procurement outsourcing – the bp experience
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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 - PowerPoint PPT PresentationTRANSCRIPT
Indirect Procurement.Value. Delivered.
Procurement Outsourcing – The BP Experience
Indirect Procurement.
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BP - OverviewBP - Overview
BP- SnapshotBP- Snapshot
Indirect ProcurementIndirect Procurement
Why OutsourceWhy Outsource
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
• Build Sustainable delivery model
• Scalable operations
• Quality
• Lower cost
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
Indirect Procurement.
What is procurement outsourcing - and what has BP outsourced
Understand Business Strategy and Need
Develop P&SC Strategies
Settle Invoice
Strategic Sourcing
Purchaseto Pay
Manage Supplier
Performance
Receive Invoice
Understand Supply Markets
Raise Requisition
Receive Products and Services
Issue Purchase Order
Approach mkt/select supplier
Award contract
The Source to Pay CycleThe Source to Pay Cycle
Activities that can be outsourcedActivities that can be outsourced
BP- Level of outsourcingBP- Level of outsourcing
Procurement App HelpdeskProcurement App Helpdesk
Order ManagementOrder Management
Spend ReportingSpend Reporting
Spot BuyingSpot Buying
Vendor Mgmt SupportVendor Mgmt Support
Category ManagementCategory Management
e-Sourcinge-Sourcing
Contract WritingContract Writing
Tactical SourcingTactical Sourcing
Spend Analytics & Mkt IntelSpend Analytics & Mkt Intel
SignificantNot Outsourced Medium
Incre
asin
g C
om
ple
xity
Contract AdministrationContract Administration
Indirect Procurement.
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 BP160 FTEs ; ca. $2B annual spend flow-through
Indirect Procurement.
• 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
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Challenges
Indirect Procurement.
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Thank You