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Procurement Outsourcing – The BP Experience

Procurement Outsourcing – The BP Experience. BP - Overview. BP- Snapshot. Indirect Procurement. Indirect Procurement (IP) manages ca. $6B spend annually and is the organisation that outsourced procurement

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Procurement Outsourcing – The BP Experience

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  1. Procurement Outsourcing – The BP Experience

  2. BP - Overview BP- Snapshot Indirect Procurement Indirect Procurement (IP) manages ca. $6B spend annually and is the organisation that outsourced procurement IP was formed in 2005 and faced the challenge of consolidating fragmented spend and building a long term delivery model 2008 turnover of $ 367B and profit of $ 26B Employing approximately 90,000 people in more than 100 countries 9th largerst company in the world 18.1 billion barrels of oil and gas equivalent, 3.8 millions barrels oil equivalent a day. 23,389 service stations; 17 refineries and exploration activities in 29 countries Why Outsource • Build Sustainable delivery model • Scalable operations • Quality • Lower cost

  3. Medium Significant Not Outsourced What is procurement outsourcing - and what has BP outsourced Activities that can be outsourced BP- Level of outsourcing The Source to Pay Cycle Category Management Develop P&SC Strategies Spend Analytics & Mkt Intel Understand Supply Markets Approach mkt /select supplier Tactical Sourcing Strategic Sourcing Contract Writing Contract Administration Award contract Understand Business Strategy and Need Manage Supplier Performance Increasing Complexity e-Sourcing Settle Invoice Raise Requisition Vendor Mgmt Support Purchase to Pay Spot Buying Issue Purchase Order Receive Invoice Spend Reporting Order Management Receive Products and Services Procurement App Helpdesk

  4. BP Journey & Experience • Created the Procurement Operations Centre in 2006 • Outsourced to a 3rd party service provider • Started with less complex processes • Corresponds to move from P2P to Sourcing activities • Have moved from a pure offshore delivery model to a hybrid onshore-offshore model • Have focussed heavily on separation of transactional and knowledge based activities within an overall activity or process • For e.g Contract Writing is 50% transactional • Initial Business Case validated • Savings in three categories: Operational, Negotiated, Compliance • Being expanded to other business segments within BP 160 FTEs ; ca. $2B annual spend flow-through

  5. Challenges • Relative immaturity of Procurement BPO • Not a volume game for suppliers • has its own challenges • Hiring continues to be a challenge • not ‘standard’ BPO profiles • Fairly high proportion of activities are unscripted and involve judgment e.g. negotiation • Transition happens from typically from a non process driven environment • Customer side change management issues

  6. Thank You

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