Dissertation: Applied Logistics and Supply Chain Management

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¶ … oil and gas industry in Libya is also directly reliant on global prices that are based on supply and demand; and any revenues generated at a given point in time depend in large part on how effective the supply chain is in mitigating the high costs of production and transporting the final product to customers. The purpose of this study was to provide a comparison between an American oil industry firm, Mobil, the world's largest publicly traded international oil and gas company in the field of supply chain management in the United States from the perspective of the Toyota supply chain approach. This analysis will then be applied to a Libyan oil industry firm, Alwaha, to identify best practices for Alwaha in developing a more effective supply chain approach. To this end, a case study approach is used to compare these companies and practices, with the findings synthesized in the concluding chapter together with recommendations for Alwaha concerning its supply chain management practices.

TABLE of CONTENTS

CHAPTER 1: INTRODUCTION

Statement of the Problem

Purpose of Study

Importance of Study

Rationale of Study

Overview of Study

Definition of Key Terms

CHAPTER 2: REVIEW of RELATED LITERATURE

CHAPTER 3: METHODOLOGY

Description of the Study Approach

Data-gathering Method and Database of Study

Assumptions

Limitations

Scope

Delimitations

CHAPTER FOUR: DATA ANALYSIS

CHAPTER FIVE: SUMMARY, CONCLUSIONS and

RECOMMENDATIONS

Applied Logistics and Supply Chain Management

TABLE of CONTENTS

CHAPTER 1: INTRODUCTION

The petroleum industry stands at an important juncture in its developmental history today, with the increasing demand for fossil fuels continuing to create the need for new supplies while the threat of peak oil some time around the mid-21st century looming large on the horizon. While the quest for viable alternative energy sources continues, the global reliance on petroleum-based products will continue to grow for the foreseeable future. For example, according to a recent report from Tillerson, "Developing all our energy resources will also require us to find and produce more fossil fuels. Hydrocarbons currently provide the vast majority of the world's energy -- and due to their availability, their affordability and their versatility, they will continue to do so. Oil and natural gas alone are projected to supply nearly 60% of the world's energy needs for the next 25 years" (2009, p. 3). In this environment, identifying the most effective approaches to bringing product to market through informed supply chain management practices represents an important enterprise which forms the focus of this study as discussed further below.

Statement of the Problem

Global prices for oil and oil products are directly related to oil industry revenues, a process that is fueled by classic supply and demand forces (Nathan, 2008). Therefore, there is an overarching need for efficient supply chains to help offset the enormous costs that are associated with discovery, production and transportation of petroleum products to ensure as much profitability can be gained from the reserves that exist (Nathan, 2008). Across the board, more efficient supply chain management practices have become recognized as an important method to develop sustained competitive advantage for all successful industries and businesses (Nathan, 2008). The objective of every supply chain, including the global oil industry, is to maximize the overall value generated. The value a supply chain generates to an organization is the difference between what the final product is worth to the customer and the effort the supply chain expends in filling the customer's request. For most commercial supply chains, value will be strongly correlated with supply chain profitability, the difference between the revenue generated from the customer and the overall cost across the supply chain (Nathan, 2008).

The ongoing environmental carnage being caused by the Gulf Oil Leak is proof positive that the logistics involved in extracting and delivering oil and gas products to consumers is a daunting and potentially dangerous enterprise. Although researchers are scrambling to identify viable alternative energy sources to replace the global dependence on fossil fuels, it is reasonable to suggest that current levels of demand will continue to increase in the future based on growing demand in China, India, Brazil and other developing nations. In this environment, identifying the most effective logistical and supply chain management approaches in the oil and gas industry represents a timely and important enterprise.

Generally speaking, effective supply chain management seeks to integrate purchasing, materials management, quality management, demand management, distribution planning, and manufacturing planning in the most efficient manner possible (Baldwin, Camm, Cook & Moore, 2002). The effective management of a supply chain must also take into account where and how the products are sourced, delivered, and ultimately marketed to the consumer (Thierauf, 2001). In this regard, Thierauf (2001) advises that the main goal of effective supply chain management is "to supply high-quality, low-cost products with a fast turnaround time. Although this is applicable to many environments, it focuses more on distribution environments" (273). To achieve this level of integration requires a coordinated network that provides data-sharing and timely feedback to be communicated throughout a company's marketing, sales, purchasing, finance, manufacturing, distribution, and transportation divisions (Thierauf, 2001). Clearly, this level of integration has been facilitated by the introduction of computer-based applications for this purpose, but the Libyan oil and gas sector currently lacks the expertise and experience to apply these systems effectively (Ford, 2002).

Nevertheless, it is precisely this type of guidance that is needed to help the supply chain managers at the Libyan oil company, Alwaha, achieve their ambitious production goals. In this regard, Theirauf emphasizes that, "By achieving this kind of integration, a company can maximize its supply chain value with a lower landed cost of product from a vendor on one side of the supply chain and pass this value to the customer on the other side of the supply chain" (p. 274). The need for the supply chain to add value to any company's profitability is universal, but efficient supply chain operations demand carefully orchestrated methods whereby information is shared along the entire supply chain spectrum, a feature that may be particularly lacking in the Libyan oil and gas industry where years of state-control and international sanctions have adversely affected the ability of supply chain managers to keep abreast of changes and current best practices in their field. For example, international analysts at Oxford Economic Forecasting (2009) report that, "Following various terrorist incidents, the U.S. responded with air strikes against targets in Libya and imposed economic sanctions. After Libya was implicated in the bombing of the Pan Am flight over Lockerbie, UN sanctions were imposed in 1992 and Gaddafi's refusal to comply with UN Security Council resolutions led to Libya's political and economic isolation for most of the 1990s" (p. 2). It was during this period in particular that increasingly sophisticated information technologies became available to help supply chain managers in the oil and gas industry more efficiently operate their systems, and the industry continues to play "catch up" with the rest of the world today.

The oil and gas industry in Libya is also directly reliant on global prices that are based on supply and demand; and any revenues generated at a given point in time depend in large part on how effective the supply chain is in mitigating the high costs of production and transporting the final product to customers (Nathan, 2008). Not surprisingly, supply chain management has assumed a new level of importance in recent years as companies of all sizes seek to improve their competitive advantage in an increasingly globalized marketplace (Nathan, 2008). Indeed, Nathan emphasizes that, "Greater economic rewards can be gained only with well-integrated global oil supply chain management" (2008, p. 15).

The goal of all supply chains, then, including those used in the worldwide oil and gas industry, is to provide a maximum return on value. The value that can be realized through more effective supply chain management techniques can make the difference between being able to provide consumers with products and services at a competitive price or not. For the majority of commercial supply chains, the value thus realized will be strongly associated with how efficient the supply chain is in increasing the revenue generated from the customer and reducing the overall costs across the entire supply chain (Nathan, 2008).

Purpose of Study

The purpose of this study was to provide a comparison between an American oil industry firm, Mobil, the world's largest publicly traded international oil and gas company (About us, 2010), in the field of supply chain management in the United States from the perspective of the Toyota supply chain approach. This analysis was then applied to a Libyan oil industry firm, Alwaha, to identify best industry practices for Alwaha in developing a more effective supply chain approach.

Importance of Study

It is clear that the globalization of Japanese automobile makers has influenced considerable changes in the automobile industries in those countries that host Japanese investments in this sector. Moreover, even in Europe, where Japanese automobile investment has been limited in terms of capital flows, Japanese models of production influence… [END OF PREVIEW]

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