A thesis that examines the increasing importance of supply chain agility for oil and gas service companies , in the highly volatile and complex oil and gas industry

1. INTERNSHIP THESIS
BACHELOR’S IN INTERNATIONAL BUSINESS
2018-2019
SUPPLY CHAIN MANAGEMENT & STRATEGIC
SOURCING IN
THE OIL & GAS INDUSTRY
Student: Sarah ROUGUINE
Host company supervisor: Mr Karim MOULOUAD
UIC supervisor: Prof. Younes EL ALAM
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2. ACKNOWLEDGEMENTS:
Firstly , I want to express my genuine appreciation to Professor Younes ELALAM , for his
brilliant direction and support . Simply, it would have never been possible for me to prepare
this thesis without the support and guideline of my professor through out the years .
My gratitude extends to him, who has helped me in every possible aspects in preparing this
thesis.
On a second note , i would like to thank my internship supervisor Mr Karim MOULOUAD
(HR), who has been of great assistance and has actively sought to make sure i was well
integrated within the workplace whilst encouraging me to overcome my weak points in order to
strenghthen my work ethic.
Finally, I want to pass on my genuine grattitude to the accompanying Staff , most particularly
Mr Yassine TIRAFI (Chief Director) and Mr Adil RTIMY (Legal Affairs) who guided me
all through this time in the work place and made my experience an unforgettable one.
‘‘Far and away the best prize that life has to offer is the chance to work hard at work worth
doing’’
-Theodore Roosevelt
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3. ABSTRACT
This internship thesis examines the strategies adopted by the internship host company and to
address the increasing importance of supply chain agility for oil and gas service companies , in the
highly volatile and complex oil and gas industry , service companies are increasingly competing on a
supply chain effectiveness to reduce costs and improve operational efficency to sustain growth in a
changing business environment .The oil price fluctuation is a key indicator for oil and gas services
companies in terms of activity and profitability .
It generates significant challenges with suppliers and risks harming the company’s ability to cope with
the market volatility.The business perfomance in a fluctating market is linked to the capability of the
supply chain to cope with changes in volumes , secure supplies, and manage risks.
Hence ,there is a need to understand the business environmnent and come up with proactive solutions
to gain a comparative advantage over the competition.
This thesis gathers knowledge on the oil and gas service industry that i have aquired within the host
company , this research will also be focusing on suggesting new type of strategies . As well as
addressing the challenge of the external environment and account for the complexity of the panel of
suppliers, the following research question will be considered in this report :
What type of strategies can petrom adopt to increase its visibility in changing hydrocarbon market
with the aim of strengthening their presence while also making the PREMIUM CARD a brand
refenrence in the market ?
Followed by two sub questions invastigating the main parts of this research :
What are the challenges of the oil and gas industry?
What are the main drivers affecting the oil and gas industry?
Petrom is mainly invested in blue ocean strategy when it comes to the premium card which has become
incredibly visible in the oil and gas market , since then the company has increased it’s willingness to
develop it’s activities by introducing new organizational and innovation policies.
Keywords : Supply chain, Agility, Flexibility, Volatility, Hydrocarbon , Service Company
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4. Table of contents
Aknowledgments…………………………………………………………………...……...2
Abstract…..…………………………………………………………………………….….3
introduction…………………………………………………………………………...…...5
Chapter 1: The internship host company…………………………………………………..6
1.1.Generalities……………………………………………………………………………...….7
1.2.Company data sheets……………………………………………………………………....9
1.3.Organizational charts……………………………………………………………...……...10
1.4.Sector and activity...……………………………………….…………………………....…11
1.5. Products……………….…………………………………………………………………..14
1.6. Market analysis
a.).SWOT analysis………………………………………………………………………..…19
b.) Porter’s Five forces……………………………………………………………………...20
1.7 Operational excellence……………………………………………………………...22
1.8 CSR……………………………………………………………………………….….23
Chapter 2: Research………………………………………………………………….......26
2.1 Introduction…………………………………………………………………..….…...27
2.1.1. definition and framework
a.) Definition (Oil and gas backround +Historical context )……………………...……...…28
b.)Conceptual Framework…………………………………………………………………...31
2.1.2. Research questions…………………………………………………………...………… 33
2.1.2.1.Main drivers
a.oil supply and technological breakthrough……………………………...………………...34
b.oil and gas market perspectives…………….……………………………………………..35
2.2. Litterature review
2.2.1. Complementary domains of supply chain agility…………………………………..…..37
2.2.2.Establishing relationships with suppliers……………………………………………....38
2.3.1 Internship department
a. Invoice Process Flow………………………………………………………………..……...41
b.Invoice diagram…………………………………………………………………………..….42
2.4.Methodology………………………………………………………………...…………..… 43
2.5.Findings…………………………………………………………………………………......44
2.6 Conclusion……………………………………………………………………………..…....47
Research limitation…………………………………………………………………….…....48
Recommendation……………………………………………………………………………49
Bibiliography , appendice…………………………………………………...………….……...51
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5. INTRODUCTION
The world economy is becoming increasingly globalized and integrated, creating a more
complex and connected environment for all industries. The reduction of technological
boundaries is expanding innovations faster and at a larger scale. Oil Companies need to work
harder to meet customer’s requirements
This evolving environment inspires companies to compete further on supply chain
effectiveness to reduce costs and optimize operations to stay ahead of competition
Supply chain covers the organization, processes, people, physical resources , and operations
moving a product or service from supplier to customer and accounts for a large share of a
company’s value. Since cost reduction, operational efficiency, and leverage are linked to the
procurement and sourcing function.
Hence, the function has become a target for greater efforts to develop the ability to address the
oil and gas volatility and become a competitive advantage.
As oil and gas service companies adapt their activity level to the oil price, fluctuations in the
pricing creates turbulences and uncertainties in the supply chain. Hence, the necessity to
develop the agility to prepare for impending oil shocks and take action when they occur, has set
procurement and sourcing agility at the forefront. This allows reducing costs and protecting
margins in downturns (recessions), while maintaining capabilities and capacity to benefit and
take advantage of upturns (upward shift in an economic-cycle).
The thesis is structured as follows ; Chapter one surrounding an overview of the host company
starting with generalities , the company data sheets , an orginazinational chart, sector and
acitvity, products , a Market analysis (SWOT and Porter’s five forces) and it’s corporate social
responsbility.
Chapter two focuses on the research part of the thesis , starting with an introduction of the
subject, a conceptual framework , the research questions , in addition to an overall analysis of
the oil supply chain , a study of some market outlook approaches followed by a detailed
review of the internship department , going through the methodology used finally the findings
and a conclusion accompanied with the limitations faced undergoing the research and the
recommendations.
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6. CHAPTER ONE:
The
Internship host Company
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7. 1.1.GENERALITIES:
The original company developed until 1974, when the new law forced multinational companies to sell
51% of their capital to the government. Esso (an American company established in morocco ) decides
to disengage and sells its shares to SNPP, National Company of Petroleum Products. The company is
then renamed Petrom, "Oil of the Maghreb". In 1993, the Moroccan government decided to privatize
the oil sector and Petrom became the property of the Holsatek Group. Created by the late Haj Ali
Bouaïda, the Group specialized in the flour milling and trading of cereal products in southern Morocco.
Petrom is now a gas and oil service company in full expansion, in a changing hydrocarbon market
( stakeholder, price liberalization international standards ..) for more than 70 years . The company is
part of a continuous process of a considerable investment policy , Accompanied by an increased
willingness to develop it’s activities by introducing new organizational and innovation policies.
Petrom is committed to serving it’s customers by providing them with quality services and products,
thanks to the level of professionalism and dedication of it’s collaborators .
The organization claims the leading position on the Moroccan market with 50 % of market share in the
fuel distribution sector as well as 50% in the distribution and importation of chemical products.
The group’s strategy is a merge of a Diversification and differenciation strategy ,the company has
signed on a exclusive contract with a world renown company ‘ point S’ to complete their range of
product , since the group is a part of continuous process investment policy ,this strategy will bring
petrom added value thanks to it’s history and perfect knowledge of the challenges of the moroccan
environment .With a large network of more than 250 service stations , the network is equipped with a
remote management system allowing real time traceability of it’s product ,as the company also has it’s
own storage and distribution centers ; more than 100.000m3 of storage capacity .
Appart from selling fuels , petrom gas stations offers oils , lubricants and filters for different types of
engines , as well as various services ; washing ,Lubricating, emptying changing tires..
The gas stations are also equipped with restaurant-Cafe where customers can enjoy a good
meal or a cup of coffee, the company offers branded products such as starter batteries , oils for diesel
and gasoline engines , Bridgestone tires and filters of brand .
Under the supervision of the Holsatek Group, Petrom is rapidly becoming a brand reference in fuels
and chemicals on the Moroccan market.
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8. The company has been through a period of modernization, it started when the group launched the
Petrom Portal network in 2011, then the company created its own range of new product (under the
XPRO brand) back in 2013.
Determined to continue its development in the Moroccan market, Petrom launched in 2017 the Petrom
2020 project, which aims to focus on innovation, quality and satisfaction of all stakeholders.
The company’s mission :
Innovation is an important key motivation to satisfy the customers current and future needs. Indeed,
their main goal is to make every effort to provide sustainable products and services of high quality.
The company’s offices :
The sales structure also relies on sales representatives in different priority regions that will support the
Group’s commercial development initiatives.
The group’s management is based on 3 business units: Solutions ,services and warehouses
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CASABLANCA AGADIR
PETROM Solutions :
-Business functions
-Customer projects
-Sales functions
PETROM Services :
-business functions
-customer services
PETROM Services :
-Business functions
-Customer services
PETROM Warehouse :
-Fuel processing and
stocking
MOHAMMEDIA
PETROM Warehouse
-Fuel Processing and
stocking
TANGIER
PETROM Warehouse
-Fuel Processing
And stocking

