Supply Chain Strategy

Introduction

The global supply chain is the network of suppliers, manufacturers, warehouses, distribution hubs, and retailers that carry commodities from raw materials to end customers. It comprises all the actions, operations, and technology required to transport goods from source to customer. In today’s highly competitive commercial world, having an effective supply chain strategy is vital for any organization (Alzoubi et al., 2020). Organizations must keep ahead of the curve to remain competitive with the ever-changing market economy and the advent of new technology. Therefore, this essay aims to analyze Shell Plc’s supply chain strategy critically and explore the impacts of the supply chain on the organization and the organization’s future.

The supply chain strategy for 2022-2023 should be carefully designed to accommodate numerous trends and problems that the market will encounter in the future year. These trends entail significant transformation, shifting clients ‘ needs, new technology, and the expansion of digitalization. In order to create a successful supply chain strategy that will allow companies to manage one move ahead of the rest, it is crucial to consider these trends.

Cost reduction, operational effectiveness, and customer satisfaction should be the main priorities of a good supply chain strategy. Companies should search for cheaper alternatives and enhance efficiency, such as reducing operations, embracing new technology, and utilizing data analytics. Focusing on customer satisfaction is crucial, as customers have higher aspirations than ever. Companies can seek ways to provide a continuous consumer experience by focusing on product availability, shipping timeframes, and customer care.

Finally, firms must assess the potential risks associated with global supply chain operations and build policies to reduce these risks. This includes recognizing potential interruptions in the supply chain, implementing mitigation strategies, and monitoring all supply chain activities under applicable rules and regulations. By carefully examining the existing and future conditions of the global supply chain landscape and building a complete strategy, enterprises may ensure that their supply chain operations are effective in the coming future.

Shell Plc strategy

Any successful company must have a robust supply chain strategy, and Shell Plc is no exception. Due to its global operations, Shell Plc should manage an extensive range of suppliers, partners, and customers. Additionally, the company has been operating in the UK for over a century and consistently improving its supply chain strategy to adapt to shifting client demands and market situations (Alzoubi et al., 2020). This section will critically analyze Shell Plc’s supply chain strategy over the past three to five years. It will consider both the intended and actual plans and how these strategies have affected the business’s overall success currently and in the anticipated future.

The corporate offices of the multinational British oil and gas firm Shell Plc are located in London, England. Secondary listings for publicly listed Shell are available on the London Stock Exchange, Euronext Amsterdam, and the New York Stock Exchange (LSE). Its primary listing is on the LSE. It is among the top firms in the world in terms of revenue and earnings and is one of the oil and gas “supermajors.” It is one of the largest energy companies in the world dealing with oil and gas. The company has operations in more than 70 countries.

In 1907, the Royal Dutch Petroleum Company of the Netherlands and the British “Shell” Transport and Trading Company amalgamated to form Shell. By 1920, Shell had surpassed American Standard Oil as the world’s top oil producer and was the principal rival of the united company. The complex and broad distribution network of Shell Plc includes purchasing, shipment, and delivery of various oil and gas products. To ensure the effectual operation of its supply chain, Shell Plc has developed several supply chain strategies during the last three to five years.

Shell Plc’s Intended Supply Chain Strategy

Over the past five years, Shell Plc has embraced various supply chain techniques. Their projected strategy primarily focuses on cost reduction while retaining high-quality service. Shell plc has developed a variety of measures to help them accomplish this aim, including:

Utilizing digital technologies more frequently to improve efficiency and cut costs
making decisions based on facts to ensure adequate resource use.

Establishing connections with suppliers to guarantee a consistent supply of goods and services.

Utilizing a variety of transportation methods to guarantee prompt delivery of goods and services
, putting environmental strategies into practice to lessen the impact of their operations on the environment.

These strategies aimed to lower costs and enhance service standards while reducing their adverse effects on the environment.

The company’s emphasis on digitalization is the most crucial of these strategies. Shell Plc has made significant investments in digital technology over the past decade, intending to enhance the efficacy and efficiency of its supply chain. The company has created many digital technologies, including the “Shell Connect” platform, which provides real-time supply chain tracking and monitoring. By gaining real-time insights into the performance of its operations through this platform, Shell Plc has been able to swiftly and efficiently detect and address any difficulties.

Shell Plc has also embraced a sustainable corporate strategy. The company has set up many measures to lessen its influence on the environment, such as its “Sustainable Supply Chain” program, which has been aimed at lowering the business’s carbon footprint. Initiatives like using renewable energy sources and creating low-emission transportation networks have been a part of this program.

