Supply chain management is crucial in heavy industries, which rely on seamless supply chains due to the complexity of their operations. In particular, upstream oil and gas plants have intricate and highly complex supply chains because of the extensive logistics involved in extracting and transporting raw materials from remote locations.

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Upstream facilities operate at remote and often inaccessible locations. Because of this inaccessibility, they must plan extensively in advance and for unforeseen scenarios. The Oil & Gas industry also operates equipment with varying criticality levels. Failure of some equipment can have far-reaching implications on operations and safety than others. 

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All these complexities make supply chain management an essential but challenging task. Over the last four decades, Hofincons Group has worked with many Oil & Gas facilities, and the connection between asset management and the supply chain is undeniable. We have seen improvement in asset management, leading to direct improvement in the supply chain for many Oil & Gas companies. 

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Here are a few direct links between asset management and supply chain management. 

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Improved Asset Data Leads to Better Supply Chain Management

‍ Oil & Gas companies can streamline procurement processes by maintaining up-to-date and precise asset data, reducing inefficiencies, and minimizing strain on the supply chain. Comprehensive and reliable asset and materials data improve clarity and accuracy in procurement activities, leading to a more responsive and cost-effective supply chain.

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Analysis and Trends Spotting

‍Connecting asset maintenance data, such as the Mean Time Between Failures (MTBF), with Supply Chain data helps with strategically stocking spares for the asset. Asset management requires documenting operational and maintenance data for each maintainable asset, which helps manage lead times efficiently, trend-spotting, root cause analysis, and improving sourcing efficiency.

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Better Visibility into Stock Levels

‍Poor stock visibility can disrupt supply chain management, mainly when a company uses multiple facilities to stock its spares. Asset management improves stock visibility in numerous warehouses, improves accuracy, and helps identify non-moving inventory to streamline the supply chain.

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Correct Sourcing Information‍

Managing materials data is critical to asset management. Even at well-managed Oil & Gas facilities, it's common to encounter gaps in materials data, such as incomplete buying descriptions, which can result in sourcing the wrong spares. One of the services linked to Asset Management is Materials cataloging, which ensures that essential procurement information is captured for each item. Detailed specifications, vendor details, lead times, and costs are recorded for each item. Having all this information in one place greatly improves supply chain management.

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Reduced item churn

‍ Frequent equipment failures or excessive maintenance can increase item churn, heavily straining the supply chain. When thousands of pieces of equipment experience higher churn, the impact on procurement and logistics is substantial; over-maintenance amplifies this churn, while under-maintenance leaves the system vulnerable to sudden disruptions. These issues can be mitigated by implementing and efficiently executing a strategic maintenance plan for each piece of equipment. Effective asset management ensures that equipment is serviced at optimal intervals, reducing unnecessary item churn and alleviating the burden on the supply chain.

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Eliminating Sudden Shocks to the Supply Chain

‍Properly maintained and operated assets are less likely to experience unexpected breakdowns, reducing unplanned disruptions to the supply chain.

Diversifying Vendor Dependency

‍Managing materials data will allow you to capture the exact details of the required spares and facilitate the identification of multiple vendors for each item. This will mitigate risks associated with geopolitical and other disruptions and ensure alternative sourcing options are readily available.

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Summary

Improving asset management is crucial for improving the supply chain of the Oil & Gas companies. Poor asset management practices can lead to events which can negatively affect even the well optimized supply chains.

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