Oil and Gas Company Achieves Huge Savings Through Route Optimization Analytics

What You’ll Find in this Case Study:

• Route Optimization Analytics Challenge Faced by the Client
• Client’s Situation
• Route Optimization Analytics Solution Offered by Quantzig
• Business Impact

Strategies for Oil & Gas Supply Chain Optimization:

• Integrated Information Systems Implementation: Deploying comprehensive information systems that cover all aspects of the supply chain, from exploration and production to transportation scheduling and warehouse management, can streamline operations. By integrating data from various sources, such as production levels, transportation modes, and logistics software, companies can enhance decision-making processes and improve overall efficiency. These systems should also incorporate forecasting techniques to anticipate demand fluctuations and optimize inventory management accordingly.
• Embracing Technological Innovation: Investing in emerging technologies like automation, IoT (Internet of Things), and AI (Artificial Intelligence) can revolutionize oil and gas supply chain management. Leveraging automation for tasks such as petroleum extraction, warehouse operations, and transportation scheduling can minimize human error and reduce operational costs. Additionally, implementing IoT devices and sensors across the production network enables real-time monitoring of equipment performance and environmental conditions, facilitating proactive maintenance and ensuring regulatory compliance.
• Collaborative Supply Chain Partnerships: Establishing strategic alliances with key stakeholders, including logistics companies, transportation providers, and parts distribution centers, fosters collaboration and enhances supply chain visibility. By sharing data and coordinating activities, companies can optimize transportation routes, reduce lead times, and improve customer service delivery. Moreover, collaborative partnerships enable access to transshipment facilities and alternative means of transportation, mitigating risks associated with disruptions in the supply chain. 
• Sustainable Practices Integration: Incorporating environmental requirements and sustainability initiatives into supply chain management is crucial for long-term viability in the oil and gas industry. Implementing eco-friendly transportation modes, reducing carbon emissions, and adhering to regulatory standards not only minimize environmental impact but also enhance brand reputation and stakeholder trust. Furthermore, adopting circular economy principles, such as decommissioning and rehabilitation plans for oil wells, promotes resource efficiency and supports responsible resource extraction practices. 
• Continuous Performance Evaluation and Optimization: Implementing robust performance measurement systems and KPIs (Key Performance Indicators) enables ongoing monitoring and evaluation of supply chain efficiency. By analyzing performance results against established benchmarks, companies can identify areas for improvement and implement corrective actions promptly. Additionally, leveraging advanced analytics and simulation models facilitates scenario planning and optimization of production cycles, inventory levels, and transportation management. Regular reviews of contractual obligations and financial structures ensure alignment with business objectives and regulatory compliance, driving sustainable growth and competitive advantages in the oil and gas supply chain. 

Route Optimization Business Challenge

Optimizing transportation route to reduce service costs

A leading oil and gas company wanted to assess its transit standards to identify opportunities for optimizing the transportation routes and reduce service delivery costs.

After attending one of our webinars on supply chain analytics, the major oil and gas player decided to connect with us to enhance their route optimization through the power of analytics.

Situation

High distribution costs

The oil and gas clients initial transit time benchmarking across multiple routes and historical shipment data revealed that its distribution costs were higher than the average market costs. The oil and gas company wanted to reduce transportation costs by implementing route optimizing techniques.

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Route Optimization Analytics Solution Offered

Route optimization analytics to determine the most profitable route plan

We collected data from the oil and gas clients logistics systems and analyzed it using cluster analysis, conjoint analysis, scenario analysis, and what-if analysis, to measure their current performance in terms of the number of sites/nodes in each route, total distance traveled, delivery frequency and costs, transit time through weekdays and weekends, delivery standards for time-critical delivery. Based on this, we provided suggestionson optimizing the route plan.

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Business Impact

Significant reduction in logistics costs

The oil and gas client utilized our model for identifying alternative routes and cargo mix to cover the maximum number of clients across the route and decide the right set of stops in the route. This reduced the total distance traveledand transit time while delivering a significant reduction in cost for the client, to come at par with the market averages.