Shell PLC has also put into practice a “smart” sourcing approach. Through the application of data-driven decision-making procedures, this strategy has been focused on increasing the effectiveness of the company’s sourcing operations. Predictive analytics has been used to pinpoint possible cost-saving opportunities. An automated supplier selection system has been created to help businesses find and work with the most cost-effective suppliers quickly and effectively.

Analysis of the Intended Strategy

Most of Shell Plc’s strategies have been successful during the last three to five years. Due to the company’s emphasis on digitalization, it can now get real-time insights into its supply chain operation, which helps it spot and resolve any problems as they arise. The company’s “smart” procurement methods have helped it enhance efficiency and lower costs while reducing its environmental effect. The company’s sustainability activities have also proven successful.

However, there have been challenges in adopting these strategies into practice. The first is the costs of executing the measures for digitalization and sustainability. Shell Plc was required to invest significantly in putting these goals into practice due to the high costs associated with developing and deploying digital technology and sustainability measures.

The corporation has encountered difficulties applying its “smart” sourcing approach. An enormous amount of time and money must be spent developing an automated procurement system. Additionally, applying predictive analytics to find cost savings can be challenging because precise predictions require significant data and thorough market knowledge.

Realised Supply Chain Strategy

Shell plc has devised various other strategies to realize their planned supply chain strategy in extra to the previously mentioned measures. These strategies consist of the following:

Using a variety of outside logistics service companies to run their supply chain.
Utilizing various inventory management techniques to guarantee that the appropriate products are offered in the appropriate locations at the appropriate times.

Putting various advanced analytics techniques into use to facilitate better decision-making.

Utilizing a variety of technologies to make real-time cooperation and communication possible.
Establishing connections with suppliers to guarantee a consistent supply of goods and services.

These strategies were created to ensure Shell Plc can provide its clients with high-quality goods and services while cutting expenses.

Shell plc has taken advantage of these third-party logistics providers’ experience while lowering their expenses using various of them. The business has been able to guarantee that the appropriate products are available in the appropriate locations at appropriate times by utilizing various inventory management systems. Using advanced analytics technologies, Shell plc has made more competent judgments that have enhanced efficiency and decreased expenses. The business can respond swiftly to consumer requests and market developments because of the usage of a variety of technologies that enable real-time communication and collaboration.

Key Global Environmental Challenges That Affected Shell Plc’s Supply Chain Strategy In the Last 3-5 Years and How The Company Addressed The Challenges

In public comments and agreements, Shell has highlighted the transition to climate-friendly, low-carbon, and interim solutions. However, a 2022 investigation discovered that the corporation made small and obscure investments in renewable energy, and there was little to back up the consistency of the company’s words and deeds (Koberg and Longoni, 2019).

In 1989, Shell built a $3 billion North Sea natural gas platform in the North Sea, raising it by one to two meters in height to compensate for the anticipated rising sea level caused by global warming. In 2013, there were over 80 million tons of CO2 emissions, according to Royal Dutch Shell PLC.

Environmentalists have voiced worry over Shell’s processing of oil from South America’s Amazon region. Amazonian oil is transported through the Martinez Refinery in California and the Puget Sound Refinery in Washington. Amazon contributed 14% of the Martinez refinery’s revenue in 2015 (Koberg and Longoni, 2019).

Shell was ranked as the 10th most ecologically friendly company in 2021 by the Arctic Environmental Responsibility Index out of 120 oil, gas, and mining companies involved in the resource development north of the Arctic Circle (AERI). In December 2021, Royal Dutch Shell decided to move on with seismic testing to search for oil in humpback whale calving sites along South Africa’s eastern coastline.

Environmentalists urgently appealed to stop the project, including a vessel routinely firing an air gun that emits a highly intense shock wave beneath waters to help undersea map geology. The South African High Court denied the application. According to Greenpeace Africa and the South African Deep Sea Angling Association, this may permanently impact marine life, particularly on adjacent humpback whales that are migrating.

Climate change has also affected the company. Greenhouse gas emissions bring on the urgent and expanding global threat of climate change. As a significant energy producer, Shell Plc has to control emissions and lessen its carbon impact. The corporation has committed to decreasing its net carbon emissions by 20% by 2030 and 50% by 2050 in response to this problem. Shell Plc has started various steps to lower its carbon emissions throughout its supply chain to fulfill these commitments (Goldthau and Hughes, 2020). These include cutting back on energy use, increasing energy efficiency, transitioning to renewable energy sources, and spending money on cutting-edge technologies.

Another concern is the growing demand for environmentally friendly products. Companies must ensure that their goods and services adhere to sustainability standards as consumers want more environmentally friendly items. Shell Plc has pledged to obtain 100% of its materials from sustainable sources in response and has started various steps. Supporting smallholder farmers in poor nations and investing in clean technologies and renewable energy sources are a few of these programs.

