How to Improve Safety and Efficiency in Your Oil & Gas Supply Chain

Efficiency, safety, and sustainability are paramount in the oil and gas industry. However, achieving these goals amidst the challenges of logistics can be a daunting task. From short lead times to regulatory changes and fragmented supply chains, the industry faces numerous hurdles that can impact productivity and profitability.

Safety is a top priority in oil and gas logistics for a multitude of reasons. It safeguards the lives of workers and personnel involved in these operations, preventing accidents and injuries that could have devastating consequences for individuals and their families. Additionally, given the hazardous nature of the materials being transported and handled, safety measures are crucial to protect the environment from potential spills, leaks, or other incidents that could cause harm to ecosystems and local communities.

Following safety regulations is not only a legal requirement but also essential for maintaining the industry's social license to operate, ensuring that operations are conducted responsibly and ethically. Moreover, prioritizing safety enhances the reputation and trustworthiness of the company, fostering positive relationships with stakeholders.

From a practical standpoint, robust safety measures also contribute to operational continuity by minimizing the risk of disruptions that could result in delays, downtime, and financial losses.

In this blog, we delve into the intricacies of logistics in the oil and gas sector, exploring how organizations can navigate these challenges to build a leaner, safer, and more efficient supply chain. For a deeper dive you can read our monthly oil & gas State of the Industry Report here.

Creating a safe work environment

A safe work environment is larger than the Safety Department. Creating a LEAN culture of continuous improvement as a method of driving results and sustainability has a strong connection to a safe and efficient environment. As organizations seek to drive supply chain improvement from a performance standpoint, they can reduce downtime, wait time, excessive miles, and other activity, all of which can increase an organization’s risk exposure. LEAN can even help tackle the driver shortage.

It is no secret how short lead times, fragmentation, complexity, and unpredictable conditions in the oil and gas industry can create costly challenges. In all, lost productivity is costly; shutting down one offshore rig can cost more than $1 million per day.

By tracking key data and implementing LEAN, organizations can eliminate waste, increase quality and productivity, create a safer environment, and gain end-to-end visibility and accountability leading to a sustainable and well-oiled supply chain.

Consider these strategies:

• Look for data highlighting market shifts. From drops in crude prices, to fluctuating costs of materials, weather, capacity, and increased demand for accountability across the supply chain, look for high-end data from the beginning of the process all the way through.
• Target fragmentation. Look for differences between lead times and response times, or large numbers of contractors, subcontractors, or vendors across the process. Doing so can reveal ways to improve the visibility needed to tie information available across the supply chain and help remove or reduce such fragmentation.
• Anticipate regulatory changes. With Department of Transportation (DOT) rules, including electronic logs, speed limiters, and limitations, the industry could see excessive delays at wells. These could result in trucking capacity reduced by three to seven percent. Knowing and anticipating regulatory landscape can help an organization better adjust to predictable changes.
• Seek standardization. Uniformity sets the stage for continuous improvement. In an environment like the oil and gas industry, where short lead times, constant change, and fragmentation leave operators in reaction mode, it’s difficult to achieve optimal efficiency. Instead, reduce tasks to basic elements. With a current state that includes no load times or schedules, no execution visibility, and manual or paper billing – that might include fax, email or paper spread sheets, tying data to actions can boost efficiency.
• Tap LEAN to improve driver utilization. Among a host of other benefits, implementing LEAN can increase lead times and efficiencies. For one customer, consolidation reduced up to three million miles driven through continuous improvement. Reduced miles translate to reduced loads and the number drivers required.
• Seek areas of value driven improvement across gas environment. This can include procurement and carrier management, financial settlement and administration, dedicated fleet, shipment optimization and load planning, operational execution, and network optimization. By reducing carriers, or optimizing shipment and load planning, organizations can realize benefits from the LEAN imperative.
• Encourage personnel involvement. By involving people, encouraging input, empowering operators, creating accountability and recognition, and building in quality, organizations can infuse standardization, eliminate waste, improve quality, and create a process that succeeds the first time.

LEAN is not an either/or proposition that must forsake other aspects of the business. LEAN is a supporting principle in driving improvement in other areas of the business. LEAN is different for every organization. Yet, it’s critical to engage partners – operators, carriers, and other stakeholders – to maximize results that can create a more efficient, sustainable, and safe environment.

Embracing a lean culture is not just beneficial—it's essential. By leveraging data, standardizing processes, anticipating regulatory changes, and fostering personnel involvement, organizations can streamline operations, enhance safety, and drive sustainable growth. As the industry continues to evolve, it's imperative for stakeholders to collaborate, innovate, and adapt to overcome the logistical challenges and build a brighter future for oil and gas logistics.

FAQs

Q: How can organizations in the oil and gas industry tackle the challenge of short lead times?

A: Organizations can address short lead times by leveraging data to anticipate demand, optimizing supply chain processes, and fostering collaboration with suppliers and partners.

Q: What role does regulatory compliance play in oil and gas logistics?

A: Regulatory compliance is crucial in ensuring safety and efficiency in oil and gas logistics. Organizations must stay updated on relevant regulations and proactively adjust their operations to comply with changing requirements.

Q: How can LEAN principles improve driver utilization in the oil and gas industry?

A: LEAN principles can help optimize driver utilization by reducing inefficiencies, streamlining routes, and consolidating loads. This not only enhances productivity but also reduces costs and environmental impact.

Q: Why is personnel involvement important in building a LEAN culture?

A: Personnel involvement fosters ownership, accountability, and innovation within an organization. By empowering employees to contribute ideas and solutions, organizations can drive continuous improvement and create a culture of excellence in oil and gas logistics.