How Does Digitalization Impact Supply Chain Restraints?
The oil & gas supply chain is being watched intently, perhaps more so than ever before. But why?
Quite simply, there are many supply chain restraints to be reckoned with, and in today’s fast-paced world, oil & gas projects just cannot afford to have an inaccurate or inefficient supply chain. To lead the field, players in the oil & gas sector must embrace digitalization to find the right tools and capabilities to achieve material visibility, improve processes, save costs, improve delivery times and make smarter, more informed decisions.
To make continuous improvements and steer the industry into the future, a digital supply chain is critical for the oil & gas sector. By adopting a digital transformation strategy, or scaling up existing efforts, organizations are ensuring they’re equipped with the right data at the right time to streamline operations and improve their ROI in both the short and long-term. Those who welcome a digital supply chain will find greater resiliency, cost-efficiency and gain a competitive advantage.
In this blog, we will share insights from our digitalization and field experts, Jay Schwartz, VP Strategy & Enablement and Senior Industry Consultants Bob Hooper and Ali Ibrahim.
The Essential Role of Projects
Projects play a key role in the digitalization aspirations of oil & gas companies. In fact, Jay Schwartz comments that “projects are the birthplace of the digital representation of the resultant physical facility we often refer to as the ‘digital twin’.”
As virtual ‘copies’ of physical assets and facilitates, digital twins are the cornerstone of many digital transformation journeys. They offer real-world examples that are hyper-relevant to an organization’s industry and domain. This is important because investing in new digitalization strategies is a big step, requiring significant work process changes and monetary costs. How do organizations know ahead of time that this investment will be worth it?
Digital tools such as a digital twin can assist here. Projects are informed with rich data that helps to drive facility automation and paint an accurate picture of exactly what the future for a project or facility could look like, as opposed to only loose predictions.
How Digitalization Addresses Supply Chain Restraints
Supply chains are notoriously volatile, often blighted with delays, disruptions and other uncontrollable or unexpected events. Securing a reliable supply chain is an essential component of success for oil & gas companies. Developing a digital supply chain is key to tackling supply chain restraints and conducting harmonized operations between service providers across various locations.
“Today it is the norm for oil & gas projects to be executed on a global basis, often in joint venture arrangements, with venture partners having offices around the globe,” says Schwartz. Not only is it important that all teams involved have access to real-time data, it’s also important to harness the right technology and digital tools to support the dynamic needs of the supply chain. Design changes may happen quickly, and yesterday’s material demands might not be the same as today’s.
A digital supply chain is essential for projects to operate flexibly and with agility. Visibility across the entire supply chain is central to this. On this, Ali Ibrahim notes that “digital transformation offers a suite of solutions to supply chain restraints by enhancing visibility across the entire supply chain.” Elaborating on this, Ibrahim adds that “technologies like blockchain and IoT provide real-time tracking of shipments and inventory levels, reducing delays and improving response times. This leads to a more resilient supply chain capable of adapting to disruptions swiftly.”
Alongside technology such as a digital twin, according to our experts it is also worth investing in predictive analytics, AI and cloud computing for your digital strategy. Ibrahim comments that “predictive analytics can forecast potential supply chain disruptions; AI can optimize routing and logistics and cloud computing offers the scalability to manage large datasets efficiently.” He concludes that “these technologies together create a robust framework for a responsive and efficient supply chain.
The Challenges of Digitalization
Digitalization is worth the investment. It’s the vehicle that will drive oil & gas projects into the future and overtake competition. However, implementing new digital technologies and tactics, such as a digital twin, is not without its challenges. Some of the most pressing challenges include:
- The investments needed to launch a new digitalization program – including monetary, time and resources.
- Winning over the support of stakeholders who are hesitant of change or investment in new tools and processes.
- In large and complex organizations, knowing where to start with digital reforms.
However, according to Bob Hooper, the biggest challenge to achieving a successful digitalization program is simply by not having one. Bob adds that “This has to be treated as a strategy and an overall overarching corporate strategy for continuous improvement [...] without a strategy you don't have a direction to go in, you really don't know what to do next [or] what systems are out there to help you solve the problems.”
Where Should the Digitalization Journey Start?
As our experts have outlined, digitalization is key to overcoming supply chain restraints and ensuring the future success of oil & gas projects. But where to begin? This can be difficult to determine, especially if your organization is large in scale with a global footprint.
According to Bob Hooper, aside from working on an overall digital strategy, the key is to start with a quick win: “If you procure a system that is easy to implement, easy to set up, easy to train, then you’re likely to get a higher ROI earlier in the process.” But how does this help oil & gas companies? Hooper continues to say that the internal marketing and visibility gained from the first (successful) digitalization efforts will help to fund and encourage further digital transformations.
Ready to embark on your own digitalization journey? Hexagon technologies and solutions serve the oil & gas industry around the world. Watch our expert’s full discussion in our recent LinkedIn LIVE session, Digitalization and Supply Chain Restraints, and get in touch to find out how we can help you build and optimize a digital supply chain that helps you to increase data visibility, save costs and avoid downtime through better planning and predictions.