9. 1.2 COMPANY’S DATA SHEET
Name PETROM sa
Chief Executive Officer M.Ahmed Bouaida
Capital 396 000 000 dhs
Employees 150-200 employees
Industry Hydrocarbon
Headquarters Casablanca ,7 lotiss, sidi maarouf
Website Www.Petrom.ma
Gas stations 250
Revenue 7 billion dhs
Phone number +(212) 522310171
Fax +(212) 522318992
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10. 1.3 ORGANIZATIONAL CHART :
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CEO
Managing director’s office
Human ressources dp
Support and procurment
Tires and Wheels
Logistics
Public relations
Legal affairs and
Contract dp
Financial dep
Engineering depart
Security Dept HSE department
R & D
Oil and gas
Management
Contractor of oil
Layers project
Contractor of Oil
And Gas Logistics
Marketing and
Communication

11. 1.4 . Sectors and activity :
Petrom is a key player in the moroccan oil market, is the largest subsidiary of the
‘HOLSATEK’ group,with more than 200 employees and benefice of 7 billion dirhams , the
group operates in key sectors of the moroccan economy :
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Transportation :
-With more of 100 of trucks ,
The company is specializes in the
Transportation of fuel,
Grain products and various others
Real Estate :
-
Also, specialized in real
Estate ,the subsidiary GDO agadir
Devlops various project all over the
Country:150 luxury apartment
8000m2 of shops in Agadir
Two major projects in Casablanca
Technology :
Pematch an exclusive tech
company offers a combustion
Optimization device ,installed
In the car tank, this device can
Improve engines performance
while preserving the environment
Fishing :
A subidiary dedicated to deep sea
Fishing, «pescado» operates in
Southern morocco and exports to
Japan and spain
Cereals :
The mill is provided by «Les grands
Moulin de Ouarzazate» with a capacity
Of 180 T per day, the cereal company
Is very present in the market wih either
Imported or local products
Radio Mars a subidiary , a national
Radio specializing in sports and
National coverage
Media :

12. The oil and gas industry is mainly dedicated to the extraction of natural resources (natural gas
and crude oil) for energy consumption.
Under the weight of the fluctuations in international prices and the increase in domestic
consumption, importation of petroleum products in Morocco were multiplied by 5.5 times in
value, . They went from 17.8 billion DH to 98 billion DH.
With $ 1.07 per liter, Morocco is the Maghreb country where fuel is the most expensive. This
is revealed by a study of the Global Petrol Prices, a website referencing the price of gasoline in
over a hundred countries, including Morocco.
Fuel prices have fallen sharply since October 2018, when it was estimated at 11.46 dirhams. It
fell by 4 dirhams in less than three months, reaching 10.21 dirhams in January 2019, following
the decline.
Concering the distribution companies of liquid petroleum products:
- Multinationals working through subsidiaries under Moroccan law: Vivo Energy Morocco
(Shell), Total Morocco and Libya Oil Morocco.
-Moroccan companies, with the most important in market share and volume are: Afriquia
SMDC, Petrom, Ziz, Winxo, ...
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13. For diesel , the price dropped by a few cents at Afriquia (10,12 dhs) , TOTAL (10,19 dhs) and
SHELL (10,18 dhs) while the price in other gas stations (apart from some exception) started at
10.32 dhs . However , Gasoline has seen a slight drop of 35 cents ,1 litre of Gasoline is sold at
11,03 dhs at Afriquia gas stations, 11,19 dhs at TOTAL and 11,13 dhs at SHELL .
Other companies have yet to follow the drop in international prices and continue to sell fuel at
non updated prices.
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14. 1.5 Products :
Petrom offers Various types of petroleum products:
.
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GASOLINE
Gasoline is a fuel made from crude oil and other petroleum liquids.
It is mainly used as an engine fuel in vehicles. It is fuel that is processed in
refinery and blended then sent at retail gasoline fueling stations.
Three main grades of gasoline are sold at retail gas stations:
Regular Premium Midgrate
DIESEL
Diesel fuel can be used specifically with diesel engines, because this fuel
tends to last longer with vehicules that need to cover a lot of distances or
are used a lot , it’s favoured by many transport types.it’s very likely that
most of the trucks and vans on the road are using diesel , this fuel seems to
get mixed reviews from companies looking to implement environmental
friendly changes
Regular
Unleaded
Gasoline
Regular unleaded gas (RUG) – is one of the most common type of gas
used around the world. It’s a by-product of crude oil that is highly
flammable, with an octane rating of 87.
Premium gas- is often referred to as “high octane” because its 90 or
higher octane rating. It’s an unleaded, crude oil by-product with
detergent additives and less polluting characteristics.

