Enhancing Operational Efficiency and Cash Flow through Supply Chain Optimization in the Oil and Gas Sector

Vinit Roshan

International Journal of Business and Management, 2024, vol. 19, issue 3, 91

Abstract: The oil and gas industry continues to play a vital role in meeting the world's energy needs. As renewable energy sources gain traction, there is an imperative to refine operational models, prioritizing sustainability, and cost-effectiveness. This study employs a comprehensive conceptual framework integrating critical analysis of business scenarios, product positioning, and market segmentation. The study adopts supply network optimization, encompassing demand forecasting, inventory management, transportation, production scheduling, cash flow management, and data analytics. The research evaluates three supply models- Satellite Manufacturing, Hub Manufacturing, and Contract Manufacturing. It employs scenario analysis to assess the impact of supply chain strategies on operating and cash cycles. The analysis reveals that Hub- based contract manufacturing is the most effective model. The research demonstrates that optimizing supply networks directly influences the operating and cash cycles of companies in the Oil and Gas industry. By reducing inventory levels, optimizing supplier payment terms, and streamlining production processes, organizations can achieve cost savings, improve efficiency, and enhance cash flow management. The study underscores the importance of thorough analysis and strategic decision-making in selecting supply chain models to enhance cost efficiency, operational effectiveness, and cash flow management. The study is limited to midstream and downstream services and may vary based on industry contexts. Future research could explore additional supply chain strategies across different sectors. This research contributes to the sustainable consumption and value co-creation literature by offering practical insights for businesses operating in the oil and gas industry or similar contexts. It provides a framework for optimizing supply chain models to improve cost efficiency and cash flow management, thereby enhancing overall business performance.

Date: 2024
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