While many oil and gas company executives continue to think their organizations are sufficiently served by their antiquated SCADA systems, I would argue that to thrive in today’s economic climate and changing industry, companies must look beyond SCADA to enterprise platforms that help them achieve operational excellence and optimize the supply chain.

If this sounds like today’s standard approach to manufacturing, it is. All other manufacturing industries, from automotive to CPG to high tech/electronics, have adopted this approach to increase operational and supply chain efficiency. They must begin by adopting — and having the IT systems to support — a supply chain framework such as the Supply-Chain Operations Reference Model (SCOR) or the Electronics Supply Chain Association Progression Model.

A deeper dive into one of these models, SCOR, serves as a starting point for understanding how a particular company would evolve its business processes, and a way to quickly see how the standardization, visibility, and collaboration benefits of such a model can completely reshape the E&P industry.

Developed by the Supply-Chain Council, a global, not-for-profit trade association, SCOR is a process reference model that enables companies to “address, improve, and communicate supply-chain management practices within and between all interested parties.” By using a common set of definitions, the model can be used to describe the “depth and breadth” of nearly any supply chain.

A process reference model integrates generally accepted concepts of business process reengineering, benchmarking, and process measurement. It creates a single, cross-functional framework that contains standard management processes, relationships among these processes, standard metrics for measuring the performance, a description of management practices for optimizing performance, and a standard approach to features and functionality.

Once complex management processes are standardized in a model, they can be unambiguously described and communicated, measured, managed, and continually refined to meet a specific purpose.

In the case of SCOR, the model includes all customer interactions, from order entry through paid invoice; all product and service transactions, from a supplier’s supplier to a customer’s customer; and all market interactions, from assessing demand to the order fulfillment. It does this by breaking down supply chain management into five distinct areas: Plan, Source, Make, Deliver, and Return. All of these except Return are relevant to the E&P industry.

? Planning encompasses balancing resources with requirements, aligning supply chain and financial plans, and developing and communicating plans for the whole supply chain.

? Source encompasses delivery schedules, receiving products, and authorizing payments along with identifying and selecting supply sources. It also includes assessing supplier performance and managing incoming product, the supplier network, and import/export requirements.

? Make encompasses scheduling and managing all production activities, including production performance, equipment and facilities, transportation, production network, and regulatory compliance.

? Deliver encompasses all order management steps from processing customer inquiries and quotes to routing shipments and selecting carriers. It also includes warehouse management, verifying product at customer sites, and invoicing customers.

Much has been written about the success of SCOR and case studies abound. But whether E&P companies adopt a formal supply chain model or take an ad hoc approach, by adopting standard definitions and processes for each of the four supply chain areas above, they can streamline internal operations, optimize production to obtain more value from existing assets, and eliminate unnecessary costs from interactions with other companies. The key is to invest wisely in an enterprise operations platform that supports standardization and real-time information access.

The oil and gas industry is facing its share of challenges in today’s uncertain market, but E&P companies clearly have the opportunity to overcome them by looking inward to achieve greater efficiency and facilitate supply chain-wide collaboration.