Sustainability Considerations: Optimizing Vår Energi’s Inventory Strategy.
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Vår Energi, a newly merged oil and gas company, is struggling to align their processes and create a unified inventory strategy. Not only do they need to consider the internal differences but also an industry-wide focus on sustainability and environmental footprint. Vår Energi wishes to be a competitive operator on the Norwegian Continental Shelf, NCS, and needs to enable their inventory strategy to reflect this. This thesis introduces and analyzes current inventory management processes and procedures established by Vår Energi in their warehouse procedure manual, as well as in their Management System Guidelines. This is considered in light of changed frame conditions affecting the way business is conducted in the oil and gas industry. Those relevant to this thesis are the Covid-19 pandemic, the volatile oil price, and the sharing economy initiatives established on the NCS. While analyzing Vår Energi, it quickly became apparent that they have a large inventory, and a lack of prioritization regarding reducing this and improving current processes to mitigate this issue going forward. By extracting data on inventory size, dormant inventory, and what is tied to safety stock and bill of material, this thesis is going to quantify the immensity of the issue. Through this research four challenges were identified: significant dormant inventory, not including shelf life for purchased materials, lack of assessment of safety stock levels and inefficient processes to include bill of material for necessary equipment. Finally, recommendations will be made on how to alleviate these issues and create a more sustainable inventory strategy, given the changed frame conditions.