Abstract

Poor supply chain management can set the conditions for failures of catastrophic proportions, both economically and in terms of safety. It has been the root cause of several of the largest disasters in oil and gas history. Many professionals fail to recognize important gaps due to the complexity of the web of supply relationships and the number of critical interfaces that can be misaligned. Professionals from executive offices, HSE, procurement, logistics, operations, and risk management need to take four major steps to ensure a safe supply chain: 1) Establish governance & organization to ensure organizational accountability for governance and management of supply chain risk, by appointing a supply chain czar and engaging crossfunctional stakeholders; 2) Adopt an internationally accepted top-level supply chain risk management framework and articulate first-level principles, including a policy on single sourcing; 3) Universally adopt formal "reinforcing" metrics and measurement systems, including measurement of supply chain risk, Total Cost methodologies, and quantification of the cost of supplier non-compliance; and 4) Extend supply chain strategy and policies to suppliers by scanning for suppliers that excel in HSE, setting supplier expectations and targets, training suppliers, and establishing mechanisms to hold them accountable including periodic audits.

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