Supply Chain Management in the Petroleum Industry: Challenges and Opportunities

Supply chain management in the petroleum industry contains various challenges, specifically in the logistics area, that are not present in most other industries. These logistical challenges are a major influence on the cost of oil and its derivatives. However, opportunities for cost savings in logistics still do exist. Giant oil and petrochemical companies are undertaking a “swap” practice that saves companies millions of dollars. The objective of this paper is to shed some light on the supply chain challenges and opportunities in the petroleum industry and on swap practices that have long been employed by petroleum industry’s giants around the world, such as BP, BASF, Honeywell, Nova, and much more, yet have long been ignored in the operations management literature.