ExxonMobil Upstream Division: TQM, Supply Chain & Strategy
This paper examines the operational and strategic dimensions of ExxonMobil's Upstream division. It covers the division's core inputs and outputs — from crude oil and natural gas extraction to diversified fuel products — and analyzes its customer and supplier relationships across multiple continents. The paper discusses how ExxonMobil applies Total Quality Management (TQM) principles throughout its operations, evaluates its use of Just-In-Time (JIT) inventory practices, and explores the decision criteria used to site facilities. It concludes with an examination of the company's innovation efforts in biofuels and algae-based energy, offering recommendations for remaining competitive as global demand for renewable energy grows.
- Introduction: ExxonMobil's Upstream Division: Market dependence and TQM overview for ExxonMobil
- Inputs, Outputs, and Operational Scope: Crude oil extraction inputs, outputs, and portfolio diversity
- Customers, Suppliers, and Customer Value: Key customers, global suppliers, and value proposition
- Mission and TQM Principles: Exploration mission and total quality management application
- Decision Criteria and Supply Chain Management: Facility siting decisions and international supply chain ethics
- JIT Principles and Out-of-the-Box Innovation: Just-In-Time inventory use and biofuel innovation efforts
- Recommendations and Conclusion: Strategic recommendations for renewable energy transition
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What makes this paper effective
- The paper integrates multiple operational frameworks — TQM, JIT, and supply chain analysis — into a coherent case study of a single company, demonstrating how theoretical concepts apply in a real-world corporate context.
- It grounds each claim in cited sources, drawing on corporate documentation, financial analysis sites, and industry commentary to support assertions about ExxonMobil's strategy.
- The paper moves logically from internal operations (inputs/outputs, mission) to external relationships (customers, suppliers) to forward-looking strategy (innovation, recommendations), giving it a clear analytical arc.
Key academic technique demonstrated
The paper demonstrates applied business analysis: taking abstract management principles (TQM, JIT) and tracing their specific application within a named organization. This technique — concept-to-company mapping — requires the student to identify how textbook frameworks manifest in corporate policy and practice, supported by direct quotation and citation.
Structure breakdown
The paper opens with an overview of ExxonMobil's market sensitivity, then systematically covers operational inputs and outputs, customer and supplier relationships, customer value, and corporate mission. It then addresses TQM and facility decision criteria before turning to supply chain structure, JIT inventory practices, and innovation. A brief recommendations section closes the analysis. Each section is self-contained and labeled, making the structure easy to follow.
Introduction: ExxonMobil's Upstream Division
Although ExxonMobil remains a successful company, like all oil and gas organizations it remains highly dependent upon market conditions, including shifts in the price of crude oil and natural gas. "A decline in oil or gas prices lowers ExxonMobil Upstream business profit margins, whereas an increase in oil and natural gas prices lowers ExxonMobil Downstream and Chemical business profit margins" (Miglani, 2016, par. 14). While the size and diversification of the Exxon Corporation has permitted it to mitigate the severity and degree to which such conditions impact its profits, it still must review its operations and total quality management (TQM) policies to ensure that it is maximizing its opportunities as an organization.
Inputs, Outputs, and Operational Scope
ExxonMobil is one of the largest and most well-known oil and gas companies in the world. Its upstream segment engages in the exploration and production of crude oil and natural gas (Priester, Hopson & DeMetz, 2015, par. 2). Although the company is also involved in downstream operations — including the production of petroleum-based retail and chemical products — its upstream products are integral to its success as an organization. However, the return on upstream investments is always somewhat uncertain and very costly.
According to analysts at the business evaluation site Seeking Alpha, Exxon must be "flexible in their operation through their diverse upstream portfolio of opportunities that includes both conventional and unconventional plays, deep-water, shale gas, natural gas, liquid natural gas, heavy oil, and sour gas" (Priester, Hopson & DeMetz, 2015, par. 2). These outputs are likely to expand in the future, given the rapid changes in technology and the growing ability to utilize different types of fuel.
