These days oil and natural gas energy suppliers are making a profit: Shell and BP, for example, reported profit increases of over 200% and investments in green energy reached an all-time high of over $1 trillion.
At the same time that profits are soaring, energy suppliers are facing major infrastructure and environmental pressures. They need to ask “What investments will deliver maximum ROI?” Energy companies need to know the best ways to invest in technologies, systems, and processes that meet multiple goals, such as:
- Provide the data needed to improve decision making and reduce risk.
- Meet carbon reduction goals, including carbon capture, utilization, and storage (CCUS).
- Achieve a stable supply of essential minerals, such as those used in solar panels.
- Ensure that change takes hold and continues.
Here are three ways for energy companies to maximize the ROI from investments:
#1: Improve the ROI of technology investments.
Technologies that range from pressure transmitters to CCUS are changing the way energy companies operate. But technology based on imperfect systems will not deliver the expected results. Before more technology is layered into the organization, existing systems should be aligned and the underlying data should be consolidated, standardized, accessible, and trustworthy across functions. By optimizing data, processes, and systems first, energy suppliers capture the highest ROI from advanced data analytics, deep learning artificial intelligence (AI), and other technology tools (for example, SIOP, PMOP, and predictive maintenance).
This information also gives energy suppliers an advantage in building collaborations with suppliers and competitors. Infrastructure improvements and technologies are costly. The largest energy companies are already forming collaborations to share research and development, and companies need the data to show that they are strong allies.
#2: Improve the ROI from the end-to-end supply chain.
Visibility into the supply chain improves decision making and reduces the risk associated with investing in new technologies. A digital twin model can, for example, reveal how the addition of CCUS technology will impact operations, including energy generation and transmission. With visibility into operations and costs (through spend analytics and asset reliability analytics, for example) and with AI-based self-serve reports, the C-suite sees exactly how investing or cutting costs in one area of the company’s supply chain affects other areas, upstream and downstream.
Visibility into the supply chain shows where the gaps occur in regulatory compliance, especially carbon reduction efforts. When Scope 3 mandates go into effect in the effort to reach net zero, energy companies will be judged on both their own policies and the policies of their suppliers and their suppliers’ suppliers—or face costly fines. That vulnerability includes the long-term impact on the environment of their own and their suppliers’ procurement and logistics operations; for example, transportation to and from remote locations.
#3: Make sure everyone is on-board.
Long-term change happens because people understand their role—owner, responsible, consult, inform (ORCI)—and because they have the supports they need to understand and maintain the change. They need hands-on leadership in altering practices they may have been following for decades.
Glitches in the supply chain should not come as a surprise; the current global supply chain situation is volatile and complex. A mature procurement department should already be investigating alternative suppliers, reducing the amount of sole sourcing, and keeping a supplier score card which tracks potential vulnerabilities, such as government stability and weather.
With Total Value Optimization™ and on-the-ground partnerships to see change through, SGS Maine Pointe guides energy suppliers in selecting the processes, systems, and technologies that will maximize the ROI of their investments.