, block chain and unmanned - or what it describes as ‘semi-manned’ - vessels.
This would include the optimisation of logistics, onshore and offshore, to track the individual items of equipment from a warehouse to the quayside to a vessel and to an offshore installation, ultimately including automation of invoicing and payment.
John Calder from Baring Partners in his presentation at the OGTC’s event- Creating a Digitally Enabled Supply Chain for the North Sea explained that inspiration can be drawn from the digital supply chain being used in other industries for the oil and gas sector. The application of IoT (Internet of Things) for predictive maintenance in the automotive industry has significantly reduced the mechanical failures, improved driver safety and increased fuel efficiency. Identical steps should be taken by Oil and Gas companies to ensure that preventative maintenance is carried out smoothly, thus reducing operational risks and increasing safety.
Mr Calder also discussed the use of cloud technology by the Telecomm industry which has improved supplier relationship and inventory management. A similar approach can help the oil and gas industry to enhance upstream visibility of inventory across suppliers and manage inventory holding across products effectively.
The Collaborative and Social Technology used by retail industry has not only improved utilisation of warehouse space, but also reduced the investment to meet the warehouse needs. Building upon this model, the oil and gas industry should consider options for asset sharing to manage peak demand.
Expanding more on collaboration, Christian Pohl from Crimson & Co, in his presentation at the OGTC pointed out that collaboration exists in various sectors. Generally, the most effective is between competitors and not between customers and suppliers. He also emphasized the main areas of successful collaboration; load consolidation, warehouse and inventory management and procurement.
According to Pohl, some real opportunities exist for North Sea collaboration through possible operating models such as spot deck sharing, vessel splitting, vessel sharing, forecast sharing, upstream operations (integration of multiple supply chain nodes) and full collaboration (fully integrated upstream and downstream logistics).
The industry has to undergo transformation before its disrupted. As an operator, if you are committed to the North Sea, then you have to be committed to frontier technology adoption for digitalising the supply chain.
A shared understanding and commitment to collaboration for digital supply chain is needed in the oil and gas industry. We need to think more like tech companies, where data is not a cost to acquire, but an asset that we can make work for us.