What Businesses Can Learn From The Oil And Gas Industry

The oil and gas industry is often viewed as something of a dinosaur in the business world. Unlike tech, software and robotics, it doesn’t command front-and-centre attention in the world’s leading business magazines. But that doesn’t mean that we should ignore it, far from it. In fact, there’s a lot that the average business could learn from the oil and gas industry. 

The Importance Of Margins
Ten years ago, concerns about peak oil became quite mainstream. It seemed as if practically every internet blogger was talking about it: the idea that we’d reached the maximum production of fossil fuels that the economy would support. Of course, that didn’t happen: not yet, at least. But what did happen was a massive investment in new technology. Oil and gas companies spend vast sums of money decking out their extraction systems with the latest technology, hoping that it might bring them cost savings. The fortunate thing was that it did. The shale gas revolution helped companies to preserve their margins and continue to make a profit, even when mining difficult-to-reach deposits. It was a kind of miracle. The lesson, therefore, is that businesses should focus on preserving their margins through investing in technology. The opportunities to do so today are greater than ever, thanks to the digital revolution. Your firm can automate tasks, outsource operations and even hand over production to other firms operating on lower-cost curves. 

Asset And Inventory Management
Companies like the Freo Group point out that many firms need help with their logistics management. While logistics is a simple idea, in theory, it’s incredibly challenging to pull off in practice. The number of things that can go wrong is extraordinary. Oil and gas companies, however, make asset and inventory management a priority. They have to. Giant silos of fuel are a risk and something that they need to get to market as soon as possible. The solution is to either automate or outsource. Many oil and gas companies don’t manage their logistics: they subcontract them to other firms. This helps them to avoid some of the issues that can crop up when trying to conduct logistics operations using paper and spreadsheets. Getting another firm with management capability to do it for you is almost always a better strategy. 

Invoice And Receipts Reconciliation
The oil and gas industry has to deal with invoice and receipt management at a level of complexity rarely seen in other sectors. Often oil is extracted from multiple wells, shipped to different suppliers, with the type of goods ranging from one kind of fuel to another. It’s a challenge to keep track of it all. Many companies, therefore, use digital accounting and tracking. New expenses, supplies and purchases enter automatically into the software, allowing the finance team to total everything up at the end of the month for their reports. 

The lesson for regular companies is similar. Keep track of invoices and receipts, ensure that they are visible and streamlined. And check that they match up to operations in the real world.