Supply Chain of Oil Industry Essay Example | Topics and Well Written Essays - 2000 words - 1

Supply Chain of Oil Industry - Essay Example This paper illustrates that the strongest supply chain has been in the past been denoted as indispensable in determining the success of a business or any other undertaking. The defeat of the British army by the American counterparts was linked to the power supplies of weapons and troops to the American side. In the oil industry, a supply chain is considered critical in that it determines the effectiveness of the industry right from transportation to consumption of the oil-related products. Cox argued that supply chain is a wider concept that should be viewed as a complex management that determines competitive advantage of any given organization. Supply chain creates a single plan that denotes the flow of products in a business. The coordination of different actors uses a defined framework designed to achieve the specific goal of linking suppliers to customers and the organization involved in the supply chain management. A well-managed supply chain helps in reducing costs and adding v alue to customers. Stadtler & Kilger pointed out that effective supply chain is used as a major source of competitive advantage. To remain at the top of the competition, customer preferences have to be put into consideration as well as articulate on what the competitors offer so that a better supply chain can be devised. The ability of organizations to differentiate themselves from others is dependent on the competence of their managers to focus on customers and competitors and manage to operate at a lower cost. In fact, Cox argued that successful companies have either cost advantage or have value advantage or even a combination of the two. In this regard, it is indispensable to argue that a well-managed supply chain should be able to have either of the two concepts or a combination of the two. In the oil industry, the prices of crude oil and natural gas are perhaps the closely watched product prices across the global market. The supply chain involved in the oil industry is, however , controlled by the main actor, who in this case is the government. Although many landlords and communities might be the owners of the land where oil is located, the government is the custodian of the oil. This changes the whole supply chain management since the government controls the oil prices.