The Importance of Downstream Supply Chain Management

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Downstream supply chain management is essential to the success of a business, so much so that students in the field of supply chains have gone as far as to say, “Companies don’t compete, supply chains do”. This couldn’t be more true in the oil and gas industry. The downstream supply chain focuses on processes and systems related to routing, scheduling, transport, logistics and distribution of oil and gas. If these supply chain systems are working optimally, you will be able to save on operational costs, increase service levels and customer satisfaction, mitigate risks as well as enhancing performance and productivity.  But to reap these benefits, the downstream supply chain needs to be agile, adaptive, flexible and respond to the changing needs of your customer base. One of the ways that businesses are adapting to these needs is through the automation and digitisation of supply chain transport and distribution systems.

What components are involved in the downstream supply chain process?

Components involved in the downstream supply chain

The downstream supply chain includes several different intertwined components and systems related to the transportation and distribution of oil and gas. These components need to work cohesively to ensure that the right product is delivered at the right time. These components include: 

Logistics 

Fleet management and logistics systems are complex, with many different variables that need to be considered. Not only is there a need to consolidate orders and maximise the return on transportation spend, but you need to forecast demand and shipment volumes to plan for the transportation of product effectively.  

Transportation

Transportation involves the movement of products through the supply chain, from the beginning to the end, which is why it forms such an essential role. It must be noted that transportation in the energy industry is a costly business and together with inventory make up 80% of all operational costs. This is why it is vital to ensure that your transportation systems are running effectively.   

Warehouse Management 

Warehouse management involves operations such as inbound and outbound processing, cross-docking, storage and physical inventory management. These elements allow you to process all product movement and aid in managing the stock in your warehouse complex.

Inventory Management 

Inventory management refers to the management of material stock on a quantity and value basis. This includes the process of planning, entry and documentation of the movement of goods. This information relates to where stock is located, what stock has been ordered, received and reserved as well as quality inspection. 

Workforce Development

Workforce development is essential to ensuring your supply chain is running effectively. Supply chain employees are responsible for planning, forecasting and ensuring that products/stock are dispatched and transported on time . These staff members need to have the skills and tools and necessary to manage these processes effectively.

None of these components work in isolation, and all depend on each other to effectively ensure the successful distribution, transportation, and delivery of the product at hand. This is why it is so important to optimise these processes and to create full visibility over your supply chain operations. This visibility will enable you to identify opportunities for improvement, mitigate risks and increase productivity, and we elaborate on this below. 

The benefits of an optimised downstream supply chain

By optimising your supply chain, you ensure that all management systems relating to transportation, logistics, storage, inventory and your workforce are working effectively. But what does “working effectively” translate to? In simple terms, this refers to enhancing your competitive advantage and bottom line by ensuring:

Cost reductions and improved profitability

Through supply chain optimisation, you are able to remove silos and increase transparency. This enables you to identify cost-saving opportunities and to proactively tackle costly problems that may arise, which impacts profitability. 

Better efficiency and flexibility 

When all components of the downstream supply chain are connected and working as they should, you are able to process and distribute orders, enhance flexibility and the customer experience with speed and accuracy. 

Greater visibility and improved control 

Greater visibility ensures that you have more control. If an issue arises with one component you can proactively assess the problem, manage each of the other components so that they are not adversely affected and find a solution. 

Better service and a competitive advantage 

Customer satisfaction and service delivery are central to the success of a business. By optimising your supply chain, you can provide your customers with what they need, when they need it, setting your business apart from the rest. 

Optimising your downstream supply chain should be a top priority for any business within this dynamic industry. 

How to optimise downstream supply chain

Digital transformation within the industry has seen many businesses digitising and automating their downstream supply chain to ensure optimal efficiency and productivity. Industry-specific software solutions have been designed to answer the specific needs of oil and gas supply chains. These digital supply chain solutions aim to: 

  • Automate data driven planning processes for demand and supply forecasts, to support sales and operations; demand, response and supply planning as well as inventory optimisation.
  • Integrate fleet and logistics management and streamlining end-to-end processes to reduce transportation complexity throughout distribution networks. 
  • Deliver on visibility and control by managing high-volume warehouse operations and integrating complex supply chain logistics with warehouse and distribution processes. 
  • Provide route scheduling solutions that support the daily inbound and outbound supply chain planning with decision-ready proposals to optimise material flow and reduce logistics costs. 
  • Enhance control and visibility by combining forecasting and planning, optimisation with real-time execution and dispatch along with analytics and reporting functionality within a wide range of transport and distribution planning sectors. 
  • Provide advanced analytics in real-time that supports proactive decision making. This allows you to predict, analyse, measure and compare performance related to inventory routing and scheduling, transportation, logistics and fuel distribution. 

Conclusion

The downstream supply chain plays a critical role in your business. If the different components of your supply chain are not integrated and working optimally, your overall business will be impacted. But by implementing innovative supply chain software solutions, you are able to enhance overall productivity and efficiency. These industry specific software solutions are changing and optimising supply chain management for the better. By enhancing these processes and optimal efficiency, you are giving your business a competitive edge and will increase your overall ROI.
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