15. ● Premium Card (Attarik Pro)
Their most recent marketing strategy. ‘The fidelity card’ , Petrom or Gas stations in general are
businesses in which it is highly advisable to have a customer fidelity system , the only way to
successfully achieve this strategy and gaining customer fidelity is by using a fidelity card to
identify a vehicle , or it’s owner. Generally users who already have a fidelity card are part of an
exclusive program (discounts , car wash, discount coupons and other gifts..).Making a fidelity
card is an entry fence to customers , because usually you have to wait several days or weeks to
get one, an effective way break this ‘entry barrier’ and get more profitability out of it , is
printing and encoding the cards on the spot ,this will save time and money for both the
company and the client .The customer perceives this as a value that makes a significant
difference ; the consumer feels as if he is part of an exclusive club and he does not have to wait
to enjoy the benefit, it s advisable to use pre-printed cards with the company’s logo and
customize it only with the client’s details. A Fidelity software or network does not need
specialized knowledge to install it can be integrated with POS cash register
Use of the Premium Card:
• To pay for Fuel, Gasoline diesel ,products from the shop , Restaurant , auto services, Wheels,
tires ,Vehicle maintenance.
• Compatibility with the GEOLOC PEMA solution
• Can be activated from the company’s website.
Easy to manage :
• Possibility to manage Hundreds of cars by monitoring their consumption , maintenance and
insurance policies live on the website .
• Creation of new maps on demand, with settings according to the vehicles concerned
customization of each card.
Enhanced Security :
• compliance of the system with international safety standards
• setting PIN codes and drivers codes to identify users
• identifications of vehicules at gas stations thanks to the nfc system
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16. • Total control:
• Real-time tracking of the amount of transactions from the meter.
• Capping volumes and consumptions.
• Sets up alerts to prevent any problem.
• Automatic reporting of all anomalies.
• Real time billing management.
• Analysis of the consumptions of all vehicles.
● The Prepaid card :
The Petrom Card also exists as a prepaid and rechargeable version to satisfy customers and
SMEs. Accepted in all Petrom, CPHM and Petrom Sahara networks, this card allows the
customer to pay for fuel 24 hours a day, 7 days a week.
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Simplicity
- Dedicated website with personalized settings to manage your card.
- Mobile application for even more simplicity.
- Balance of the card adjusted automatically and viewable on the ticket.
- No bank guarantee or domiciliation necessary.
Efficiency
- One card to pay for all purchases at gas stations.
- Possibility of recharging the card on the website.
- Fidelity program with points gain with each refill.
Proficiency
-Total configuration of the card with capping of expenses.
- Possibility of restricting the use of the map geographically and temporarily.
- Real-time transaction tracking on the website.

17. NEWLY RELEASED PRODUCTS :
Pema Gestion is a management solution that offers businesses the same technologies and
processes that are used in gas stations
The installation is simple, fast and without any disruption . All the collected data can then be
consulted on the online portal.
An electronic sensor is placed in the tank to automatically and continuously measure the fuel
level and it’s condition. The information, transmitted in real time, is very precise and allows
inventory control according to the products and different tanks
Pema Smartfuel is a vehicle identification solution that can automatically supply them with the
right fuel and control their expenses. Indeed, the system recognizes the vehicle before the
supply, thanks to a device installed before, in the tank level. It then decides the appropriate fuel
needed and in what proportions, according to the information associated with the Petrom Card.
This solution also eliminates fraud, since the use of the card is reserved for authorized vehicles
only.
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PEMA GESTION
PEMA SMARTFUEL

18. NEWLY RELEASED PRODUCTS
The Pema Geoloc solution makes it possible to indicate the position and the mileage of all the
vehicles registered thanks to previously installed GPS boxes. The advantage of this system is to
improve the vehicles management by tracking real-time trips and consumption, but also to
optimize the organization of business activities by enhancing its productivity. In addition,
geolocation enhances safety conditions by detecting dangerous behavior and limiting the risk
of theft.
The Pema Tag solution is based on Near Field Communication (NFC) technology that
automatically identifies vehicles entering the service stations.
Made of a self-adhesive patch on the windshield, the Pema Tag allows the presence of a vehicle
associated with the Petrom Card when it is used in one of the service stations.
Thus, the Petrom Card is completely controlled, avoiding its use by unauthorized users.
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PEMA GEOLOC
PEMA TAG

