Petroleum plays an important role in the global economy development as it is the main source for transportation and it is also used for the production of energy. The unique features of petroleum industry needs a special treatment of the supply chain. The supply chain in the petroleum industry involves exploration of the petroleum mines and production of petrol which includes drilling, reservoir, refining the crude petroleum and marketing the purified petroleum products to the customers.
The supply chain for any industry increases the production, improves the efficiency of the other processes and it also provides competitive advantage. The supply chain in the petroleum industry improves the quality, reduces the costs and reduces cycle times and helps in optimal utilization of the resources.
Along with the benefits there are also some challenges in managing the supply chain in the petroleum industry which have major impact on the cost of oil and its derivative products. These challenges arises from the production capabilities of crude oil suppliers, long transportation lead times and limitations of modes of transportation. Logistic is a major challenge in supply chain. The petroleum companies can easily overcome these challenges by using the technological advancements in the field of supply chain. For example, use of supply chain software for effectively communicating with the all the partners of the supply chain. The challenges regarding the oil prices can be solved by petrochemical companies with the use of swaps.
Efficient and cost effective supply chain practices help in continuous supply of petroleum products. The only way for petroleum companies to get profits and succeed in business is to optimize the value of the hydrocarbons.