QUESTION ONE $[40]$

British Petroleum: Value Chain Excellence

Forbes$$ Global $2000$ ranking for the year $2019$ ranked British Petroleum $($BP$)$ as one of the world$$s top five oil and gas companies. Oil & Gas Industry$$s value chains exhibit a high degree of complexity. Long$-$lead time, cross$-$country operations, political factors, capacity constraints, and limited modes of transportation are the major causes for this complexity. Due to these causes, most of the companies operating in O&G industry fail to expand beyond their core$-$competencies. But BP is among the few that operate in all the segments of this industry with efficiency and effectiveness.

Focus on Efficiency

Value chains in O&G industry are characterized by functional products, stable manufacturing processes, and low uncertainty in demand and supply. According to Hau Lee$$s framework, value chains with these characteristics are categorized as $$efficient value chains$.$ This means that value chains in this industry develop strategies with a goal to create highest level of cost efficiency. This is done through elimination of non value$-$added activities, focus on economies of scale and long$-$term contracts, and optimization of capacity across the value chain segments.

New Challenges

Globalization along with involvement of multiple behind$-$the$-$curtain stakeholders developed new challenges for this industry. These challenges include managing increased uncertainty, costs to stay competitive, volatility in oil and currency exchange rates, and most importantly $$meeting the environmental regulations$.$

The Success Factors

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Integration $$ British petroleum used upward and downward vertical integration as a strategy to integrate and diversify itself across all segments of O&G industry. It diversified itself in energy sector to adopt economies of scale and gain control over the supply sources as well as the front$-$end retail stores.

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Strategic & Collaborative Partnerships $$ BP successfully created strategic partnerships with its supply and demand sources. Some of these include strategic partnership with the Russian Company Rosneft and Azerbaijan$$s state oil and gas company $($SOCAR$),$ and strategic alliance with Petrobras in Brazil. This enabled BP to have a greater control over supply sources.

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Organizational Structure $$ The integration and diversification provided economies of scale and better control over the supply and demand sources. But at the same time, it increased the complexity in its value chain. To handle this complexity, BP strategically divided its value chain into two segments i$.$e$.$ upstream and downstream.

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Modernization of the Whole Group $$ BP invested $$429$ Million in research and development to modernize the whole group. This involves simplification of the processes and enhancement of the productivity through digital solutions. This includes use of cloud$-$based

technologies, Robotic inspection, APEX technology in upstream assets, smart glasses in

USA, and digital vests in Oman, etc. All these are intended to manage the operations more effectively with increased productivity and safety

BP is a live example of how to manage and integrate value chain by redesigning organizational structure and using digital technology. It successfully used this strategy to improve critical performance measures such as net cash margin per barrel. The company increased its net cash margin per barrel in $2018,$ reflecting increased commercial optimization and strong operations. All these measures indicate that British Petroleum earned to be in the top$-$five companies in the Oil & Gas Industry. $($Source: Excellence in Operations & Supply Chain Management, Dec $27,2019)$

$1\mathrm{.}1.$

Discuss are aspects of operations that significantly contribute to the financial success $(15)$

$1\mathrm{.}2$

Describe the structural and infrastructural elements that would be found in BP $(10)$

$1\mathrm{.}3$

Describe and discuss the three important aspects required for efficient operations management. Please include examples in your discussion $(15)$

QUESTION TWO $[30]$

$2\mathrm{.}1.$

The objective of any supply network is to meet the requirements of end customers by supplying appropriate products and services through its many supply chains, Discuss the five operations performance objectives. Use examples in your discussion $(15)$

$2\mathrm{.}2$

Describe and discuss the five manufacturing processes. Please include examples in your discussion $(15)$

QUESTION THREE $[15]$

Describe the primary and supporting activities in the value chain. Use examples to support your answer

QUESTION FOUR $[15]$

$4\mathrm{.}1$ Work mass customisation suggests a high$-$volume system in which products are built to$-$order. High$-$volume build$-$to$-$order is difficult to manage. Discuss some major challenges experienced when using mass customisation $(10)$

$4\mathrm{.}2$ Discuss the advantages to mass customisation and build to order. Use examples to support your answer