Hello again, oil field services savants. Sorry for the break since my last post, but it is been hectic in the business world, both professionally and academically. Today, I want to post about vertical integration: what it is, why Schlumberger and other oil businesses are using them, and long-term outlook.
Schlumberger was one of the first companies in the industry to implement vertical integration into its supply chain management and cost structure. They first introduced the strategy aggressively in 2009, right after the major economic downturn due to the housing market bust in 2008.
By assuming all facets of the supply chain management process, the company has cut back on cost, but it remains to be seen whether or not the company will be able to self-sustain the operational burden. It will be interesting and compelling to see how the oil industry comes out of its current funk over the next six to twelve months.
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