19. 1.6. Market analysis :
a.) SWOT analysis
a SWOT analysis is conducted to identify organizational strenghts (S) ,organizational
weaknesses (W),environmental opportunities(O) and environmental threats (T).an
organizational strenght is an internal capability that can be exploited to achieve the company’s
goal , whereas organizational weaknesses are internal characteristics that may undermine the
company’s business , an environmental opportunity is a situation that offers potential the
organization achieves its goals. In contrast, an environmental threat is an external element that
can develop into a non-crisis or crisis problem, and potentially prevent the organization from
achieving it’s goals.
An overall swot analysis of the host company is given below:
STRENGHTS
➢ Petrom is the 4th oil and gas
distributor on the market
➢ Has diverse operations in
chemicals,fuels,lubricants
➢ Invested in various sectors and
activities
WEAKNESSES:
➢ Legal issues
➢ High import dependance
➢ Limited Marketing Opportunity
OPPORTUNITIES
➢ Oil price fluctuations
➢ Increasing natural gas market
➢ Expand in the import/export sector
➢ New Technology
THREATS
➢ Environmental concerns
➢ High competition
➢ Ever increasing demand
➢ Hybrid /electric cars
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20. 2.2 Porter’s Five Forces Analysis :
The five forces model is a framework that is used to assess the inside variables influencing
rivalry and the outside components influencing bargaining power. This comprehends the
business and what procedures are expected to be taken to gain competitive advantage. The
inside elements of the business are characterized through the rivalry of existing firms, the
threat of new entrants and the risk of substitute products.
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21. ➢ Rivalry Among Existing Firms (high)
➢ Bargaining Power of Suppliers (moderate)
➢ Bargaining Power of Customers (low)
➢ Threat of New Entrants (low/moderate)
➢ Threat of Substitute Products (low)
Existing Rivalry:
➢ Large industry size
➢ Fast industry growth rate
➢ Government control
➢ High competition between gas companies
Bargaining power of Suppliers:
➢ High competition among suppliers
➢ Not many Diverse distribution channel so there is a dependency on oil import
➢ Since the volume of supply is high and the threat to cut down the supplies makes the
bargaining power of supply lower.
Bargaining power of customers:
➢ Due to inelastic demand buyers are less sensitive to prices
➢ Since the price is standardized all over the world; gives the customer less bargaining
power
Oil companies gets the leverage over consumers and the chances of bargaining power is less
since the market is inelastic.
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22. Threat of new entrants
➢ Advanced technologies
➢ Strong distribution channel
➢ Bureaucratic support needed
➢ Entry Barrier
Threat of substitute products:
➢ Number of substitute product is limited
➢ Substitute products are not adequate to meet the demand
➢ Substitute products have a low performance on the market
➢ Switching into substitute cost more money
1.7 Operational excellence:
Petrom believes in Operational Excellence (OE), a framework that the company has extended
that support Safety culture , environmental stewardship and top performance. Petrom believes
that incidents are preventable , as the company does have policies, devices, tools and
behavioral expectations in place to assist in achieving that goal through their workforce.
OE safety culture is based on a code of conduct that employees and contractors use and that
supervisors and managers reinforce ,the code is based on two key principles:
✔ Do it safely or not at all.
✔There is always time to do it right.
In addition, the code call for always involving the right people, as in , those most experienced
in decisions affecting safety procedures and equipment :
✔ Always operate within design and environmental limits.
✔ Always operate in a safe and controlled condition.
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23. ✔ Always ensure safety devices are in place and functioning.
✔Always follow safe work practices and procedures.
✔Always meet or exceed customer’s requirements.
✔Always maintain integrity of dedicated systems.
✔Always comply with all applicable rules and regulations.
✔Always address abnormal conditions.
✔Always follow written procedures for high-risk or unusual situations.
✔Always involve the right people in decisions that affect procedures and equipment
1.8 Corporate social responsability :
a.) What is CSR ?
Corporate Social Responsibility is a concept which has become dominant in business reporting.
Every corporation has a policy concerning CSR and produces a report annually detailing its
activity. And of course every company claims to be able to recognise corporate activity which
is socially responsible and activity which is not socially responsible. There are two interesting
pints about this: firstly we do not necessarily agree with each other about what is socially
responsible; and although we claim to recognise what it is or is not when we are asked to
define it then we find this impossibly difficult. Thus the number of different definitions is huge
The broadest definition of corporate social responsibility is concerned with what is – or should
be – the relationship between global corporations, governments of countries and individual
citizens. More locally the definition is concerned with the relationship between a corporation
and the local society in which it resides or operates. Another definition is concerned with the
relationship between a corporation and its stakeholders.
all of these definitions are pertinent and each represents a dimension of the issue. A parallel
debate is taking place in the arena of ethics – should corporations be controlled through
increased regulation or has the ethical base of citizenship been lost and needs replacing before
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24. socially responsible behaviour will ensue? However this debate is represented it seems that it is
concerned with some sort of social contract between corporations and society.
b.) CSR in the oil and gas sector:
The nature of an industry determines CSR concerns and the social concerns are highly diverse
between different industries. For instance, the clothing industry raises issues of employment
conditions , fast-food restaurants raise the issue of obesity, while the main issue in the tobacco
industry is the long-term health effects of smoking. These concerns may vary between
countries, but the key concerns related to an industry’s operations are typically shared in most
countries, and this is no different in the oil and gas sector.
The Oil and gas sector is a frequently sensitive and arguable topic because of its several
pollution scandals , the obviously negative evidence such as oil spills and the resulting
objections by civil society groups is partly the reason why the oil and gas sector has turned out
to be one of the leading industries in advocating CSR.
Oil companies have initiated, funded and implemented community development schemes.
These companies now help to build schools and hospitals, launch micro-credit schemes for
local people and assist youth employment programs
Given the importance of CSR activities, the oil and gas sector is an instructive example for
analysing to what extent the CSR movement can transform practices in an industry.
Unfortunately, Moroccan oil and gas companies are not transparent enough in the aspect of
financial solidity.
✗ Wealth stays in the hands of politicians and industry insiders
✗ No transparency ; information and data are not made available.
✗ Bribery and fraud go unchecked
✗ Hidden identities of oil and gas companies equity holders and subsidiaries, letting corrupt
leaders keep stolen funds unobserved
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25. ✗ Inadequate financial statements
Therefore, it is often concluded that though oil and gas companies earn huge amount of
revenues, their influence on local economy and society is quiet moderate or even negative,
causing the domestic or global poverty and corruption.
c.) Petrom and CSR:
Petrom’s Supertech solution offers significant savings and contributes to an eco-responsible
approach.
Supertech is a device that is installed inside the tank to optimize combustion. The concept is
based on a magnetic treatment to act on the fuel structure while making the engine more
reliable. Thanks to this solution, consumption drops by around 8% and pollutant emissions
decrease by 70%.
Distributed in 30 countries, Supertech has been tested by teams from the Ministry of the
Environment who have confirmed its effectiveness.
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26. CHAPTER TWO : RESEARCH
Oil & Gas service companies adapting
procurement and sourcing to
the volatile hydrocarbon market
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27. 2.1.Introduction :
Since the petroleum sector was liberalized back in 1993 , a number of new entrants joined the
moroccan market , which was previously controlled by a few major companies. Over the past
few years, players in the oil industry have also been experiencing the challenge of declining
demand, changes in customer preference, political/legal and social changes (Wairachu, 2001).
In addition , changes in tax laws, need to play more roles in community activities and
environmental, safety and quality driven concerns. It was also noted that stiff competition has
led to lower profit margins in the industry due to companies competing on price and discounts.
With increased competition, companies have been competing on price, perceived quality,
customer service, product range, discounts, credit terms and station appearance among other
things. According to Apungu (2003) companies have tried to differentiate themselves on
service delivery, product quality/benefits, safety and sale of environmentally safe products. The
retail sector has also witnessed the emergence of convenience store at the stations. Current
brands in the market include: Mini-brahim by AFRIQUIA, Happy sud by TOTAL..
also identified a major trend of strategic alliances between major oil marketers and other
service providers. The major oil companies entered into alliances with major banks to provide
Automated teller machines, Fast food restaurant, entertainment places, tire services with
Sameer Africa and Chemists among others; this is aimed at providing the retail customer with a
wider range of services.
This chapter gathers knowledge on the oil and gas service industry and an overview of the
existing literature on supply chain agility to explore the application of greater agility for oil and
gas service companies. It provides evidence that within the procurement and sourcing function
there are ways for oil and gas service companies to overcome the looming risks and
successfully operate in an increasingly volatile and complex market
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28. 2.1.1. Definition and framework
2.1.1.1 Definition
Oil and gas service companies, in addition to complexity and connectivity, volatility has become
a growing and recurring challenge to address. Service companies provide field development
services (covering the entire oilfield life cycle) to production companies selling oil to end-users.
As oil producers adapt their activity level to the oil price, fluctuations in the pricing creates
turbulences and uncertainties in the supply chain. Hence, the necessity to develop the agility to
prevent or avoid oil shocks and take action when they occur, has set procurement and sourcing
agility at the forefront. This allows reducing costs and protecting margins in downturns
(recessions), while maintaining capabilities and capacity to benefit and take advantage of upturns
(upward shift in an economic-cycle).
Moreover, companies are operating in a complex environment where the fiercer competition is
pushing companies to reduce costs with suppliers to “do more with less” (Trebilcock, 2015) to
respond to customer’s needs. Service companies are interacting with a large panel of suppliers
a.) Oil and gas background
The oil and gas industry is mainly dedicated to the extraction of natural resources (natural gas
and crude oil) for energy consumption. It is composed of equipment and service providers and
production companies (referred to as operators) selling oil and natural gas to end-users (table 1).
The actors rely on the supply and demand of these natural resources determining the market
pricing.
First, an overview of the commodity prices will present the best market volatility indicator.
Then, a review of main historical events will present the main oil price drivers. Finally, market
projections from various companies and organizations will provide information on key elements
expected to govern the future of the oil and gas industry, essential when discussing ways to drive
future performance.
28

29. Table 1: Oil sectors and corresponding actors
Sectors Definition Actors Customers
Upstream Exploration and production • Manufacturing
companies
• Service companies
Operators
Midstream &
downstream
From field to final
consumption (transportation,
storage,refinery..)
• National oil
companies
• international
operators
End-users
The oil and gas global supply-chain includes activities such as domestic and international
transportation, ordering and inventory visibility and control, materials handling,
import/export facilitation and information technology
Every Supply Chain in large industries involves configuration, management and continuous
improvement of sequential set of operations that includes multiple parties. The goal in Supply
Chain Management (SCM) is to deliver maximum service to the customer at the lowest cost
possible. The Oil and Gas Supply Chain can be analyzed through three different industry
sectors:
• Upstream
• Midstream
• Downstream
When describing a company , that is in the Oil and Gas Supply chain industry , business terms
such as “Upstream” and “Downstream”are frequently used. As companies or services get closer
to servicing the end user, the more downstream they are located in the supply chain.
Each of these sectors have their own characteristics which will be elaborated in more details,
further on in this chapter.
29

30. b.) Historical context
Crude oil prices have always been subject to fluctuations punctuated by large peaks referred to
as oil crisis. It is important to understand the environment in which oil and gas service
companies operate, a study of these historical episodes brings an overview of the drivers
influencing the oil price. Since 1970, the industry has been subject to four major downturns
(table 2).
Differences and similarities between these price drops in terms of duration, magnitude, drivers,
and actors reactions reveals a complex industry affected by numerous domain
Table 2: Major oil crisis since 1970
Dates Nov 1985 to Mar
1986
Nov 1990 to Feb
1991
Jul 2008 to Feb
2009
Oct 2014 to Sep 2015
(ongoing)
Duration 82 days 71 days 115 days >250 days
Price drop 66 % 48% 79 % 55 %
Volatility 4,69% 5,18% 4,86% 2,87 %
Fundamental
drivers
Increase in non-
OPEC* oil
supply.
First Gulf war
(Iraq invasion of
Kuwait)
Financial crisis
Increase in non-
OPEC* oil supply
OPEC*
straregy
Raise production
to protect market
share
Raise production
to keep oil market
well supplied
Cut production to
target a price range
Raise production to
protect market share
Source: World Bank (2015c)
*The Organization of the Petroleum Exporting Countries (OPEC) is a cartel of 12 member
countries with a substantial net export of crude petroleum, contributing to more than 30% of
global oil production. Saudi Arabia (SA), the world largest producer, is the leading member of
the organization (BP, 2015a). In addition, the difference between conventional and
unconventional oil (including shale and sand) lies in the required methods and techniques used
to produce or extract the oil from the reserves.
30

