Petroleum Supply Chain
The Petroleum Supply Chain involves a lot of challenges in the logistics area. In fact these challenges in the Petroleum Supply Chain have a major impact on the prices and derivatives. Even the emerging Canadian Petroleum Industry has to have an effective Petroleum Supply Chain to get the best results from the prospected oil. When we consider the downstream Petroleum Supply Chain there is a lot of liquids or various grades that have to be stored and transported to refineries and then to the final retail outlet. It is not just gasoline we are talking about here but a whole variety of oils which constitute the finished products.
In the Petroleum Supply Chain we find gas and oil traded in almost all the stages. Trading takes place at the distribution terminals and even when it’s in the pipeline or at the refinery. This makes the path of Petroleum Supply Chain very complicated and it is difficult to draw a direct link between the raw product and consumption. The time taken in the supply chain becomes unpredictable and sometimes takes longer than expected. Some experts feel that even though there is long time taken, gas and oil are easily portable and hence can cut short the supply chain.
It has been observed that certain factors involved in Petroleum Supply Chain drives the prices of the finished product. Many feel that about one-third of the price of gasoline is driven by future trading considerations. This means whenever there is crisis traders tend to form an opinion on the future availability of the product. The remaining two-thirds of the price is dominated by the usual costs and margins involved in Petroleum Supply Chain.
Even when we see the performance of some of the best Petroleum Supply Chain management companies, not one of them have been able to be good in all the aspects. Some have excelled in planning the demand and supply while some have been very good in the transporting part. The major challenges lie in all the three areas of Petroleum Supply Chain which are the supply of raw materials, manufacturing process and optimization of the product and the final distribution and supply.
All along the route of Petroleum Supply Chain major decisions have to be made. Consider a refinery which is planning to purchase crude. The delivery time has to be taken into account and also several factors might again change the decision and the crude might get traded before it can reach the refinery.
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