The third challenge is resource scarcity. The pressure on businesses to develop new strategies for better use of resources and to lessen their environmental effect grows along with the demand for energy and resources (Goldthau and Hughes, 2020). Shell Plc has invested in various strategies to lessen the company’s resource burden in response to this challenge. These include spending money on resource-saving, cutting-edge technologies, renewable energy sources, and circular economy solutions.

Conclusion based on tasks 1 & 2

The established business strategies of Shell Plc are unquestionably viable. Their dedication to reducing emissions and investing in renewable energy sources shows that they prioritize environmental sustainability. Additionally, they have made significant investments in research and development to increase their operational efficiency, which is crucial for long-term sustainability. Finally, their tremendous dedication to corporate social responsibility (CSR) efforts has allowed them to build strong bonds with their stakeholders and guarantee the success of their company. In conclusion, Shell Plc’s current business plans seem viable and well-positioned to guarantee the company’s continued prosperity.

SWOT Analysis Of Shell

Strengths

Readiness to explore: Shell has made investments in the development of technology. Shell has improved its oil and gas exploration techniques using geophysical data, enabling it to explore more oil and gas effectively in recent years. As a result, the US’s reliance on the Gulf nations for fuel decreased.
Market dominating position – Shell conducts downstream and upstream business in more than 60 different nations. One of the world’s largest oil businesses, Shell has several fuel brands, including Shell V-Power, Shell LPG, Shell Rotella, and others. The seat of authority offers Shell substantial bargaining power in the industry.

Weaknesses

Laws violation is one of the weaknesses. In recent years, Shell has broken a few laws. Due to their use of the freight forwarding company Panalpina and subsequent violation of the Foreign Corrupt Practices Act, Shell Oil was found to have violated anti-corruption legislation in the US. A $30 million fine was imposed for breaking the prohibition against corruption (Xaif, n.d.). This had an impact on the company’s reputation and goodwill as well.

Opportunities

Unification with BG Group is one of the opportunities. In 2016, Shell amalgamated with BG Group, giving it a firm foothold in the offshore regions of Brazil and Australia (Xaif, n.d.). Compared to rivals, Shell is in a better position because Brazil and Australia have abundant oil and gas.

Threats

The primary threat is climate change. As energy demand rises, Shell will need to keep carbon dioxide emissions in check in both upstream and manufacturing processes. In order to avoid rising costs and tight regulations, Shell must discover efforts to limit carbon dioxide emissions.

PESTLE analysis

Political:

Shell Plc is subjected to the political world of the UK, a country that strongly supports renewable energy sources and has put up a number of policies to promote their use. The Feed-in Tariffs, Renewable Heat Incentive, and Renewable Transport Fuel Obligation were all implemented due to this legislation (Fern Fort University, 2019). The UK government has also offered several tax credits to encourage the adoption of renewable energy sources.

Economic:

The UK economy is doing well, with robust GDP growth and low unemployment. Shell Plc can grow its business and invest in new energy sources, especially with the current economic climate. Furthermore, the UK consumes a lot of energy, which presents Shell Plc with a fantastic opportunity to grow its market share.

Social:

The UK is seeking renewable energy sources to replace fossil fuels as it becomes more conscious of their adverse environmental effects. As a result, Shell Plc has discovered the UK to be profitable as it seeks to diversify its energy portfolio and invest in renewable energy sources.

Technological:

The UK is at the forefront of innovation of technical advancement and is making significant investments in the study and creation of new renewable energy sources. As a result, Shell Plc has been able to use trimming technology and create novel approaches to producing renewable energy (Fern Fort University, 2019).

Legal:

In the UK, there is a regulatory framework that supports both the usage of renewable energy sources and investments in those sources. As a result, Shell Plc is positioned to invest in renewable energy sources and benefit from subsidies offered by the UK government.

Environmental:

The UK has taken steps to encourage using renewable energy sources as part of its commitment to lowering its carbon emissions. This has allowed Shell Plc to invest in renewable energy sources and contribute to the UK’s carbon reduction efforts.

Strategic supply chain options to ensure the success of Shell Plc company in the future

Any company’s success depends on its strategic supply chain alternatives, but this is particularly true in the petroleum sector. Like other companies, Shell Plc depends mainly on its supply chain to keep the system operating smoothly and effectively. Shell Plc is a leading global energy company and one of the world’s largest oil and gas producers. As such, Shell must ensure its strategic supply chain practices are cost-effective and efficient. To this end, there are several strategic supply chain options that Shell can consider to ensure success in the future.( Mägar, and Faustino, n.d) Shell Plc might implement the following crucial strategic supply chain alternatives to guarantee future success.

