Inbound LogisticsThe majority of BP’s operation is based on several oil and gas fields globally. According to Marketline (2016) the company operations involves production and exploration of crude oil and gas along with trading and marketing power, natural gas liquids and natural gas. The company uses a series of ships and pipelines to transports gas and oil to numerous conversion facilities such as power stations, industrial plants and refineries around the world. The company also has their subsidiary, BP shipping, to move gas and oil cargoes. Recently BP implemented an enhanced oil recovery (EOR) technology to deliver their light oil. In 2014, the company developed the first automated robot that tests EOR technologies, the first of its kind in the world, thus shortening the needed time for trials and development before bringing them to the field. BP’s focus on improving shipping efficiency, they have established a virtual arrival system. It provides a reduction in emission and fuel consumptions by permitting vessels, other parties, and ports to agree on and work together for optimum time for of vessel arrival. BP’s fleet has coasters and carriers for liquefied petroleum gas (LPG), Very Large Crude Carriers (VLCC’s) and liquefied natural gas carriers (LNG). BP has altered their main exploration activities from the North Sea and Alaska based on the leaks in the pipelines that posed a serious threat to the environment. BP has also found interest in Canadian Oil Sands that creates a new opportunity to balance the downstream conversion and upstream production.
BP’s operation expands worldwide. They have an interest in over 14 refineries worldwide. As of the end of their 2014 fiscal year, BP Plc had 17,200 retail sites worldwide that operated under their brands of BP, Aral, and ARCO. The company also had approximately 7,000 US brands sites followed by Europe around 8,000 and the rest of global locations 2,100. According to BP’s Exploration and Production (2016), their gas and oil production and exploration division is one of the core business operations, in the United States and globally. They have teams in Alaska, Gulf of Mexico, and onshore locations in the lower 48 states that are responsible for safely finding and extracting energy resource that fill the needs of Americans. BP has a refinery process for its crude oil needs. They use a process that is called ‘crackling’ where the crude oil is purified and cleaned, separating the fuel oil, gasoline, and other hydrocarbons. There is a continued demand for BP to streamline their operational processes to reduce cost and the potential damages to the environment. The demand for energy has been on an incline, and BP has invested in heavily promoting and establishing alternative energy as well as improving their operational energy efficiency. BP’s operation has also shifted towards safety and is a strong value for their overall success. They are continually trying to upgrade their refineries to improve the overall safety. BP has reported a reduction in injury rates by almost seventy-five percent.
BP’s logistics involve activities that distribute and store products to their buyers including delivery vehicles operations, warehousing, and order processing. The company faces significant global operations and the need to make effective and efficient logistics is the best way to reduce the cost of transporting crude oil. The system that BP has established for transporting their supply of crude oil is more cost efficient for BP regarding long-term savings. BP uses light transportation as a means of outbound logistics and global networking for their overall logistics. They established a transportation network that crosses each other across the globe. They also own or long-term charter an international tanker fleet that has more than thirty-five vessels. They have a variety of different methods to transport their chemical products and fuel lubricants to their various global destinations. Reducing transportation cost is important to BP, and they look for all methods to transport timely and efficiently. Take for example fuels; the company uses trucks and rail systems to transport locally. It is then stored in tanks at the retail service stations to distribute to the customers. However, for their international markets, the finished products are taken by carriers and then loaded onto rail cars and trucks to distribute to their market place. Their natural gas is dependent upon location. It is often transferred through the pipelines to their local distribution companies and then is shipped by their LNG carriers.
Market and Sales
BP’s success is strongly dependent upon their sales and marketing efforts. The primary strategy of the company is to maintain operations within markets where they can capitalize on the market share. They can also make sure that they keep their market well-supplied through an advantage supply approach. Their global success has been dependent upon building strong relationships with their customers. The company adopted retail sites with large convenient stores as a strategy to build brand loyalty and a large customer base. The company builds off of the horrible oil spill of 2010 to take responsibility and build on their environmental responsibilities. BP’s environmental issues such as the oil spill and global warming required BP to focus on the climate change issues. They started by changing their logo and brand image. The company is building on their values and remaining true to their commitment to finding continuously new ways to increase their energy efficiency in all areas of their operation. BP is also working with their equipment manufacturers and vehicle companies towards refining their effectiveness in the use of lubricants and fuels. BP has worked hard to differentiate themselves from their many competitors. One key way they have distinguished themselves by focusing on biofuels, carbon capture, and solar energy storage, and growing their low carbon energy sector.
BP has a broad range of service that they provide to businesses and customers. According to Marketline (2016) the company provides transportation, marketing, manufacturing, supply, refining, and trading petrochemical products, petroleum, crude oil, and other services to retail and wholesale customers. They also have over 1,400 full service retail centers that provide for the client’s needs. Not only to provide gasoline, oil, and other product for customer’s transportation needs, they also have a variety of snacks for the customers to get in their one stop shop experience. The gas, oil, and energy industry has been unstable for a significant period of time. There are many concerns for many of their global locations due to the instability of the market. Over the past decade, the price volatility has lessened, and there are fewer concerns regarding the industry, however they are still present. BP has to address the growing concern associated with terrorism that has arisen post September 11, 2001. The company acknowledged their responsibility due to the industry and have implemented new steps to secure their activities with all of their value chains. The company has continued to expand their focus and initiatives towards climate change and safety. These issues are continually evolving, and BP has committed to making the changes necessary to comply with their responsibilities.
- Company Profile BP PLC. (2016). Marketline.
- Exploration and Production. (2016). bp.com. Retrieved 3 April 2016, from http://www.bp.com/en_us/bp-us/what-we-do/exploration-and-production.html