Digitalisation, integration and the oil and gas supply chain

2 Jul 2019
Article by Achilles

Digitisation is expected to be a $1 trillion opportunity for oil and gas companies. But it is not as simple as putting digital solutions in place and letting them work their magic. Regulatory frameworks, a lack of data standardisation and an industry-wide prioritisation of efficiency over cost are all barriers to change for the oil and gas supply chain.

Here’s how the industry can rethink its practices to start catching up.

The future for upstream

For upstream oil and gas companies in Europe, digitalisation has the potential to save up to $73 billion a year. It could transform the way seismic and geological data is analysed and complex supply chains are managed, helping to lower the costs of production.

Energy consultancy Wood Mackenzie believes the key to reducing costs and risks is harnessing digital solutions from outside the industry, rather than relying on in-house approaches.

Innovation and digitisation

Technological innovations promise to make supply chains less linear and more interconnected. They break open the functional silos that impair data sharing, helping buyers and suppliers connect more effectively.

A 2017 McKinsey survey showed that most supply chains only had a digitalisation level of 43%. A lack of budget and organisational urgency, as well as the challenges of integrating new tech into legacy systems, could be to blame for sluggish uptake. The key is identifying the right digital solutions and their benefits.

Key Technology for the oil and gas supply chain

Let’s take a look at some benefits of key technologies:

Artificial Intelligence (AI)

One of AI’s main benefits is reducing the time of repetitive processes, such as vendor screening and pre-qualification. It is also capable of providing audit summaries, making recommendations on qualified suppliers and analysing historical data to inform major decisions.

Big Data and predictive analytics

Advanced data analytics can help buyers collect, verify and utilise huge amounts of information. Supplier databases, for example, put prequalification, compliance and financial information all in one place. It has the potential to speed up supplier profiling and on-boarding, while allowing companies to address common bottlenecks like poor inventory management and delays.

Internet of Things (IoT)

Cloud computing and IoT are creating networks of connected devices and workers at every stage of the oil and gas supply chain. As the backbone of central operations, they allow remote management of workforces and real-time control of processes and equipment.

The challenge for procurement professionals

Even though the benefits of digitalisation are clear for oil and gas companies in Europe, this doesn’t guarantee that procurement teams can easily integrate new solutions. It can prove valuable to leverage the experience and expertise that other sectors have built up after years of applying digital solutions to their supply chains.

Our Oil and Gas Europe joint search brings together our Achilles JQS and FPAL communities, through integrated technology into one network, allowing buyers from all over Europe to work together to set the standard of best practice globally.

We can help you lead the way on digitalising your oil and gas supply chain.

Learn more about Oil and Gas Europe.



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