The COVID-19 severely disrupted supply chains of the global base oil and lubricants industries, but it also provided operational lessons that could prove valuable in coming years as companies learned to better prepare for the unexpected and worst-case scenarios, speakers said during an industry conference last week.
Speaking June 30 during a panel discussion during the online ICIS Asian Base Oils & Lubricants Conference, Charles Champion, director of Charles Champion Consultancy Pte. in Singapore, noted that the base oils and lubricants industries will move forward with the knowledge that supply chains can be disrupted suddenly at any point on the chain, with zero inventories to date in many places.
“Business scenario planning, which should be a basic business tenet, will now be given more importance based on lessons learned from COVID-19 and other disruptors,” Champion said, such as hurricanes, “Frankenstorms” that mix hurricanes and winter storms, last year’s winter vortex in the southwestern United States, the Suez Canal blockage earlier this year, and fires and explosions at a number of petroleum and petrochemical plants.
“Many organizations already have safety first and business continuity plans in place, as these are seen as a license to do business,” he added. “By 2026, there will be heavier gravitas by corporations for these versus the pleasures of profit.”
Gabriela Wheeler, base oils editor for Lubes’n’Greases, said companies may adopt different strategies to source components and materials.
“Companies are going to start looking at being better prepared for emergencies and contingencies – they’re going to analyze and evaluate their supply chains,” Wheeler said. “I think many of the problems that were brought about by the pandemic showed industry participants that they cannot rely on components and materials that are coming from far away, [not] exclusively, that they might have to look at regional supply from sources closer to home, to be able to continue their supply chain management without too many disruptions.”
She said the pandemic provided lessons in how to manage problems and how companies can make do with what they have – and that the understanding gained could benefit. “For example, the pandemic resulted in reduced staff and personnel at different locations and plants, and offices as well, mainly at production plants,” she noted. “That’s something that hadn’t been seen in the industry before. I think there have been some lessons learned from that, and hopefully some changes in the future will allow for smoother operations without too many disruptions due to unforeseen events.”
Matthew Chong, senior editor for ICIS, suggested that, “in the coming months or years, we may see that companies need to learn how to be more efficient in inventory planning and operation because this pandemic has taught many of us to expect what is unexpected.”
Shailendra Gokhale, managing partner for India-based Rosefield DAA International Consultancy LLP, also suggested management of companies could evolve in the coming years to become more decentralized, with more local supply chains and increased sourcing from within a region. “Every region would like to create their local supply chains to the extent possible,” Gokhale said.