Introduction
Global economic indicators have taken a major hit in recent times, with fiscal instability creating a ripple effect on energy and supply chain delays globally. Furthermore, current market volatilities have generated a level of uncertainty that supply chain organisations have had to contend with.
Market volatility is no longer driven by a predictable set of factors. Over the past decade, the landscape has shifted dramatically, with new drivers emerging such as cybersecurity threats,
pandemics, trade tariff wars, Environment, Social and Governance (ESG) issues, and geopolitical conflicts like the Russia-Ukraine war. This constant state of crisis is wreaking havoc on supply chains, causing unprecedented variability across the board.
In Nigeria, soaring inflation has eroded the purchasing power of both businesses and the public. The uncertain FX rate has multiplier effects on the cost of operations in the Manufacturing and Energy industries, with major manufacturers exiting the country due to their inability to break even.
Amidst all these, one of the national refineries has undergone a structural revamp and is currently operating at 40% production capacity, while a private indigenous refinery has been commissioned and commenced operations. However, these developments are faced with challenges. Refiners have stated that the lack of crude oil allocation from regulators to local refineries prevents them from reaching their full production capacity.
In October 2024, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) launched the “Project 1 Million Barrels of Oil Per Day Initiative”, targeting a daily oil production of at least 2.1 million barrels. This expansion presents significant economic opportunities, but its success depends on efficient and resilient supply chain management.
Addressing the crude oil allocation challenges will unlock the potential for refineries to optimise their supply chains, driving both operational efficiency and profitability in a dynamic market.
The supply chain function is critical to the operations of these organisation, thus, achieving efficiency in this function will contribute to profitability and cost management in an otherwise volatile period.
To fully harness the benefits of increased refining capacity, businesses must implement robust supply chain strategies. Effective Supply Chain Management (SCM) ensures stable business operations, optimised distribution, agility in market demand, regulatory compliance, risk mitigation, and cost efficiency and revenue maximisation. The article will give insights into how the SCM function can be optimised to reduce costs and maximise revenue.
Click here to read more.
