Thanks to the ever-evolving global business landscapes, the oil and gas industry has become highly competitive. With international interests, changing international diplomacies and an increased interest of countries like China, the Oil and Gas production industry is no longer what it used to be a few years ago.

Today, the industry is facing challenges like never before, especially when it comes to procurement. Find out what the most common oil industry problems are and how to overcome procurement challenges.

Procurement in the Oil & Gas Industry

The Oil and Gas industry can not function without a functioning cycle of supply chain management, logistics and procurement. The intricate network of raw material sourcing and processing, to distribution and supplies, requires multiple businesses spanning dozens of industries.

So what is procurement in the oil and gas industry? In the strict sense of the word, procurement in the oil and gas sector refers to the process of managing contracts, negotiations and risks with suppliers and vendors. This is done through dedicated manpower in the procurement departments that assess, inspect and manage supplies. Not just that, it is also their job to perform risk assessments, generate projections and make sure that deliveries are exactly as expected.

Major Procurement Challenges

Despite the generic flexibility of this industry, it runs into quite a lot of procurement challenges. Some of these procurement issues can be detrimental to the growth of businesses if not dealt with timely and appropriately. 

Supply Chain Consistency

Petrochemical prices are prone to crazy volatility at the slightest of global changes. Add to that, a mix of complicated international regulations and you have a recipe for a very complex working environment. 

Maintaining a steady supply chain despite global events is a challenge unlike any other. However, a foresightedness towards risks and international developments coupled with enhanced transparency in your supply chain helps remedy the situation. 

Skilled Manpower

This may come as a surprise, but there is a significant shortage of the right employees in this industry. While finding the right balance between skills, qualifications and attitude may be a challenge itself; it pales in comparison to employee retention.

Hiring and retaining talented personnel is the first step toward smoothening your overall operations. This also applies to contractors – making sure everyone associated with your day to day operations is the right fit is the prime contributor to operational success. 

Data Management

The answers to problems usually lie in your business data! Data processing reveals deep hidden insights and patterns that help stakeholders make decisions. With the sheer amounts of data that an oil and gas business generates every day, it becomes a nuisance to manage it, let alone analyse it daily!

The right way to do this is through proper business intelligence teams and systems. Have a data analysis expert on your team sift through the copious amounts of data, process it and extract meaningful information from it. The right business intelligence set-up would not just help you find patterns in the short-term, but also improve revenues for the longer haul. 

Addressing Volatility 

Whether it is quickly changing demands or rapid moving prices, everything in the oil and gas industry is very volatile. Meeting ever-changing demands is one of the most challenging aspects these days. When unprecedented scenarios like wards, natural calamities or pandemics hit the world, they create even more fluctuations in this sector. 

If you want to stay a step ahead, you have to study global situations that may cause changes in demands and adjust your supplies accordingly. Supply-chain management also comes into the picture here, especially to manage things when the procurement becomes incredibly low or high as compared to usual! 


Crude oil production does not come cheap these days, which is why capital costs are at an all-time high. Large investments are needed to start and operate oil rigs, supply the raw materials and manage operations. This is why companies have to keep on improving their efficiency through process optimizations. Finding the best course of action and fixing process gaps is not a luxury anymore, but a necessity.

Strategies and Best Practices

A proactive approach along with proper safeguards is a sure-shot way to mitigate issues that arise with volatility in the industry. This can be achieved through a few strategies that aid in the all-around protection of your company’s interests. 

  • Source, hire and retain capable human resources. Train them from time to time on the latest updates in the industry. 
  • Deploy the latest data analysis technologies and experienced manpower to handle your data. Data is at the core of correct business decisions in any industry
  • Ensure transparency in your business’s supply chain and consistently review its flow 
  • Select and manage your suppliers based on their performance and commitment 
  • Constantly reduce your carbon footprints through sustainable practices and eliminating redundant procedures 
  • Work with integrated software solutions that integrate all your procurement needs into one easy to manage platform

Final Thoughts

While the challenges would not stop haunting the oil exploration and production businesses, there is certainly a way to overcome them. Thanks to modern technology, you can manage your business with state-of-the-art software that manages procurement. SBN’s advanced procurement management software features tools that help you view your inventories, track shipments and view supply chains in real-time, you no longer have to worry about unpredictability. 

If you’re interested to know more about the ways a procurement management software can help your oil company, talk to us. We can show you how a leading procurement management software like ours can make a world of difference!