31. ➔ In 1985-1986, the price drop was mainly driven by new supply conditions, with an
increased oil production from unconventional sources in the North Sea and Mexico. This
generated a long period of low oil prices, encouraged by OPEC’s strategy to raise its
production to protect its market share.
➔ In 1990-1991 and 2008-2009, the price drops were caused by external events the First
Gulf war and the Great Recession respectively. These events triggered a global economic
slowdown accompanied by falling commodity prices, such as grains (corn, flour), energies,
and metals. Thereafter, markets failed to rebound rapidly, leading to a modest recovery
➔ In the mid-2014, like in 1985, the downturn was driven by changes in the supply
conditions. The oil crisis followed a period of high oil prices, which enabled non-OPEC
countries to increase production, mainly shale oil (US), oil sand (Canada), and biofuels.
Again, OPEC’s loss of market share encouraged the organization to rethink its strategy and
role as a swing producer (World Bank, 2015c). Although the magnitude of the price drop is
slightly lower than during previous oil crisis, the 2014-downturn is long lasting (exceeded
250 days of falling oil prices).
To conclude, the 2014 price drop seems to share similarities with past episodes of falling oil
prices, mainly a higher-than-expected supply from unconventional sources and a lower-than-
expected demand engendered by voluntary cutbacks and a global market slowdown (World
Bank, 2015c). However, the 2014 drop is unprecedentedly long lasting.
b.) Conceptual Framework:
Companies are increasingly competing as supply chains rather than independent entities
making it important to describe and understand the various concepts framing the existing
knowledge in the field (Gligor, Holcomb, & Stank, 2013). Agility is rooted from the Latin term
“agilis”, the ability to move about quickly and easily. In supply chain management, the
terminology reflects the capability to respond to changes. Manufacturing companies were the
first to adopt the concept by improving the degree of manoeuvrability to master uncertainty
(Lau & Hurley, 2001). They used flexibility as a tool to accommodate uncertainty and absorb
fluctuations in demand economically (Beach, Muhlemann, Price, Paterson, & Sharp, 2000).
31

32. The adaptation of the supply chain relative to these uncertainties and fluctuations is discussed
through various concepts. The literature does not seem to reach a consensus on the exact
definition of agility. Therefore, multiple definitions enable to gather complementary
dimensions of this complex term:
 Alertness defines the ability to read and detect changes. This dimension focuses on the
monitoring of data and the use of environmental scanning to sense trends, threats and
opportunities for both demand and supply (Gligor et al., 2013). The notion reflects the
ability to address unexpected challenges, survive unprecedented environmental threats, and
transform changes into opportunities (Swafford, Ghosh, & Murthy, 2008)
 Accessibility describes the importance of relevant data and information systems to share
data across the supply chain for a better integration (Gligor et al., 2013). Access to real- time
information with the implementation of virtual supply chains could become key to quickly
detect and react to market changes (Gligor et al., 2013).
 Decisiveness designates the ability to make decisions with determination and certainty. The
term refers to the ability to influence the speed at which a company can change direction
(Gligor et al., 2013)
 Quickness is the ability to complete an activity as quickly as possible (Gligor et al., 2013).
The term involves the speed and responsiveness of implementing decisions to respond to
economic upswings and downswings while spending less time managing the crisis
(Geissbauer & Householder, 2011). The emphasis is on the proactive aspect of an agile
supply chain permitting to recover effectively from market fluctuations (Lin, Chiu, & Chu,
2006).
 Flexibility or adaptability relates to the ability to implement different processes and tactics
to the required needs. It is often used as the main characteristic of an agile organization (Lau
& Hurley, 2001). Flexibility combines the robustness of a supply chain, meaning the ability
to change the existing capabilities, and the re-configuration potential to re-align or reinvent
the supply chain in response to market changes (Stevenson & Spring, 2007).
32

33.  Leanness is assimilated to the elimination of waste, meaning the removal of non-value
adding activities. The notion can be viewed as a stepping-stone to rapidly reconfigure the
supply chain (Yusuf et al., 2014). Leanness is suggested to apply where demand is relatively
stable with little variety, whereas agility works in less predictable environments with
multiple customers’ requirements (Christopher, Peck, & Towill, 2006).
The six agility dimensions can be separated into two groups. The cognitive group covers the
information processing dimensions including alertness, accessibility, and decisiveness. The
physical group covers the action-taking dimensions including quickness, flexibility, and
leanness. The distinction between information and action dimensions permits to identify the
capabilities that need to be enhanced or reduced to achieve the desired supply chain agility
and eliminate vulnerabilities (Gligor et al., 2013).
2.1.2. Research questions:
In a highly volatile and complex oil and gas industry, service companies are increasingly
competing on supply chain effectiveness to reduce costs and improve operational efficiency to
sustain growth in a changing business environment ,Thus, companies today must adopt various
strategies in order to build a reputation as well as relationships with various stakeholders in orders to
strengthen their presence in the market .
Having thrown some light on the nature of the research, the main question will be as follows:
RQ :What type of strategies can the company adopt to better increase its visibility in changing
hydrocarbon market with the aim of strengthening their presence amd making the
PREMIUM CARD a brand refenrence in the market ?
To be able to provide an answer on the main question the sub-questions are divided in order to
investigate the two main parts related to this study. Accordingly, the main Research Question
can be approached by answering firstly to the sub-question 1:
Q1 : What are the main drivers affecting the oil and gas industry?
33

34. And secondly the sub-question 2:
What are the challenges of the oil and gas industry?
2.1.2.1.Main drivers
A review of the oil price fundamentals, namely oil supply and demand, outlines the
interconnectivity and complexity between oil prices and multiple domains shaping the world
economy.
a.) Oil supply and technological breakthrough :
Oil supply can be defined as the amount of oil produced. History shows that as consumption
increases, investments are constantly undertaken to increase oil production and reserves to
assure future supply. High oil prices encourage operators to produce more and explore for
additional sources. Low oil prices reduce operators’ exploration investments to preserve
reserves and be able to sell oil in the future at higher prices.
The rising quantity of oil extracted is highly linked to technological developments. Innovative
solutions have increased production in existing fields and developed new fields in previously
considered unviable areas. Water injection and fracturing are examples of technologies that
have changed the supply side with regions contributing further in supplying the market and
new regions producing oil. However, international oil and gas companies are slow to adopt new
technology, taking twice the time compared to the medicine sector for exemple (Mitchell,
Marcel, & Mitchell, 2012).
To conclude, reserves are unevenly distributed across the world, with only a few areas
benefiting from the possibility to adjust their production quickly to falling oil prices.
The production cost and investment necessary to operate in the different areas varies widely.
Moreover, technological developments have made available reserves that were previously
deemed non- accessible, challenging the historically dominating regions.
34

35. b). Oil and gas market perspectives :
The combination of various drivers influencing the evolution of the oil and gas industry founds
a complex and hardly predictable environment. Market outlooks from different companies and
organizations can help to be aware of the expected market developments to make long-term
strategic decisions in accordance with the industry’s future.
The market outlook is based on the reports from TOTAL ,SHELL (Vivo energy ) who are all
well-established operators investing heavily in market analysis for strategic planning, both
companies are strongly engaged in discussions on the evolution of the oil and gas industry,
Every year, they publish reports on their perspectives to contribute to the public debate on the
industry’s future:
• TOTAL MAROC:
Cost Strategy
The Total Group pursues a goal of reducing production costs, renewing reserves and
discoveries.
Indeed, in 2006, Total had the lowest technical costs (exploration cost + production cost +
depreciation) This is the result of good cost control.
It can also be noted that Total has the lowest cost of renewing reserves for a second place
renewal rate. It has seized opportunities: new fields, changes in regulations, modernization of
production tools.
Given its experience, this allows the company to finance projects and invest heavily upstream.
All the more so because by controlling the links in the chain, TOTAL is not subject to external
pressure, which would have cost implications.
Total concentrates its efforts on the design, development and manufacture of new products and
services, notably, like SHELL, in terms of renewable energies.
TOTAL is the world's largest producer of ETBE (Ethyl Tertio Butyl Ether obtained from the
reaction of agricultural alcohol with refinery isobutylene) and the first biodiesel user. mixed in
35

