Key Building Blocks of a Best-in-Class Oil Product Supply Chain
A well planned, well executed supply chain could be the difference between winning a customer order and adding profitable volume to your business or losing that sale. Worse still, is that you think you just entered into a profitable deal only to find out, when you account for all of the costs, that the deal is actually destroying value and you have a one, or two-year contract to honour that is going to lose the company money every month. In the onshore, downstream oil business there are two critical differentiators. These are reliability of supply and price, which includes pricing and payment terms. These factors often compete as increasing reliability usually costs money resulting in higher prices to ensure that a sufficient margin is obtained. But this does not have to be the case. With a well-constructed, well planned and well executed supply chain, built using the key building blocks of a best-in-class supply chain, it is possible to meet both reliability of supply and competitive delivered prices to grow and sustain profitable sales volume.
In this article we present five key building blocks which will provide your supply chain with strength, resilience and reliability while maintaining competitive delivered prices. One client generated more than $100mn in savings and over $80mn in working capital savings by making improvements in each of these core processes. Another client identified a once off saving of $41mn with annual savings of $4mn from improving their sales forecast accuracy.
CITAC Industry Insight is published in CITAC’s Sub-Saharan Africa Oil Market Report July 2021.