A Shift in the Supply Chain Part 1

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This is the first of a multi-part discussion with Supply Chain Management expert Steve Bass, current Director of Supply Chain at ClearStream Energy. Over the next few weeks we’ll be exploring how the discipline has evolved over the years, its history with technology and why the current market and demographic conditions have primed it for changes in everything from systems to strategy. 

Payload: Let’s start by painting the picture. When it comes to Supply Chain in Oil & Gas, where has the discipline traditionally been with respect to innovation and efficiency?

Steve Bass: We’ve been behind the times. We’ve been in catch-up mode for a little while. We didn’t act aggressively enough in the last downturn. Things are okay when you have $100 oil. You can almost forgive anything at that price. Our attitude in those times has been: ‘We don’t have to focus on efficiencies and costs right now. We have other things to worry about.’


Payload:
But that’s not across the entire industry.

Bass: Not at all. In all markets you’ll get the leaders and the innovators at the front, and then the pack that follows, and finally the laggards that eventually get there. We have all those groups here too. But our pockets of excellence tend to be scattered and disconnected. You can point to specific great things that are going on across the industry but when oil is high, as an industry we take our eyes off the ball of cost management and project management.


Payload:
Old habits die hard.

Bass: Yes, but as soon as oil dips in price, it reveals the inefficiency in that model. We’re getting a little bit of a lesson in market economics right now: some people are listening to it and others are going back to what they’ve always done.


Payload:
Is that because oil & gas is such a traditional industry?

Bass: Yes, our speed of change is too slow. We take a long time to evolve. We need to get into a mode of working that is more impactful and delivers changes and solutions faster.


Payload:
How does technology fit into that?

Bass: Technology can help you drive efficiencies and allow you to deliver consistency in your business operations. It also helps you accumulate data and statistics that allow a more planful approach to future business, including predictive analysis and ‘what if’ scenarios to predict impacts to business costs and schedules. The real question is ‘what does it take to successfully use that technology?’ I believe it requires understanding your business processes. A lot of companies have invested in technology without really figuring those out and further understanding how they make money. Failure to address these basics has undermined technology solutions in the past.


Payload:
Despite some of the false starts, the changing demographics in oil & gas seem to require a shift in how things are done.

Bass: When I first came here [from the U.K.] a career in Supply Chain wasn’t being openly discussed in universities and as a career choice generally. Those of us in Supply Chain today have often come from other business areas where you started dealing with things like contracts, buying, materials or warehousing. People made these strange journeys to Supply Chain almost by accident. Now that’s being addressed with educational institutions, so we have new talent entering the profession.


Payload:
And they come with their own expectations.

Bass: We are having to shift the way things are done. This requires a multi-pronged strategy that includes developing skillsets and making an intellectual capital investment in our people. To your point about demographics, we have a truly multicultural industry and a Supply Chain that reflects and encourages diversity of culture and gender. It’s interesting to note that we do have a common language in Supply Chain and its processes, whether you are from China or Calgary. After all, our roots are from the ancient trading histories of buyers and sellers coming together in markets.


Payload:
Does this new generation of workers have a different mindset about technology?

Bass: The new talent that’s coming through has a great attitude towards technology and their expectation is that ‘I can get an app for that’ and have two-way communication with the enterprise in real-time, and scan a document with my phone. They’re getting very disappointed about how paper-oriented we are as an industry.

In part two of our conversation, we’ll explore some of the changes already taking place in Supply Chain as a result of the latest commodity price shifts and the dangers of inertia winning out as prices rebound.