Localised manufacturing: the energy sector’s digital revolution in spare parts and supply chains

A quiet revolution is taking place across the energy sector – with significant and beneficial impacts across the ecosystem: from energy producers to equipment manufacturers and ultimately end users.

The energy sector revolution centres on the transformation of a company’s spare parts assets: from physical stock into customisable and secure digital assets. The journey from ‘physical’ to ‘digital’ has been applied across many sectors, but energy has been a slow adopter. However, that's changing rapidly, driven by compelling economics and technological maturity.

But why is this change happening, and why now? In essence, the energy sector is undergoing a sea-change in technological readiness – driven by material science advancements, computing power, and, of course, the evolution of AI capabilities. The development of global standards for digitisation processes, advanced manufacturing of parts, and digital warehousing led by certification bodies like Det Norske Veritas (DNV) are enabling a streamlined, on-demand localised manufacturing ecosystem.

Benefits of this for international and national oil companies, power generation plants, and utilities are multiple and diverse. Notably, lead times are vastly reduced as digital warehouses enabled by additive manufacturing can produce necessary spare parts rapidly – saving weeks if not months let alone mitigating the risk of sourcing parts that could be either obsolete or unavailable. The result: operational reliability is enhanced as downtime for producers is vastly reduced – fundamentally improving their bottom line. And the energy technology manufacturing companies stand to benefit too.

Digital warehousing and additive manufacturing enables reach into more markets with speed and opens new revenue streams through digital asset licensing. It also enhances their ability to meet local content requirements mandated by regional governments - necessary for regional growth and innovation. This theme of localisation is a priority for many in the region, both businesses and governments.

For businesses, localised manufacturing decentralises the supply chain - helping them to circumvent constraints and disruptions to ensure a timely and secure supply of spare parts. This redefines the supply chain, making it more manageable and adaptable in times of uncertainty and potential market disruptions.

Localisation is core to the long-term thinking of regional governments and their national industrial strategies. The UAE, via its ‘Make it in the Emirates’ campaign, and Saudi Arabia; via ‘Vision 2030’; are attracting some of the world’s leading technology and industrial companies to work within their respective manufacturing ecosystems.

In the UAE, the Ministry of Industry and Advanced Technology (MoIAT) is also prioritising smart manufacturing as part of the national industrial strategy – having launched an Industry 4.0 programme to accelerate digital transformation in local manufacturing, increase productivity, and develop innovative products. The bigger picture is the goal to increase manufacturing productivity by 30% and add US$6.8 billion to the UAE economy by 2031.

Across both markets, the underlying aim is to develop regional manufacturing capabilities and create an ecosystem capable of supporting and sustaining critical domestic sectors, such as energy, over the long-term, building economic resilience.

Wider advantages include greater sustainability. Vastly reduced distances for parts shipping and less-to-zero physical storage cut damaging carbon emissions while reducing energy consumption.

We can now see that the triggers for transforming the energy sector’s spare parts supply chain are multiple - each with its own momentum: ecosystem development, supply chain resilience, and regional innovation. Localisation and national visions are the umbrella for them all; a win-win for manufacturers, governments, energy companies, and the wider population.

The exciting, parting thought is that where the energy sector is blazing a trail, wider manufacturing is set to follow. At Immensa, and speaking as MENA’s leading digital manufacturer, we fully expect - in a decade - around 80% of global manufacturing to follow the digital manufacturing model.

Whether an original equipment manufacturer (OEM) or an energy producer, the digital revolution in supply chain procurement is turning risks into opportunities and losses into profits.