36. the gas oils. If the Group is a leader, it is because it is also the precursor or rather the inventor,
allowing it to have a head start over competitors in these areas.
Indeed, even if Total is not to be regarded as an innovator as such in this market, as SHELL can
be, the Group has already proved its innovative talent.
• SHELL (VIVO energy )
Innovation Strategy
The innovation strategies consist in a company concentrating its efforts on the development
and manufacture of new products or processes. This requires a good knowledge of the
technologies of it’s sector and especially by making significant investments in research and
development to anticipate future needs and discover appropriate responses. This makes it
possible to create a certain impact on the business (by giving rise to a new activity and slowing
down the previous one), on competition (by modifying the FCS in the sector) and represents a
real competitive advantage.
By creating alongside the already existing business segments - Exploration / Production, Oil,
Chemicals, Gas and Coal - a sector devoted exclusively to renewable energies, the Shell Group
has embarked on 20 years of research and learning in this field. .
As a first step, Shell plans to develop renewable energies at a local scale, especially in rural
environments penalized by the absence or the lack of electricity networks. Once the
exploitation of renewable energies becomes profitable in this context, larger-scale applications
will be considered.
36

37. 2.2. Litterature review
2.2.1. Complementary domains of supply chain agility
In addition to information systems, collaboration with suppliers and contractual features
additional domains can contribute likewise to the implementation of greater supply chain
agility. These domains include talent retention, geographical diversity, and financial hedging.
According to Lau and Hurley (2001), the development of the organizational flexibility is key to
acquire a sustainable competitive advantage and long-term commitment throughout the
organization. Here, the organization covers the company culture, knowledge, workforce, and
business practices. As people account for a large share of the organizational, support from the
entire workforce intervening across the supply chain is required to achieve a sustainable level
of agility. As such, the relevance of training, education and employee empowerment enable to
keep and attract competent employees for the adoption and implementation of a more efficient
supply chain. Conversely, deep organizational hierarchies may impede cooperation and
communication, preventing the cross-functional integration required for employee’s
participation. Major head-count reduction during downturns can also have negative effects on
the working environment of the company. Following a series of layoffs, companies often suffer
from disenfranchised employees and low productivity of those who remain at the company,
damaging the company’s brand internally and externally .
To conclude, for gas companies to survive in today’s highly uncertain business environment
agility has been adopted by multiple industries and within various domains of supply chain.
According to Chiang, Kocabasogly-Hillmer, and Suresh (2012), cultivating supply chain agility
can be an effective strategy to overcome demand volatility and risks of disruption. Agility
constitute an effective strategy to coordinate and redeploy organizational competencies to seize
opportunities, minimize threats and develop the needed dynamic capabilities to provide timely
responses and product innovation. The means and methods to reach a good level of supply
chain agility are numerous and can be challenging to implement because of the trade-offs
between complexity, efficiency, uncertainty, and flexibility. The aim is to configure the supply
chain and build the required capacity and efficiency to be in line with demand requirements
(Gligor, Esmark, & Holcomb, 2015). The reviewing of the agility concepts and the emphasis
on selected complematary elements can help managers identify where to invest efforts.
37

38. 2.2.2. Establishing appropriate relationships with suppliers:
Since supply chains range beyond firm’s boundaries, it is important to consider the relationship
with suppliers (Duclos, Vokurka, & Lummus, 2003). Suppliers represent a large share of
companies’ costs (purchased inputs) and are critical team members who contribute to the
product designs, technologies, and quality (Carr & Pearson, 2002). Supply flexibility combines
the ability to find alternative suppliers and to implement a flexible network of suppliers
responding better to market fluctuations (Lao, Hong, & Subba Rao, 2010). It can be
implemented to overcome external drivers (demand volatility and forecast accuracy) or internal
drivers (production availability and capacity) (Tachizawa & Thomsen, 2007). Both drivers
appear to affect service companies, who rely heavily on equipment from external suppliers to
meet its volatile customer demand. Hence, to establish the appropriate relationship with an
existing or new supplier for a specific product, it is important to evaluate the current market
situation for that product and the future strategic position desired for the individual suppliers
and panel of suppliers.
Companies need to classify suppliers to come up with individual strategies in line with global
objectives. The suppliers can be classified using the Kraljic matrix, based on supply risk and
profit impact . Supplier risk is determined based on the number of suppliers (single, dual, or
multiple vendors), switching cost, and product availability (Supplier Management, 2015). The
supplier can be classified as:
➔ Routine (low risk, low profit)
➔ Bottleneck (high risk, low profit)
➔ Leverage (low risk, high profit)
➔ Strategic (high risk, high profit)
Other evaluation variables like supplier’s dependency on the company, criticality of the item
supplied or supplier’s quality and reliability may also be used.
Then, the supplier classification can help to set the best individual tactical approach to reach
the strategic objective and better match the business needs. The supplier can be maintained,
developed, (suggesting a stronger collaboration) or phased-out (reflecting the need to find new
suppliers).
38

39. It is the role of the supplier managers to evaluate the best approach. Sometimes strategic
alliance with a supplier can create more value through a closer and longer-term relationship.
The Oil supply chain Diagram
39

40. The upstream sector:
The upstream sector is also known as the E&P (Exploration and Production) sector. It is
consisted of processes and operations that involve searching for potential underground or
underwater crude oil and natural gas fields, drilling of exploratory wells, and subsequently
drilling and operating the wells that recover and bring the crude oil and/or raw natural gas to
the surface. In recent years, there is an evident shift towards the inclusion of unconventional
gas as part of the Upstream sector. This also affects the developments in processing and
transporting Liquefied Natural Gas (LNG).
The midstream sector:
The midstream sector is usually combined in the literature with the downstream sector. This
segment in the supply chain, involves the transportation, storage and marketing of various oil
and gas products. Transportation options can vary from small connector pipelines to massive
cargo ships making trans-ocean crossings, depending on the commodity and distance covered.
The downstream sector :
When it comes to the downstream sector, it encompasses the refining, processing, distillation
and purification before turning it into usable, sell-able and consumable products e.g. fuels, raw
chemicals and finished products etc. All the afore-mentioned services transform crude oil into
usable products such as gasoline, fuel oils, and petroleum-based products. Retail marketing
activities help move the finished products from energy companies to retailers or end users.
Key downstream sectors include:
• Oil Refining,
• Supply and Trading,
• Product Marketing – Wholesale and Retail
The marketing activities in the downstream segment refer to the processes of promoting,
searching and supplying customers who have internal demand for refined fuel products or who
have large wholesale networks that can distribute the different product to variety of retailers.
40

41. 2.3.1 Internship department (Logistics)
a.) The Invoice Process:
The main objectives of the department consist mainly of buying equipment from suppliers and
selling products (tires and wheels to be more exact ) to customers and processing invoices from
suppliers.
Process of selling to Customers
The client place an order , the department takes the reference number then checks the
availability of the tires or wheel with one of the company’s supplier , the order is confirmed
until the supplier says so , the department then puts a purchase order in the name of the client
to the supplier , the client is given 30 to 60 days to pay , the department keeps track of the
order until it arrives to the client.
Analysis : Buying from Suppliers :
The logistics department and the accounting department work hand in hand since both
departments receive payment invoices from one of the company’s suppliers , the primary
function of processing invoices is ensuring that the payments are processed within the
company’s policy and according to the contract., copies of the invoice are sent to the logistics
and the accounting departments as voucher and checks if the products are received or not , if
not, the payment is held until the product is received as per of the contract . Generally the
payment is mentioned in the contract / agreement with the supplier and the payement is
processed on time . If there is any dispute regarding the submitted invoice , the process is held
until the problem is resolved.
Invoices process analysis :
there are three different type of invoices, all of them are received and processed according to
the standard practice :
1. A contract work ticket (CWT) : these types of invoices are sent by regular suppliers who
provides regular services to the company, these invoices are sent through an online
software ,normally the payment date follows the N30 (30 days) method from the day of
submission of the invoice .
2.Standard Invoice : in case of a standard in voice, the invoices are sent by the supplier , after
the invoice is received ,the department checks the invoice thoroughly and approves it if
everything matched
3.Purchase order : (PO) Purchase order is different from CWT and standard invoice, a PO is
submitted against any materiel service, as in the supplier providing material , a purchase order
contains:
✔ material ordered as per the contract
41

