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Upstream, Midstream, and Downstream� What�s the difference? | Lone Tree USA
UPSTREAM: This refers to anything having to do with the exploration and production of oil and natural gas. Geologic surveys and any information gathering used to locate specific areas where minerals are likely to be found is commonly called �exploration.� The term �upstream� also includes the steps involved in the actual drilling and bringing oil and natural gas resources to the surface, referred to as �production�. MIDSTREAM� The final sector of the oil and natural gas industry is known as �downstream.� This includes everything involved in turning crude oil and natural gas into thousands of finished products we depend on every day. Some of the more obvious products are fuels like gasoline, diesel, kerosene, jet fuels, heating oils and asphalt for building roads. The terms �upstream� and �downstream� refer to two different, but equally important, aspects of marketing. We covered the key differences between the two in an article published in called �Upstream vs Downstream Marketing; Why do so many companies focus solely on downstream marketing?�. As a quick recap, upstream marketing is focused on strategy and the long-term market situation, while downstream marketing looks at tactics, activity and supporting the company�s sales team with their objectives. Distinguishing these types of marketing activity can help further develop the connection betwe. The terms upstream, midstream and downstream are often used to refer to the major sectors or operational components of the petroleum industry. The upstream sector involves the exploration for and extraction of petroleum crude oil and natural gas. The upstream oil sector is also known as the exploration and production (E&P) sector. The upstream sector includes the searching for potential underground or underwater oil and gas fields, drilling of exploratory wells, and subsequently operating the wells.

A supply chain includes all the businesses involved in getting a finished product to the market. You might hear the words "upstream" and "downstream" when referring to various stops along the chain. You must first know the particular stops along the way to know exactly what they refer to and the activities that take place at these specific locations along the chain. Supply chain management takes into account suppliers, manufacturing plants, distributors, wholesale warehouses and retail stores.

The general objective across the board is to get finished products to the consumer in the most cost-effective manner. Inconsistency in levels of consumer demand for a product greatly influences activities all along the supply chain.

An explanation of upstream and downstream is relative to location along the supply route. Using an assembly plant as the center of a chain helps to explain upstream and downstream activity more clearly. Sometimes the concept is referred to as the "downstream the supply chain" and "upstream the supply chain. With the assembly plant as the focus of the supply chain, upstream activity includes suppliers of raw materials, such as aluminum and copper. Activities upstream could include a supplier mining Upstream Downstream Concept Tracking these materials to fulfill orders.

Suppose the materials are on order but not on hand. The focus of activity would likely be to mine the requested materials as quickly and efficiently as possible. Transporting or shipping to the plant is another example of upstream activity.

Downstream from the assembly plant are distributors, shipping partners, and point-of-sale stops along the way, such as wholesalers and Upstream Downstream Concept Account retailers. One important downstream activity is inventory management. Distributors, wholesalers Upstream Downstream Concept Usage and retailers all strive to carry inventory in quantities needed to fulfill customer orders without overstocking. When operations are running smoothly, the distributors ship orders on time.

When an order cannot be filled in a timely manner, this is called a "stock-out" and activity stalls. Another downstream activity is customer service in the retail store, when the product finally reaches the consumer. Regardless of whether materials are upstream or products are downstream, the central focus of each business involved along the chain remains the same, to make sales and reap profits.

In some operations, the same company may own multiple components of the supply chain. Called vertically integrated, this type of company can have upstream and downstream activities occurring simultaneously under the same upper management and occasionally at the same location. Vicki A Benge began writing Upstream Downstream Concept Global professionally in as a newspaper reporter. A small-business owner since , Benge has worked as a licensed insurance agent and has more than 20 years experience in income tax preparation for businesses and individuals.

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