Building asset redundancies, developing robust early warning systems and having an agile organizational culture fostering cross functional collaboration are key elements of the new operating model
IndianOil and BCG have collaborated to bring out a publication that underlines that urgent need for oil and gas companies to rethink their supply chain priorities to build resilience and agility to mitigate impact from increasing risks and uncertainties. The article/publication titled 'EFFICIENCY TO RESILIENCE: BUILDING CAPABILITIES IN OIL AND GAS SUPPLY CHAIN FOR AN UNCERTAIN WORLD' outlines elements that oil and gas companies need to consider in order to build a resilient supply chain for the 'new normal'. The publication was unveiled by Chairman, IndianOil, Mr. Shrikant Madhav Vaidya, on the sidelines of InTandem, a virtual conference organised by IndianOil, that focussed on resilient, agile, digital and customer-centric supply chain.
The publication reflects on the major trends impacting oil and gas ecosystem in India ranging from COVID induced pricing volatility and demand depression to the emergence of new-age, service-oriented business models in logistics and fuel delivery. The report highlights the fixed nature of assets and the high costs of disruptions as key structural complexities in oil and gas supply chains. The report cites that the benefits of building resilience manifest in higher financial returns in times of crisis, as evidenced 2-3% TSR outperformance of resilient companies during the 2008 Global Financial Crisis as well as in a first mover advantage to new business opportunities. The report also proposes a framework for how companies can build resilient supply chains by distilling learnings from companies such as IndianOil, Cisco, PepsiCo, Walmart etc. that have demonstrated flexibility and adaptability in supply chains in times of crisis.
BCG and IndianOil believe that the journey from efficiency to resilience involves designing redundancies in the asset base, trading off systematically between competing priorities of efficiency and resilience and leveraging analytics for identifying risks and vulnerabilities. Companies also need to foster a culture of cross-functional collaboration backed by an agile organization to respond quickly in times of crisis.
Mr. Gurmeet Singh, Director (Marketing), IndianOil, said, "IndianOil has a supply chain that is resilient, customer-centric and ever-evolving. Our team is ever-prepared to adapt to change and challenges. Due to our focus on digitization and agility in supply chain, we were able to ensure uninterrupted fuel supply across the country, including delivering 2.6 million LPG cylinders everyday, providing ATF for the Vande Bharat Mission, smooth in-time roll-out of BS-VI grade autofuels & Advance Winter Stocking at J&K Mission during the COVID-19 crisis,. We are taking vital steps to strengthen our capabilities in the future which will help elevate supply chain management to our strategic priority".
Speaking about the report's insights, Mr. Rakesh Sehgal, Executive Director (Supplies), IndianOil, said, "Supply chains have traditionally focused on cost-efficiency - leading to complex, globally interconnected networks. However, recent developments on crude sourcing, demand fluctuation etc. have challenged the supply chain priorities. We, at IndianOil, are proud to have overcome all these shocks resiliently. This publication provides an in-depth view of our joint perspective on the priorities that oil and gas supply chains should focus on going forward through multiple examples that demonstrate the strength of IndianOil's supply chain through"
"The COVID-19 crisis has brought into sharp focus the increasingly uncertain world that we live in and the disruptive environment that supply chains currently operate. Oil and gas companies with winning aspirations should take a proactive approach and invest in supply chain resiliency today so that they are better prepared to manage inevitable future disruptions. This joint publication brings forth BCG and Indian Oil's collective thinking on this topic with well researched case studies and learnings and implications for Indian oil and gas companies.", said Anirban Mukherjee, Managing Director and Partner; BCG's Energy Practice.
"The interplay of global trends and a changing domestic ecosystem exacerbated by the COVID-19 crisis has created a burning platform for oil and gas companies for rethinking supply chain priorities. We have found that there are tangible benefits that companies with a resilience focus can reap in terms of reduced impact and faster recovery in times of disruption. Companies such as Cisco, PepsiCo, Walmart etc. have successfully embedded resilience in their supply chains by designing asset redundancies, early warning systems and working closely with the suppliers and vendors among other measures. These are measures that oil and gas companies should also invest in.", said Dr.Rahool S. Pai Panandiker, Managing Director and Partner; BCG's Energy Practice.
About Indian Oil Corporation Limited:
With a 33,000-plus workforce, extensive refining, distribution & marketing infrastructure and advanced R&D facilities, IndianOil has been providing energy access to millions of people across the length and breadth of the country through its ever-expanding network of customer touch points, currently numbering over 50,000. With a turnover of Rs. 5670 billion for the fiscal 2019-20, IndianOil is one the largest and most trusted corporate in the Country, touching the lives of over a billion Indians.
About Boston Consulting Group:
Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we help clients with total transformation-inspiring complex change, enabling organizations to grow, building competitive advantage, and driving bottom-line impact.
To succeed, organizations must blend digital and human capabilities. Our diverse, global teams bring deep industry and functional expertise and a range of perspectives to spark change. BCG delivers solutions through leading-edge management consulting along with technology and design, corporate and digital ventures-and business purpose. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, generating results that allow our clients to thrive.