Case Study

Sourcing & Procurement Evolution for a $12B Oil Field Services Organization

"A lack of understanding and delineation of Sourcing and Procurement activities causes a lack of execution including vendor management and ensuring the right materials and products are available when and where they are needed"

Industry
Services Performed

Situation

  • A global energy organization had been struggling to meet inventory level targets and continually experienced both stock shortages and overages
  • While both Sourcing and Procurement organizations existed within the organization, the delineation of activities was not respected nor commonly understood, leading to overlaps and gaps in responsibility
  • Tactical fire fighting became the norm, at the expense of Vendor Management and control
  • SLKone was retained to review and assess the current state organizational model, clarify Roles & Responsibilities, and effectuate functional cost reduction and driving proper support levels

Bespoke Solutions

  • SLKone identified all organizational resources performing Sourcing or Procurement activities across the matrixed divisional and regional organizations to create activity assessments
  • Activity listings were developed and used to facilitate work sessions to gather additional inputs and feedback
  • A centralized, commodity-organized Strategic Sourcing organization was established that emphasized the utilization of shared services within the organization
  • Roles and responsibilities within the new organization were developed
  • Established and managed a PMO to ensure successful implementation and change management

Leading With Results

  • Transferred 40% of tactical purchase order creation, tracking and payment activities, to the shared service center
  • Reduced functional costs by 8% (~$3M) (Compensation, T&E, Contractors)
  • $25M annual additional savings through improved vendor management. Savings were driven by the delineation of activities, improved responsibility allocation, and establishment of the Strategic Sourcing team
Case studies and expertise may represent projects and engagements performed by SLKone team members prior to their employment at SLKone
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