Business Operations In My Organization: Strategies for Achieving Competitive Advantage
Lionel Bryan Small
Business Operations in Your Organization: Strategies for Achieving Competitive Advantage
This Praxis paper focuses on four areas that can improve Royal Dutch Shell Group’s (Shell) ability to be more competitive with other integrated oil majors in the global supply chain. Shell’s goal is to be “the world’s most competitive and innovative energy company” (Shell 2013). First, the macro-processes involved in the supply chain of Shell are introduced. Forecasting techniques were researched to see how these can be applied to demand management in Shell. ...view middle of the document...
Globally, Shell generates revenue by either selling products directly to third party whole-sale terminals or to Shell branded gas stations. Gasoline, diesel and aviation fuel delivered to customers was below the requirements. This continues to be a challenge in 2013.
Figure 1. Shell Performance Score 2012. Retrieved from www.shell.com
Shell Oil Company’s Global Supply Chain Strategy. Historically, Shell has been a successful global supply chain. The company has Shell branded gas stations in over thirty-four nations. Some of the gas stations are owned by Shell. Others are Shell branded via franchise. Shell leads the US market with over 25,000 gas stations. Twenty million people visit Shell gas stations daily to buy fuel, car care products and other vehicle related services. The Shell Pecten logo is one of the most recognizable in the world. The logo is linked to quality in the gas station business.
The Shell success was built using the five core Global Supply Chain Management Strategies (GSCMS), which include value management, product and service management, demand management, relationship management and resource management.
Value Management. Shell maintained value by marketing competitively priced quality products. Customers believe when they buy Shell’s products they will be satisfied every time. Having customers consistently return to buy Shell products creates value realization for the company. The company re-invests a portion of its revenue to maintain the high quality that separate them from others.
Product and Service Management. Shell does an excellent job at service management. They have to improve product availability. During the last five years, Shell has changed its strategy from focusing on deepwater oil production to unconventional production from gas shales. The company sold off very profitable assets to invest in unconventionals. The liquid production from unconventionals is below predictions and expectations. This has resulted in insufficient feedstock for the Shell refineries and the low scorecard rating in this category.
Demand Management. As quoted from Mentzer, J., Myers, M., & Stank, T. (2007), “Demand management is the capability of an organization to synchronize two primary global supply chain functions: demand generation and supply." Shell Oil is a well known fuels provider to end users in global markets. It maintains its advantage by being available and competitively priced. The company also sponsors and executes sporting, social and education events such as golf tournaments, fireworks displays and scholarships to students. These actions keep the company in the spotlight. Television ads also market the company products. The results of the aforementioned actions maintain competitive advantage once the products continue to be of the highest quality. As such products and services demand continues to be high.