Since oil prices began their decline in the second half of 2014, the burning question on the minds of analysts and economists alike has been this: where will it stop? But as a CNN Money poll points out, it’s a guessing game at best. Analysts have been rigorously attempting to pin down the magic number, watching a range of indicators from OPEC announcements to rig counts. Yet convention seems to have been thrown out the window – improved US employment numbers should have sent prices up, yet oil prices fell, pushed by anticipation of a strengthening US dollar.
Unpredictability is the new normal for the oil and gas industry. Given the extreme complexity involved in oil extraction and production, a prolonged period of uncertainty places a tremendous pressure on oil and gas producers. In this respect, the oil and gas industry may find it useful to take a page from the mobile phone industry.
Apple be nimble, Samsung be quick…
At first glance, the two industries appear to be quite unconnected. Oil and gas production is unwieldy. It involves the assembly and movement of not just heavy machinery and industrial equipment, but of highly specialized human resources. The mobile phone industry is design-driven and whilst it does require skilled precision manufacturing, is largely automated.
So what is the association between the two?
The mobile phone industry has undergone a period of rapid evolution. Mobile phones have gone from being mere communication tools to becoming invaluable productivity devices… and fashion statements to boot. Users have grown increasingly fickle and demanding, ruthlessly abandoning brands they once adored – as Nokia and Blackberry discovered. New models have to be released every six months, and discontinued quickly should they prove to be undesirable by consumers.
In such an environment, top players in the mobile phone industry like Apple and Samsung have placed tremendous emphasis on a responsive manufacturing process and an intensely competitive supply chain. As these two mobile phone companies have demonstrated, when your market is fickle and uncertain, your best defense is a nimble, optimized operation.
Only the optimized will survive.
Given the scale of oil and gas production, it is difficult to acquire the same degree of agility that has been achieved by technology companies like Apple and Samsung. But optimization of processes is entirely possible with the right solutions in place. During this lean period it is not just advisable, it’s critical for oil and gas companies to revisit their processes, to wring out costly inefficiencies, and to build a defense for an age of uncertainty.
Find out how optimized integrated planning is helping oil and gas companies adapt to ‘the new normal’. Get your free copy of Maximizing platform production today.