Regardless of its diversified investments, the input costs of experienced and technically skilled manpower, the necessary equipment for extraction, and the legal challenges of ensuring continued access to existing and future extraction areas are all significant. These substantial costs are one of the reasons that the behemoth-sized Exxon has become so dominant. The difficulty of entering the marketplace and overcoming such logistical and regulatory barriers ensures Exxon's likely future success as a company.
Customers, Suppliers, and Customer Value
The majority of Exxon's customers come from the United States, Germany, South Korea, India, and France. Some major customers in its diverse portfolio include Metwood, Inc., a "manufacturer of commercial and residential mixed-material structural products," and Osaka Gas Co. Ltd., "one of the oldest and largest energy suppliers in Japan with seven million natural gas customers in the country" (MacDonald, 2016, par. 1–2). Exxon also serves the largest suppliers of gas in France and Italy, underscoring its significant international presence.
In addition to its wide customer outreach, Exxon has cultivated a significant base of suppliers. According to its own website, the company notes: "in areas where we are growing our business, we conduct business process training covering topics such as health, safety and security; business ethics; costing and tendering; finance and credit; and international standards and codes" ("Supplier Development," 2017). Suppliers are often located in regions such as Russia, which may have substantially different business ethics and practices than those embraced in the United States. Exxon strives to bridge this gap through such educational programs.
Exxon's primary value to its customers is access to a corporation of vast size and operational reach. It can operate at significant economies of scale and has the resources to transport its raw materials swiftly whenever and wherever they are needed. Although the supply of crude oil and Exxon Upstream's many products remains contingent upon the company's ability to find, develop, and extract a naturally occurring, nonrenewable source of fuel, the company offers reliability and value because of its history and technological capacity.
Mission and TQM Principles
As noted by Miglani (2016), the mission of ExxonMobil's Upstream division can be understood as comprising three core components: exploration, development, and production. Exploration involves identifying new potential sources for oil and gas; development involves the actual drilling as well as creating the necessary platforms to process, store, and transport raw materials; and production involves the actual extraction of oil and gas to the surface (Miglani, 2016). At all levels of the company, sophisticated technical knowledge is required — from operating machinery to advancing the production of crude oil through superior technology. In some instances, sophisticated legal knowledge is also needed to navigate the regulatory landscape governing the transportation of crude.
Exxon was one of the earliest organizations to embrace the philosophy of total quality management. TQM principles are applied to every facet of the organization — not simply to the development of actual products, but also to transportation channels, system management, and sales ("Global Product Quality Management System," 2017). There is ongoing monitoring and training of personnel to ensure compliance, and plans are put in place to prepare for failures of quality assurance ("Global Product Quality Management System," 2017). Exxon also pledges to ensure that its third-party suppliers conform to TQM standards set by the company. Given that Exxon has, in the past, been associated with several notable scandals regarding the quality of its delivery systems, this component of its corporate philosophy is essential.
References
Driving innovation. (2017). Exxon. Retrieved from http://corporate.exxonmobil.com/en/current-issues/climate-policy/climate-perspectives/energy-developing-new-technologies-to-reduce-ghg
Global product quality management system. (2017). ExxonMobil Chemical. Retrieved from http://www.exxonmobilchemical.com/Chem-English/Files/Resources/220515-global-product-quality-management-system-1.pdf
MacDonald, T. K. (2016). Exxon Mobil stock: Analyzing 5 key customers (XOM). Investopedia. Retrieved from http://www.investopedia.com/articles/markets/051216/exxon-mobil-stock-analyzing-5-key-customers-xom.asp
Miglani, J. (2016). How ExxonMobil makes money? Understanding ExxonMobil business model. R&P. Retrieved from https://revenuesandprofits.com/how-exxonmobil-makes-money/
Priester, J., Hopson, C., & DeMetz, D. (2015). ExxonMobil: The strongest of the supermajors. Seeking Alpha. Retrieved from https://seekingalpha.com/article/2980646-exxonmobil-the-strongest-of-the-supermajors
Supply chain management. (2017). ExxonMobil. Retrieved from http://corporate.exxonmobil.com/en/community/local-economic-development/supply-chain-management/overview
Supplier development. (2017). ExxonMobil. Retrieved from http://corporate.exxonmobil.com/en/community/local-economic-development/supplier-development/overview
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