Lean mean supply chain management


In this brave new world of 'lean' that the international oil and gas industry is beginning to embrace, there is one area that could give rise to an immediate increase in true value and reduction in cost. That area is supply chain management.

If you are old enough to remember BS5750, this being the forerunner to ISO 9001, then you will remember the great 'groan' that was heard from the supply chain when it was realised that they would need to begin to complete 'vendor assessment questionnaires', to either pre-qualify for contracts or to get onto a customer's approved supplier list. If you have ever completed one of these forms you will know what I mean by the 'groan' from the supply chain.

Unfortunately, the intent behind the concept of the vendor assessment questionnaire, was that it was the first step in the customer-supplier relationship and the customer would then, for his key suppliers, i.e those on his 'approval supplier list', really begin to understand their true capabilities and build an enduring relationship for the future. But this appears to have become an end in itself. Is it perhaps an excuse to maintain jobs in the client's contract and procurement department?!

However, this has not been the reality. In the international oil and gas industry, if you make an expression of interest to bid against a tender, then inevitibly you get issued with the ubiquitous vendor assessment questionnaire. Now to give the industry credit, in the UK and Norwegian sectors of the North Sea, two supply chain vendor performance bodies have arisen in the form of FPAL and Achilles respectively. The initial intent of these organisations was for the supply chain to subscribe to one or both of them, depending on where you wished to do business and the clients could then go to these bodies and assess and verify capability.

Again, the intent and the reality are somewhat different. To use an unfortunate metaphor, the 'achilles heal' of the Achilles and FPAL systems are that they demand a significant degree of supplier assessment to enable any good and meaningful evaluation of the suppliers true capability and performance to be measured. Unfortunately, this hasn't always been forthcoming, as clients are generally too busy doing more important activities than completing FPAL or Achilles supplier assessments.

So as we move towards this bright new 'lean' future, I hope against all hope that the 'penny will finally drop' within client's supply chain management departments. The enormous cost burden for what is, in my opinion, a rather painful, labour intensive, ineffective and valueless solution to supply chain management in our industry. There will need to be a comprehensive and radical revision in their thinking and the industry will need to move towards a truly more collaborative contract and procurement approach. Then thankfully we can finally sentence the 'vendor assessment questionnaire' to room 101!!

#supplychain #Management #oilandgas #business

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