42. ✔ material received as mentioned in the invoice
✔ material confirmation
After the confirmation ,the PO is tracked in two ways :
✔Received
✔Not received
If not received PO’s are kept on hold until the materials receive confirmation , once the
confirmation is approved , a copy is sent to the accounting department , if it crosses the first 30
days count after receiving the PO copy an additional 10 days is added to the payement
procedure .
Settling dispute/On hold invoice procedure :
this is part of a compliance procedure to make sure that every payement is done with proper
checking ,these payment are checked throughout the year
Invoice process flow :
for a better understanding a regular invoice diagram is shown below:
42
Reception of the
invoice with
Financial seal
Sort invoice as PO/
CWT /Standard
Track the CWT
& Standard invoices
For any dispute/approval
send it to Legal /Finance dept
After resolving the dispute, send
back to logistics for processing
with
additional
10 days for payment
For PO check if
the material
is received
If the material received is confirmed
An invoice will be sent ,if not
the invoice is
held until confirmation
After receiving confirmation
accountability
Will process the payment
Invoices are processed
according to
the company’s policy

43. 2.4.Methodology:
In this section, the methodology used for this research to collect data and answer the research
question is outlined and discussed , this section starts with a discussion of the research
approach , followed by the data collection method.
RESEARCH APPROACH
Quantitative Research involves the use of computational, statistical, and mathematical tools to
derive results.
It is conclusive in its purpose as it tries to quantify the problem and understand how prevalent
it is by looking for projectable results to a larger population.
On the other hand, qualitative research is generally more explorative, a type of research that is
dependent on the collection of verbal, behavioral or observational data that can be interpreted
in a subjective manner. It has a wide scope and is typically used to explore the causes of
potential problems that may exist. Qualitative research typically provides insights on several
aspects of a marketing problem.
Companies who use quantitative research rather than qualitative are typically looking to
measure extent and looking for statistical results that are interpreted objectively. While the
results of qualitative research can vary according to the skills of observer, the results of
quantitative research are interpreted in an almost similar manner by all experts.
Both types of research vary widely in ,not only their results, but all other aspects as well.
The qualitative approach is informed by inductive logic, in which potential understandings of a
phenomenon are derived from the data.As such, hypotheses are formed following the collection
and initial analysis of the data, at which point additional data are often collected to assess the
hypotheses in an iterative process. Hypotheses in qualitative research often point to the role of
contextual factors that influence the phenomenon of interest, seeking to distinguish why and
how individuals with varying experiences understand the phenomenon differently.The goal of
qualitative analysis is not to produce broadly generalizable results but rather to provide detailed
or “thick” descriptions of specific situations or experiences.
43

44. 2.5 . Findings:
The data was collected through both quantitative and qualitative methods ;
The quantitative data collection strategy was selected to review and validate or reject
assumptions on oil price fluctuation and gas stations preference
This section presents the results of a questionnaire conducted to a total of 20 people :
44

45. 45

46. The qualitative data collection strategy was adopted both to set the assumptions to be validated
or rejected by the quantitative data and to collect illustrations on challenges encountered with
suppliers. A document review on supply chain agility and on the oil and gas industry gathered
the information used to derive the assumptions. These documents include journal articles and
external reports from open sources or consulting firms on the oil and gas market outlook and
on supply chain practices adopted in other industries. The information gathered originates from
internal information from supplier’s profile and in-depth interviews with the company’s
logistics manager.
46

47. 2.6 Conclusion :
The complex and volatile hydrocarbon industry is creating a challenging environment for oil
and gas service companies ;Volatile because the industry has been through multiple oil crisis.
Complex because the drivers behind the oil crisis are generated by a wide array of domains
(including economical, geopolitical, and technical). In addition, the market outlooks are
predicting a persisting volatile and complex environment, with the oil price expected to face
further fluctuations and the increased integration and globalization of the world economy.
Large players are facing fiercer competition and encouraged to leverage on size and global
footprint to reduce cost and gain operational efficiency to sustain growth in the changing
business environment.
Petrom is part of a continuous process of a considerable investment policy , Accompanied by
an increased willingness to develop it’s activities by introducing new organizational and
innovation policies.
The company is committed to serving it’s customers by providing them with quality services
and products, thanks to the level of professionalism and dedication of it’s collaborators
they also claim the leading positon on the Moroccan market with 50 % of market share in the
fuel distribution sector as well as 50% in the distribution and importation of chemical products.
Much of their work is through partnerships. Partnerships — between the industry and suppliers
and between producers and consumers — are key to providing the world with the energy
needed for economical progress.
New Partnerships:
NAPS ,an electronic payment operator , aims to modernize the gas station payement system
across the country but also to bring it to another level thus NAPS is committed to introduce the
‘’electronic payment ‘’ to the entire fuel company , Which is considered a big advantage.
‘’Point S’’. An international Franchise implanted in Morocco ; has just signed on a partnership
with the company , the Point S tires company will open service centers at PETROM stations all
over Morocco , the two companies will join forces and expand their services further more.The
first center opened recently in Casablanca is fully operational and fully equipped for Moroccan
47

48. motorists , other openings are planned in different cities, according to the manager .the
company will be opening 30 to 50 shops within three years.
It seems that Petrom employs a Blue ocean strategy when it comes to differentiating their
products in the national oil and gas market thanks to the company’s exclusivity card that saves
you a considerable amount of money with each refill.
LIMITATIONS:
For confidentiality reasons, some of the information used for the thesis is not communicated,
namely values and suppliers names. Nevertheless, the provided information on suppliers and
presented trends are sufficient to demonstrate the impact of the market volatility. Although the
combination of qualitative and quantitative research enables to reach a robust study with a
better understanding and stronger findings,
No matter how efficiently a study is conducted, it cannot be perfect in all aspects . This
research was conducted in accordance with the objectives given; it may not include broad
explanations of facts and figures due to the nature of the thesis. The lack of required online
data was a problem , all the documents and files are kept strictly under lock and key due to
their confidential nature. Also ,the problem of short time period makes the analysis restricted
as one cannot properly understand and thus analyze all the operations of an organization just in
eight weeks.
RECOMMENDATIONS:
The understanding of the complex oil and gas industry enable to comprehend the environment
in which Petrom is operating,The literature review on supply chain agility provides the
required knowledge to understand the possible ways to improve its ability to overcome the
looming risks and cope with the uncertainty of the market .
The supply chains are under tremendous pressure to compete in the rapidly changing
environment (global competition, shorter product life cycles, and dynamic changes of demand
pattern) (Tiwari, Tiwari, Samuel, & Bhardwaj, 2013).
48

