How Digital Disruption Is Reshaping the Upstream Supply Chain
Once branded as a digitalization laggard, the oil and gas sector is upping its game. The downturn was a wake-up call. It challenged the industry’s conservative culture and forced companies to structurally adjust to be more resilient in a low-oil-price environment. Despite the industry being technically sophisticated and one of the earliest digital adopters, until this point, digitalization was not seen as strategically imperative.
For a sector that is still experiencing the effects of the worst downturn in a generation, digitalization represents both an opportunity and a threat. The operator gains greater visibility of the supply chain; with visibility comes the opportunity to optimize other key areas of operation such as safety and productivity. But, for those along the upstream supply chain whose main purpose is to supply services to and develop technologies for the exploration and production community, many of the ideas and new operating models disrupt their current business.
The operator/supply chain relationship sits at the heart of the upstream business. They work very closely together and are interdependent; one does not exist without the other. That said, the relationship is adversarial. Operators will drive costs down as much as they can, while the supply chain will drive up costs when they can, for example, when the price of oil increases.
This report suggests that digitalization will transform the upstream supply chain both vertically, led by the ripple effects of oil companies' digital ambitions, and horizontally, driven by oilfield service companies' digital investment and alliances.
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19 May 2020
15 May 2020