Sustainable Supply Chain A New Lifeline Of Petrochemical World

However, the agendas of major industry conferences show that petrochemical companies care most about economic factors, specifically the reduction of costs. We evaluate the existing state of sustainability in chemical supply chains and offer some promising direction for the future.

The O&G sector has been key to the development of the global economy and culture. However, there is cause for concern about long-term viability due to sustainability concerns especially in the management of supply chains. However, it is crucial that sustainability considerations be included, as effective SCM is increasingly important to the performance of businesses. Sustainable Supply Chain Management (SSCM) has benefited from a lot of research, but it's been hard to put into practice, and more study is needed to properly understand its effects on supply chains.

Sustainable Supply Chain Management represents the comprehensive integration of important business operations which enables firms and their supply networks to fulfil economic, environmental and social goals. So, businesses that adopt it can both meet near-term financial targets and address far-off environmental and social concerns via their supplier chains. In terms of long-term viability, the oil sector is crucial due to the pervasive nature of the products it produces. SSCM installation may lessen the negative impacts of operations. Although SCM has developed into a fully formed field, an exploration into SSCM in the oil industry is just getting started. Few studies have been conducted on the topic, but those that have examined how to improve supply chain performance through innovative strategies and open innovation programmes have focused on topics such as suppliers' development through management systems able to identify and manage the environmental and social risks involved in their operations; developing a Green SCM framework to assess environmental sustainability in oil refinery operations; assessing the impacts on the environment of decommissioning offshore oil platforms; and challenges faced by the oil and gas industry.

Supplier Selection Strategy

Supply chain management presents a number of difficulties for oil and gas distribution firms in the areas of economics, ecology, and society. As a result, SSCM in the oil business must address a wide range of concerns, from mitigating pollution's adverse consequences to reducing wasteful use of resources to safeguarding the planet's biodiversity. Petroleum firms prefer to adhere to conventions or use commonly established standards rather than manage each possible issue independently. Suppliers' impacts on the environment and society can be evaluated by oil and gas distributors with the use of codes of conduct, norms and standards, and certification that verifies the suppliers' adherence to these codes. All of these elements are necessary for supply chain performance enhancements. Oil and gas distributors regulate their supply chains by setting rules and standards for their suppliers, which are then evaluated. So, suppliers can submit environmental or social self-assessments, which could be bolstered by financial incentives.

Many facets of environmental friendliness are incorporated into Product Stewardship plan. It has been argued by Lane and Watson (2012) that Product Stewardship strategy is a rapidly developing field that plays a vital role in reducing waste and giving companies a competitive edge by helping them save money and stay ahead of the competition.

Eng. Abdul Rahman A. Shams Al-Din, Chairman, Yanbu National Petrochemical Co. (Yansab) stated, “There is growing consensus among academics that environmental stewardship is a viable tool for addressing the ethical and practical challenges of corporate social responsibility. Product stewardship expanded from its original focus on the safe disposal of hazardous materials to include the protection of all natural resources. New industrial sectors have emerged as a result of activities stemming from Product Stewardship, and these changes have led to the establishment of partnerships. Product Stewardship is practiced with the end goal of reducing product impacts on the environment throughout the product's life cycle.”

Managing Supply Chains

The formation of an SSCM calls for teamwork on the part of all parties involved in the supply chain. Supply chains can benefit from effective planning and collaboration in a number of ways, including waste reduction, material recycling, energy savings, the creation of novel processes for environmental improvement, and the dissemination of information about the environmental impact of purchased materials. However, implementing environmental sustainability in supply networks is hindered by a lack of information transfer and a misalignment of goals due to insufficient communication along the supply chain.

“Collaboration between members of the supply chain has a significant impact on the sustainability of the supply chain by facilitating the sharing of information and the identification and resolution of issues that arise along the supply chain. Codes of conduct, for example, are used to set principles in supply networks and need communication to enforce those standards throughout the supply chain. Therefore, the message could have an immediate impact on the supply chain's social sustainability results,” stated Mr. Waleed M. Al Jaffari, Vice Chairman, Advanced Petrochemical Co.

“Oil and gas distribution supply chains are notoriously complex due to the high volume of both providers and consumers involved. Since of this, planning is difficult because it involves thinking far in advance about things like demand, capacity, networks, and distribution, whereas purchasing, distribution, and demand fulfillment typically call for a medium to short-term view. Setting up a supply chain that can last for the long run requires careful forethought and an all-encompassing plan,” opined Eng. Ali Abdul Aziz Ali Al-Turki, Chairman, Methanol Chemicals Co. (Chemanol).

Establishing a common goal and regularly exchanging information across supply chain participants may help facilitate better communication. Waste reduction, pollution avoidance, and pollution control have all been linked to the effective management of internal relationships. Stakeholders' external relationship management focuses on non-internal actors like governments, NGOs, and customers who exert sustainability pressure on supply chains through legislation, regulation, and the moulding of public opinion.