Supply Chain Optimization in the Oil Industry : A Case Study of MOL Hungarian Oil and Gas PLC

Abstract: Abstract   Problem discussion: The significance of the oil industry’s impact on the global economy is obvious. Oil supply chain management has to solve a lot of challenges caused by the nature of the supply chain in the oil industry such as complexity, inflexible characteristics, long lead time, limited transportation forms at the different stages in the supply chain, rigid take or pay procurement and limited primary distribution capacity. Other challenges are caused by unforeseen events such as political or economic changes which have an impact on the price of the oil. This thesis seeks to add value by signifying and indicating optimization as a way to address uncertainties and points out a way to utilize resources efficiently in order to gain further development and cost savings in the long term. Finding options for optimization of the oil supply chain is vital because any cost saving means vast amounts of money for the oil companies therefore optimization is at the centre of attention in the oil supply chain management. Purpose: The purpose of this thesis is to investigate supply chain management in the oil industry and find options for optimizing the supply chain in the oil industry by reviewing and analyzing previously written literature on the chosen topic for the research.  Method: A single case study was applied in this thesis. The company chosen for the case study is called MOL Hungarian oil and gas PLC and is located in Hungary. To carry out the research, a qualitative research approach was implemented. Primary data was collected through semi structured interviews via telephone and the internet with the company’s staff. In addition to this, secondary data from different sources such as articles and books were used to construct or build the theoretical frame of reference for the thesis.  Delimitation: The scope of the thesis is limited to the supply chain management in the oil industry and its optimization. Further narrowing the scope, this thesis gives more attention to the downstream section of the supply chain in the oil industry. Conclusion: Optimization is recognised as main tool for the oil companies to achieve competitive advantage. Analysing MOL Group gives a factual example how optimization works in an oil company and contributes to manage its supply chain efficiently and handle the many uncertainties surrounding the oil industry. It is demonstrated what factors play key role in optimization and how they interact with each other. MOL Group’s solution for optimization builds around a serious planning process, IT solution, marketing and refinery operation triggering and working in synergy with many other factors which cannot be excluded from the optimization process. Due to the excellence of supply chain optimization, MOL Group has a very strong presence and leading position in the East Central European region generating increasing profit margin year by year in last two decades.