It’s a challenging time for many commodity companies and the big oil companies are no exception. As we have seen with the larger mining companies recently, the larger oil companies also have the urgent need to reduce working capital and materials bought, reduce operational procurement costs and simultaneously green the supply chain. Within the context of lower commodity prices, it is today the lean company with scale that wins.
Having a completely vertically integrated business normally provides some protection from low oil prices as the downstream business captures some of the value that the upstream business loses. But having both upstream and downstream also means there are many more and varied spend classes across a very large and complex business which is something like a global combination of a mining company, a transport company, a chemical company, and a retailer.
Although complex to achieve, the opportunities for procurement savings in this company are great with 3 billion dollars in inventory and more than ten times this in actionable spend. Helping deliver these savings is a global procurement team of some 3000 staff considered leaders for commodity expertise, market knowledge and technological superiority in electronic transactions. This team initiated the Refresh project to standardize all procured commodity classes during 2016. This was done as part of the global drive to achieve better visibility across e-catalog, inventory and material master components in the main purchasing tools SAP, ARIBA, and Oracle.
Refresh Desktop software was used to read, analyze and tag all commodity spend classes at the lowest level to the UNSPSC and HS standards. This verified dictionary of clean commodity codes and classes will be used in assigning consistently repeatable purchasing classes for every new item of supply. Effectively this package of cleansed “big data” will highlight reliable opportunities in the client's supply chain, unlocking significant new purchasing, operational and tax savings going forward.