Performance measurement framework for the oil and gas supply chain

Abstract

This study examines performance measurement in the oil and gas industry. The aim is to identify the prevalence of performance measures and to provide evidence of the potential impact in the usage of performance measures on organisational performance. The study investigates the links between organisational strategies, choice of performance measures, and organisational performance.
The resource-based view (RBV) theory and Miles and Snow's organisational fit theory were, respectively, used to explain the research and as the basis for analysis of results. The organisational fit theory states that organisation's approach to competition can be classified into four main strategies. These strategies will influence the way they manage their organisations and lead to different performance outcomes. This may include the way they measure their supply chain performance. The resource-based view suggests that organisations can achieve superior performance through internal resources and competencies. Based on this theory, performance measurement framework is viewed as one of the important organisations’ resources.
A literature review on supply chain performance measurement was carried out to identify performance measures that are relevant to the oil and gas industry. This resulted in an initial list of measures based on the review. Exploratory interviews were then conducted to confirm the measures, understand the contextual definitions of the measures, and to find out from practitioners what additional measures they consider important beyond those obtained from the literature. This resulted in a broader set of performance measures, which were then validated through a self-administered questionnaire survey. A total of 550 questionnaires were sent out to UK companies whilst 120 to Malaysian companies. A total of 100 responses were received from both countries, which accounts to 15% response rates.
The outcomes of the survey clarify the prevalence of performance measures in the industry according to the level of importance. Correlation and regression analyses indicate that there is a link between the choice of performance measures and organisations’ strategies. Also, the results indicate a link between choice of performance measures and the actual performance of the organisations, suggesting that performance measures are critical resources of organisations used to support competitiveness in line with resource-based view theory. In addition, this study identifies the most influential strategy and performance measures in enhancing organisations’ performance within the oil and gas industry.