To gain and hold competitive advantage within the oil and gas industry, Shell must leverage its overall buying power. P&T is accountable for maximising value from Shell’s annual third-party spend of about $65 billion. So P&T helps Shell subsidiaries focus on what and how much should be bought, when, and at what price. The goal is getting the most value out of purchases, not just the lowest cost.
By putting its global internal demand for certain categories of goods and services into the marketplace with a small number of contractual packages, Shell can gain in terms of safety, quality of goods and services, costs and technical innovation. The selection of preferred suppliers enables closer oversight of delivery and performance, better mechanisms for quality control and significantly lower prices. Such contract-management improvements, coupled with increasingly efficient operations and collaborative relationships with suppliers, saved Shell and its partners about $5 billion between 2011 and 2013.
The Contracting and Procurement unit within P&T analyses the market to drive future sourcing strategies. The unit also takes a key role in connecting Shell subsidiaries with economically, environmentally and socially responsible contractors and suppliers.