To gain and maintain competitive advantage in 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 $67 billion. So P&T helps Shell subsidiaries focus on what and how much should be bought, when, and at what price. The goal is to get maximum value out of purchases, not just the lowest cost. The Contracting and Procurement team within P&T also analyses the market to stay on top of current trends and formulate future sourcing strategies.
By funnelling its global internal demand for certain categories of goods and services through a small number of tendered contractual packages, Shell can exercise closer oversight of delivery and performance, keep tighter control on quality and benefit from signiﬁcantly lower prices. Such contract-management improvements, coupled with increasingly efﬁcient operations and collaborative relationships with suppliers, saved Shell and its partners about $10 billion between 2010 and 2014 inclusive.
In addition to leveraging a global market, Shell finds value in working with suppliers of national or regional markets. We often introduce local companies to global companies, providing both parties with potential business opportunities and the benefits of shared experience.
P&T therefore plays a key role in connecting Shell subsidiaries with economically, environmentally and socially responsible contractors and suppliers.