First, Shell should develop supplier relationships. Shell needs to concentrate on improving its connections with its suppliers. This entails developing and preserving long-term connections with dependable providers. This will assist Shell in obtaining the consistent supply of superior products and services required to satisfy client needs. Additionally, Shell can negotiate better terms and pricing with its suppliers, which will help lower expenses. Shell could also think about funding training and supplier development initiatives. These initiatives will aid suppliers in increasing their productivity, which will ultimately benefit Shell. Overall, having close connections with suppliers can enable Shell to acquire the best resources and products at the lowest possible cost. Additionally, it helped them strengthen their relationship with suppliers and their collaboration.

Secondly, Shell Plc can utilize Digital Technologies such as blockchain and the Internet of Things. Digital technologies increase the supply chain’s transparency and visibility, enabling more effective operations. By utilizing these tools, Shell can more rapidly identify its problem areas and find remedies. The ERP (enterprise resource planning) systems are used to track and control every area of the supply chain. Shell Plc can use this technology to track shipments, keep an eye on suppliers, and ensure that products are delivered on time and at a determined price.

Shell Plc should Leverage Automation and Robotics to help prevent potential errors, lower labor expenses, and simplify and optimize the supply chain procedures. The shell should utilize these technologies to increase productivity and cut expenses. The shell should spend money on a digital supply chain (Mägar, and Faustino, n.d). This entails automating procedures like order fulfillment, inventory control, and payment processing through technology. Shell would benefit from lower supply chain expenses, increased efficiency, and improved supply chain operations visibility. Shell could also consider utilizing artificial intelligence and predictive analytics to better understand client demand and foresee future trends.

It should also invest in Advanced Analytics: To increase insight into its processes and identify potential problems and areas needing improvement, Shell should invest in advanced analytics and predictive data analysis. By doing so, they will be better able to comprehend the underlying dynamics of the supply chain and decide how to optimize operations.

Shell has to increase supply chain visibility (Alzoubi et al., 2020). Multiple methods and technologies must be used to improve insight into its supply chain activities. Identifying potential bottlenecks, spotting issues early, and responding rapidly to shifting client expectations will all be made possible by this. The shell should also think about spending money to secure its supply network. The supply chain systems must be protected from cyber-attacks and other security risks by utilizing various methods and technologies, including encryption and authentication.

Lastly is to invest in green initiatives. This entails investing in sustainable supply chains, waste reduction, and renewable energy sources. This kind of investment will aid Shell Plc in achieving its environmental goals while cutting costs and improving efficiency.

Of all the above strategic alternatives, the best strategy I would recommend is the development of an enduring supplier relationship.

Issues faced in the implementation of supplier relationship strategy by the Shell Plc Company

Establishing Trust: A vital component of a successful supplier relationship is building trust with the suppliers. Without confidence, the supplier would be hesitant to collaborate with Shell or might only be willing to offer a few services. Establishing trust requires displaying dedication, dependability, and openness. This can be accomplished through transparent communication, reasonable price, and frank and open discussion.
Data Collection and Analysis: An study of the data is required to pinpoint the areas where the business has to improve to successfully develop a supplier relationship with Shell Plc in the UK. In order to do this, data must be gathered from various sources, including supplier performance reports, financial records, and consumer feedback. This data must be carefully assessed to determine the areas that require improvement. Following identifying the problem areas, Shell Plc can formulate a plan to address them to forge strong supplier relationships.
Setting Expectations: In the supplier relationship, it’s critical to establish clear expectations for each party. Expectations for quality, delivery, and communication are included. It’s critical to define a strategy for handling potential problems and discuss the performance metrics and service standards that must be satisfied.
Negotiating Terms and Conditions: To establish a successful partnership, it is crucial to negotiate the terms and conditions of the supplier relationship. This entails debating pricing, payment terms, and other prerequisites that call for consensus from both sides (Gardas et al., 2019). It is crucial to confirm that the terms and circumstances of the agreement are favorable to both parties and understood by both sides.
Contract Management: Management of the contract is crucial after the terms and conditions have been decided. This involves tracking results, keeping an eye on how well the parties abide by the contract, and taking care of any problems that could crop up (Alzoubi et al., 2020). The success of the supplier relationship is ensured by proper contract management, which guarantees that both parties are held responsible.
Performance Management: The supplier relationship’s fundamental tenet is performance management. Keeping an eye on the supplier’s performance and dealing with potential problems is crucial (Gardas et al., 2019). This includes keeping tabs on performance indicators, including delivery times, service quality, and price. In order to maintain a successful connection with the supplier, it is also crucial to give them feedback.
Risk Management: The supplier relationship includes risk management. It is crucial to evaluate any possible hazards connected to the relationship, such as monetary, operational, and reputational threats. Creating methods to reduce these risks and guarantee the sustainability of the supplier relationship is equally crucial.
Regulatory Compliance: In the United Kingdom, establishing a successful supplier relationship requires one to adhere to several laws and regulations. In order to stay clear of any potential legal problems, Shell Plc must ensure that it complies with all relevant rules and regulations. This entails being aware of all relevant procurement rules, safety and environmental regulations, and any other legislation that might be relevant to their activities.

