Supply Chain Case 2 – Optimising Supply Chain Operations for IOC’s Subsidiary
situation
A subsidiary’s supply chain operations
was in the bottom quartile amongst
subsidiaries of an International Oil
Company (IOC):
Management was missing key
information and performance
indicators needed to steer the
business
Fragmented supplier base and
inefficiencies in product sourcing,
procurement and spend
Long, cumbersome approval and
payment processes – over 50%
invoices paid after due date
creating tensions with suppliers
Missed opportunities for discount
from suppliers if timely payments
were being made
In this context, a Supply Chain review
was launched to identify root causes of
issues and implement solutions
our approach
Analysis revealed 4 main themes in
client’s supply chain challenges:
Purchase-to-payment (P2P)
workflows were sub-optimal
Inefficient process owners
Technology to support P2P activities
was inadequate
Interaction /communication with
suppliers was weak
Opportunity matrix was developed, and
solutions prioritized based on degree of
impact and ease of implementation
Outcome
Redesigned supply chain
operating model – created joint
inter-departmental teams
embedded with vendor
representatives - 92% reduction
in payment backlog in 1st
quarter
Multi-million-dollar cost saving
benefits from supplier discounts
for quicker payments
Client’s subsidiary moved from
Bottom to Top quartile of
best-performing subsidiaries in
terms of supply chain operations
among IOC’s subsidiaries
globally