STRATEGIC SOURCING’S DECISION MAKING OF CHEMICALS SUPPLY IN THE UPSTREAM OILFIELD SERVICES COMPANY

• Main Author: Alatas, Abdurahman
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/46636
• Institution: Institut Teknologi Bandung

Oilfield Services Company have been operating in dynamic and unstable environments where they face constant challenges, most importantly in terms of supply and demand. One year after the huge drop in crude prices within 2014, oil and gas companies have made all the easy cost savings, the low-hanging fruit is off the tree. Procurement and sourcing teams across the industry have pushed for price reductions from suppliers, and clamped down on discretionary spending. The problems of chemical sourcing within the company mainly because of high dependency to single supplier, making company spend uncontrollably and increasing risk of future discrepancy in both commercial and operational factors. Supply of chemicals and minerals for the company to this supplier accounting to 82% of total yearly spend related with chemical. Many efforts have been tried previously to sort this issue, but always facing issue with quality and/or deliverability of the products. This final project are focused on analyzing the external and internal factor that prevent better way of chemicals strategic sourcing, and try to find the alternative strategic sourcing method to relieve the company from single sourcing issue. The framework used are based on sourcing portfolio analysis, which combined the criticality analysis, power positioning analysis, and dynamic leverage analysis that resulting in the recommended strategic sourcing method to be used. External analysis through customer attractiveness questionnaire to five available chemicals supplier were finalized, and as a based on analysis of the other actives supplier are also finished the same questionnaire. Market analysis were also done with Porter’s Five Forces.. External analysis then combined with internal analysis from the stakeholders’ interview. The result utilize to see the potential opportunity to increase customer attractiveness to suppliers. Method of strategic sourcing were compared between common purchasing portfolio analysis with the more sophisticated sourcing portfolio analysis. The results shows that the strategic sourcing process for chemicals are supposed to be more complicated than previously expected. Chemicals are then divided to three categories on which each category have different position in the current sourcing portfolio. The project done has resulted in the suggested approach of strategic sourcing to each chemical category, with the recommended level of stakeholder involved. Each chemicals sourcing have different priority of dynamic leverage strategies recommendation. Results also suggest with the current state of demand, for cement and commodity chemical category to have multiple supplier, while specialty chemicals are advised to have single source. All those results are based on the analysis of the future sourcing portfolio analysis preferred by the company to maximize value and minimize the risk of chemicals sourcing. Two part of project implementation will began soon, prior to management approval and the availability of strategic sourcing, procurement, operations, and quality team. The internal process to increase our customer attractiveness will be done in parallel with the external process for supplier approach through request for proposal and closed tender process.