Procurement’s Next Frontier- Transformation & Integration

Submitted by:Group2, GMBA

Arjit Saran, Taru Singh, Kirsten Raymond

Procurement Strategy

• Vision: To create a Customer Focussed Enterprise to achieve increased procurement effectiveness, efficiency and compliance resulting in significant financial benefit.

Gather Input Develop Strategy Plan Execute &

Manage

Plan

Do

Check

Act

Drivers for non compliance

• Lack of clarity• Lack of management commitment• Lack of SOP’s.• The “Box Ticking” Approach• Inability to have a system wide approach

Group Procurement

Group Procurement

Systems People

Functions

Systems Implementation• E-Procurement• E-Auctions• Supplier Relationship Management• Category Management

Building Capabilities

Group Procurement Head

Procurement Head FPSO

Procurement Head Drilling

Procurement Head

Shipping

Category Manager

Strategic Sourcing Manager

Functional Specialist

Contracts Expert

Category AnalystBuyer

Finance Expert

Building CapabilitiesIntegrate Procurement Function with each Business Unit

Define timelines for procurement activities

Develop Standard Operating Procedures

Recruit Personnel

Provide Training on Procurement Platforms

Develop Management Trainee Program

Define responsibilities for each role expressly

Virtually Integrated Enterprise

Total Value of Ownership

1• Price : Negotiate the price by developing Supplier capabilities,

Negotiate based on type of product

2• Usage and Innovation: Manage demand effectively, Early Supplier

Involvement for Innovation

3• Risk and Sustainability: Identify and Mitigate risks, Broaden usage

of standardized products, Creative re-cycling

4• Process and Operational Efficiency: Ensure quality, monitor

progress and supplier efficiency.

Advantages of Centralised Procurement

Reduced Overheads

Better Spend Analysis – Cost Savings

Centralized Records of Procurement

Better Supplier Relations

Better Inventory Control

Use of E- Platforms – transparency, visibility, fairness

Volume Discounts over various product categories

Supplier Differentiation

Strategic

Heavy negotiation, Supplier Process Management, Analyse market and competition

Leverage

Promote Competitive Bidding, Exploit Market Cycles, Use Industry standards, Pro-active Sourcing

Bottleneck

Widen specifications, Develop new suppliers, Medium term contracts

Fig: Kraljic Matrix

Supplier Development

Star ?

Cow Dog

Relative Market Share

Mar

ket

Gro

wth

Rat

e

Fig: BCG Matrix

THANK YOU