During implementation, it is appropriate to consider three things; the impact of the strategy, the timescale, and the ownership within the Shell Plc organization. These concepts are discussed as follows:

A successful supplier relationship implementation is a challenging procedure that can significantly impact the company (Gardas et al., 2019). The effectiveness of business operations, the price of goods and services, the quality of the good or service, and the general contentment of clients and stakeholders can all be impacted. As a result, it is essential to properly plan the adoption of a supplier relationship, taking into account any potential risks and benefits

A clear timeframe should be created before establishing a supplier connection to guarantee that the process goes smoothly and effectively; identifying current or new suppliers, assessing their capacities, efficacy, and cost, negotiating contracts and price agreements, and managing the relationship through time should all be included in this schedule (Gardas, Raut and Narkhede, 2019). Setting reasonable timelines can help ensure that the procedure is finished promptly

It’s critical to decide who will maintain the relationship while establishing a supplier partnership. The appropriate team inside the company, such as the finance team, operations team, or procurement team, should be given this duty. In order to ensure that the supplier relationship is correctly handled, the person or group in charge of it should also be given the required resources and power.

In conclusion, the global supply chain plan is a complicated and comprehensive idea that needs careful evaluation and execution. The ability of businesses and organizations to spot and seize chances to cut costs, boost efficiency, and raise quality will be crucial to the strategy’s success. This will require a holistic approach that examines the entire supply chain from suppliers to customers and a readiness to adopt new technology and methodologies. Additionally, businesses must be prepared to work with other stakeholders, including governments, to make the global supply chain plan for 2022–2023 successful. Businesses and organizations can do this to ensure the global supply chain is prepared to meet future demands. Companies can make well-informed choices that will be advantageous to their operations over the long term by considering the market dynamics and potential risks. By integrating digital technology, reducing procedures, and exploiting data-driven insights, the strategy focuses on increasing the supply chain’s efficiency.

Reference List

Alvarado-Vargas, M.J. and Kelley, K.J., 2019. Bullwhip severity in conditions of uncertainty: regional vs. global supply chain strategies. International Journal of Emerging Markets. https://www.emerald.com/insight/content/doi/10.1108/IJOEM-02-2017-0050/full/html

Alzoubi, H., Ahmed, G., Al-Gasaymeh, A. and Kurdi, B., 2020. An empirical study on sustainable supply chain strategies and its impact on competitive priorities: The mediating role of supply chain collaboration. Management Science Letters, 10(3), pp.703-708. http://dx.doi.org/10.5267/j.msl.2019.9.008

Gardas, B.B., Raut, R.D. and Narkhede, B., 2019. Determinants of sustainable supply chain management: A case study from the oil and gas supply chain. Sustainable Production and Consumption, 17, pp.241-253. https://www.sciencedirect.com/science/article/pii/S2352550918302379

Goldthau, A. and Hughes, L., 2020. Protect global supply chains for low-carbon technologies. https://www.nature.com/articles/d41586-020-02499-8

Koberg, E. and Longoni, A., 2019. A systematic review of sustainable supply chain management in global supply chains. Journal of cleaner production, 207, pp.1084-1098. https://doi.org/10.1016/j.jclepro.2018.10.033

Mägar, R. and Faustino, A., STRATEGIC PLAN FOR ROYAL DUTCH SHELL PLC. https://www.academia.edu/download/61089569/Strategic_Plan_for_Shell20191101-49862-eutyg7.pdf

Xaif (n.d.). Extensive SWOT Analysis of Shell – 2022 Update | IIDE. [online] Available at: https://iide.co/case-studies/swot-analysis-of-shell/#1_Strengths_of_Shell.

Fern Fort University. (2019). Royal Dutch Shell plc PESTEL / PEST & Environment Analysis[Strategy]. [online] Available at: http://fernfortuniversity.com/term-papers/pestel/nyse4/386-royal-dutch-shell-plc.php.