49. This environment requires companies to adopt a more flexible supply chain to more easily
respond to uncertainties, unpredictable situations, and risks, minimizing cost, quality (labour
and performance), and time (delivery) (Tiwari et al., 2013 ), there are all kinds of risks in this
type of industry which are not necessarily accounted for. Each of the risks (operational, legal,
reputation and capacity) can be translated into a value or financial cost based on the impact on
the company’s (the host company ) business performance. Thereafter, the financial cost
associated to the looming risks should help determine the best strategy to adopt with the
supplier to reach the best possible outcome.This financial Cost can be determined through:
• Time means the period required to complete the audits or the administrative procedure for a
new supplier to be validated.It also included the time required to conduct a market study to
identify new players or evaluate the performence of existing suppliers
• Cost relates to the travel expenses for the audits , the costs linked to testing the equipment
and the opportunity cost of lost sales during supply disruptions
• Quality relates to the fact that the oil and gas industry has high requirements and low level
of acceptable risks.For the supplier to fulfil these requirements Petrom does have
technology and knowhow , including trainings (to develop skills) and product designs.
Hence , the development of a new supplier requires time and cost to reach a satisfactory
level of quality and after sale service .
Petrom can use the financial cost to identify the best strategy to adopt with suppliers.Some
suppliers can generate a higher value through a stronger collaboration,while other suppliers
bring more value without a collaboration.This consideration can help to concentrate efforts
on key supliers and assure the sustainability of the company’s business performance.Once the
strategic position to adopt with a supplier is identified , recommendations can be implemented
to improve the company’s agility capability,
49

50. ➢ External Recommendations :
External recommendations can be implemented for a stronger collaboration with key
suppliers.These recommendations include IT system improvements and risk sharing features
widely discussed in the literature in supply chain agility.Internally the collaboration with
suppliers can be enhanced by integrating IT systems .Suppliers are criticising the lack of
visibility and communication ,If Petrom starts providing in terms of strategic planning , supply
managers will have the possibility to communicate further on the expenditure outlook without
being obligated to cancel and postpone numerous orders without notice.The objective is to shift
from a demand driven to a forecast driven supply chain (Christopher, 2000).According to
Singh and Acharya (2013) a rapid information sharing across all supply chain members can
dilute the impact of uncertainty and increase collaboration among partners.Hence , the
implementation of an integrated IT system will enable supplier managers to make better
strategic decisions and improve the collaboration with suppliers by providing greater visibility
in terms of both planning and strategy .Categorizing the panel of suppliers and evaluating their
performance is key to set the best strategy to adopt with suppliers , both supply chain
managers and academics can ensure that greater value can be created through stronger
collaborations.in addition , because of the time , quality and cost associated to a supplier going
bankrupt or losing confidence in the oil and gas industry , the opportunities to build stronger
collaboration with suppliers can improve Petrom’s ability to adress the volatile market
environment . This collaboration can be achieved through the implementation of contractual
features . For example ; sharing-risk by building up inventory or implementing a total
minimum quantity commitment contract, obliging the company to maintain a minimum
purchase order (PO) during fluctuation to avoid a supplier going bankrupt.
50

51. Bibliography – Refenrence:
Baffes, J., Kose, M.A., Ohnsorge, F. & Stocker, M. (2015). The Great Plunge in Oil Prices : Causes,
Consequences, and Policy Responses. World Bank Group, 1–51. Retrieved from
Buhl, H.U., Strauβ, S., & Wiesent, J. (2011). The impact of commodity price risk management on the
profits of a company. Resource Policy, 36, 346-353.
Carr, A.S. & Pearson, J.N. (2002). The impact of purchasing and supplier involvement on strategic
purchasing and its impact on firm’s performance. International Journal of Operations & Production
Management, 22(9), 1032–1053
Chiang, C., Kocabasoglu-Hillmer, C. & Suresh, N. (2012). An empirical investigation of the impact of
strategic sourcing and flexibility on firm’s supply chain agility. International Journal of Operations &
Production Management, 32(1), 49–78.
Christopher, M. (2000). The Agile Supply Chain: Competing in Volatile Markets. Industrial Marketing
Management, 29, 37–44
Chung, W., Talluri, S., & Narasimhan, R. (2010). Flexibility or Cost Saving ? Sourcing Decision with
Two Suppliers. Decision Sciences Journal of Innovative Education, 41(3), 623–650
Cohen, S. & Roussel, J. (2013). Strategic Supply Chain Management: The Five Core Disciplines for
Top Performance, Second Edition, 230–243.
Duclos, L.K., Vokurka, R.J., & Lummus, R.R. (2003). A conceptual model of supply chain flexibility.
Industrial Management & Data Systems, 103(6), 446–456.
Geissbauer, R. & Householder, B. (2011). Achieving Flexibility in a Volatile World. Supply Chain
Management Review, September/October, 24–31.
Gligor, D.M., Esmark, C.L. & Holcomb, M.C. (2015). Performance outcomes of supply chain agility:
When should you be agile? Journal of Operations Management, 33-34, 71–82.
Gosling, J., Purvis, L. & Naim, M.M. (2010). Supply chain flexibility as a determinant of supplier
selection. International Journal of Production Economics, 128(1), 11–21.
Hazen, B.T., Boone, C.A., Ezell, J.D., & Jones-Farmer, L.A. (2014). Data quality for data science,
predictive analytics, and big data in supply chain management: An introduction to the problem and
suggestions for research and applications. International Journal of Production Economics, 154, 72–
80.
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52. Khan K, A. & Pillania, R.K. (2008). Strategic sourcing for supply chain agility and firms’
performance. Management Decision, 46(10),1508–1530.
Lao, Y., Hong, P., & Subba Rao, S. (2010). Supply Management, Supply Flexibility and Performance
Outcomes: An Empirical Investigation of Manufacturing Firms. Journal of Supply Chain Management,
46(3), 6–22.
Lau, R.S.M. & Hurley, N.M. (2001). Creating Agile Supply Chains for Competitive Advantage. South
Dakota Business Review, 60(1), 1–7
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Institute of International Affairs, 29–80.
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International Journal of Operations and Production Management, 27(7), 685–713.
Tiwari, A.K., Tiwari, A., Samuel, C., & Bhardwaj, P. (2013). Procurement Flexibility Tool for Supplier
Selection in Disastrous Environments. Global Journal of Flexibility Systems Management, 14(4), 211–
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Economic Perspective, January, 155–168. Retrieved from https://www.worldbank.org
/content/dam/Worldbank/GEP/GEP2015a/pdfs/GEP2015a_chapter4_report_oil.pdf
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53. GASOLINE PURCHASE SURVEY
I.General habits :
1.On average, how many times per month do you and/or your family purchase gas?
✔0-3 times
✔4-6 times
✔7-9 times
✔10 or more
2.On average, how many different gas stations will you use during a month?
✔ 1
✔2
✔3
✔4 or more
3.when you go to a gas station , do you choose a station that is ?
✔ Close to where you shop
✔Close to your home
✔Close to where you work
✔Wherever you are and you notice you need gasoline
4.Do you have a retail gasoline card(s) (i.r. one issued in the name of a gas station ) ?
✔Yes
✔No
53

54. GASOLINE PURCHASE SURVEY
5. When thinking of gas station that you visit most often, what are the main services or
reasons that you continue to purchase gas from this gas company?(Check all that apply)
➢ Convience of location
➢ Fuel price
➢ Method of payment option
➢ Retailer Credit Card preference
➢ Availabilty of other cinsumer commodities
➢ Frequent purchaser benefit
➢ Availability of mechanic services
➢ Availability of car cleaning facilities
➢ Particular Brand reference
➢ Friendly services
➢ Fast service
➢ Other
54

55. GASOLINE PURCHASE SURVEY
II.Petrom specific question :
1.Are you familiar with petrom gas station ?
✔I have never heard of them
✔I have heard of them but never shop there
✔I occasionally buy gas/products there
✔I prefer to buy gas/product at Petrom
✔I use Petrom exclusively
2.Overall how would you rate your opinion of Petrom gas stations ?
✔Poor
✔Fair
✔Neutral
✔Good
✔Excellent
III.Classification Data :
1. Please indicate your gender :
✔Male
✔Female
GASOLINE PURCHASE SURVEY
55

56. Which of the following categories does your current age fall within?
✔Under 18
✔18-25
✔26-35
✔36-45
✔46-55
✔56 or older
56