A multinational oil corporation has myriad supply chains that can span across continents, countries, and even oceans. Platforms like this official website of oil trading (oil-profits.com) come up with the best trading algorithm that is exceptionally suitable for beginner oil traders. This level of complexity means a lot of work for those at the top to ensure those relationships are correctly managed. And because these relationships involve assets worth hundreds of billions, it often takes the involvement of multiple levels to manage them fully. The oil industry has been using blockchain for a long time.
It is why blockchain technology, developed by many countries to help solve many of the supply chain problems in other industries, has been adopted by the global oil and gas industry. The only difference is that it’s about more than managing relationships with other entities but between the company and those within its supply chain.
Transparency is Key
Transparency is of utmost importance for a multinational operation such as an oil corporation. The stakeholders are spread out worldwide and rely on each other for critical data to make daily decisions. Blockchain is an ideal way to ensure that they are all involved in the chain of information flows. All entities can share updates and replicate critical data with each other through decentralized, shared storage. In addition, blockchain enables transparency and reliability by removing the need for trust or a central authority to validate data.
Industry players have started using blockchain for supply chain management because it eliminates intermediaries, data duplication, and manual processes. The result is that supply chain administration costs are reduced from 10% to 20%. In addition, the cost savings can be used by people to fund other aspects of operations such as exploration and research, much like the way distributed ledgers are used in other industries like finance.
How It Works
So how does blockchain work in this case?
Under the oil industry’s current system, a complex network of databases exists to record and manage critical data for each operation. These systems are centralized and not particularly useful for tracking information processes among different parties participating or involved in the same business line.
Each party on the supply chain has its database and means of sharing information with others on the same chain or across their supply chains. Blockchain allows for the sharing of critical information and records across these databases so that valuable data can be shared in real-time, thus eliminating the need for manual processes such as communicating with an employee in another country or manually adding records to a spreadsheet.
In the oil industry, operations can be listed under different business categories, such as crude oil refining, petroleum product manufacturing, and retail sales. The chemical companies’ existing supply chain management systems are also used to manage data from other industries. Instead of having multiple databases for each type of operation, each one is connected through blockchain.
The oil industry is using blockchain for managing contracts:
Contracts and agreements of related parties are kept digitally in a distributed ledger system. In addition, there are other blockchain-based solutions that the industry can use. Blockchain technology has yet to be adopted by the oil industry to aid in negotiations between the different companies within its supply chain. However, many consulting firms are now providing their services for the oil industry. They are working with multinational oil corporations and smaller, independent companies to help streamline these complex operations using blockchain technology.
The oil industry has taken huge strides into the new millennium and is now looking to this new technology to improve its day-to-day operations. Many current problems in the oil industry, such as petroleum reserves accounting, licensing, and valuation, are being solved by using this new technology.
Engineering firms are now offering blockchain supply chain solutions with blockchain expertise. Oil corporations have contracted consulting firms to help them with specific problems within the supply chain process and provide different aspects of blockchain technology.
These consulting firms will also help create a standard contract between parties and maintain complete transparency of information at all times throughout the life cycle of operations within the supply chain.
The oil industry is using blockchain for managing payments:
The idea behind using blockchain for supply chain management is to improve processes and procedures and provide information access to all parties involved. Blockchain technology allows all parties within a supply chain to share critical data in real time, making it a perfect system for optimizing payment flows in this business model.
Instead of paying multiple invoices, the payer will receive a single invoice with all the payments and discounts that need to be applied at each process stage. It means there will no longer be a need for paper documents and long, manual processes to make changes within the payments. The development of smart contracts can also ensure that information is presented with clear instructions on how to use the information.
