Petroleum Supply Chain Network Design: A Case Analysis from Oman

Author(s): Avninder Gill (Thompson Rivers University, Canada)
Copyright: 2012
Pages: 21
EISBN13: 9781466617100

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Abstract

Product distribution represents a significant portion of logistics costs. A well designed distribution network may provide substantial long-term benefits, but as the infrastructure develops, the optimal strategy may not be taken for granted. Product distribution costs are dependent on the supply chain network design, and the issue assumes more importance in emerging economies. When the emerging economies mature with time, both the supply as well as demand points shift, thus making it necessary to re-visit the network design problem in the future. This case analyses the supply chain retail network design of a company that distributes petroleum products throughout the Sultanate of Oman. The network design strategy employs an optimization model to identify the depot locations and gas station allocations in its distribution network. The case leads to identify the petroleum depot locations and gas station allocations and allows for designing an efficient distribution system. Additionally, the case study provides an opportunity to explore the major challenges faced by the petroleum supply chains in emerging economies. These challenges include changed business scenarios due to the diversification agenda of these economies, memberships in trade organizations and bilateral agreements, emergence of additional competition, lowering or elimination of tariffs, less protectionism of the local companies, and other risks associated with the supply chains.

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