2019 Energy Conference Network Oil & Gas Supply Chain and Procurement Summit, Houston

Enverus on machine learning in the supply chain. Blue Wave on local content development. Sirion Labs, ‘chase mice or hunt elephants?’ Appian’s low code for ERP integration. ISM on supply chain trends. Fluor mitigates the ‘bump’ factor. Chevron and the Oil & Gas Blockchain Consortium. Requis - from ‘supply chain’ to ‘value network’

Chris Smith (Enverus) advocates the use of machine learning and natural language processing to categorize invoice line items. Meaningful savings opportunities can be found in a buyer’s smaller, less visible items, something that was previously ‘exceedingly difficult to do’. Using their own data, buyers can quickly discover their most cost-effective suppliers. One study identified a per-valve saving of $72, for an average annual volume of 20,000 valves.

Eduardo Nunez (Blue Wave) presented on local content development*. Local content providers are sometimes challenged by a lack of clarity in contracts and procurement standards. This makes local content obligations hard to fulfil. Blue Wave is an international corporation formed by ExxonMobil and BP veterans to help develop local suppliers and improve the conditions of local communities. Blue Wave helps local companies understand energy sector standards develops them into suppliers of major international or state-owned energy companies and their partners. Blue Wave also provides a collaboration framework for governments, IOCs and local suppliers along with a mechanism for technology transfer to local suppliers. Blue Wave recently launched in Mexico with support from the State of Tabasco. A kick-off workshop saw one IOC commit to sponsor 25 local suppliers for a year. International expansion is planned for 2021.

* local content development, providing local jobs or engaging local service providers and suppliers is often a pre-requisite for international companies to operate in developing nations.

Sirion Labs president Claude Marais categorized current procurement practices as ‘hunting mice while the elephants run wild!’ Traditional supplier management and account governance strategies take a one-size-fits-all approach for suppliers and customers. What’s needed is a tiered approach – at both the process and technology level. The executive/strategic tier sets the overall tone of the relationship. A management tier adds a performance check, dispute resolution and scorecard review scorecard. The operational tier adds detailed contract, performance and financial management. All of which is enabled by an integrated contract lifecycle management (CLM) platform that provides templates for contract clauses, authoring workflows and e-signature. The CLM also provides OCR/ICR and a document and metadata repository. ‘Today’s CLM technology is uniquely positioned to enable this integrated approach’.

Glenn Healy presented Appian’s ‘low code’ platform for modernizing enterprise and operational applications. Appian connects to data sources such as ERP, legacy systems, asset/inventory systems, IoT/scada, blockchain and enables these to be extended with cloud-based solutions from AWS/Google/Azure AI or Blue Prism’s robotic process automation. Appian promises an intuitive experience on mobile, and other endpoints with out-of-the-box AI and machine learning.

Gwen Mitchell, president of the Houston affiliate of the Institute for Supply Chain Management, introduced the 750 members-strong organization. ISM is a cross industry body that is a ‘pace setter’ for ISM learning, networking and opportunity. Mitchell sketched out the top supply chain technology trends as robotic process automation, ‘autonomous things’(!), the digital supply chain twin, immersive experience and, you got it, blockchain.

Jeff Houtz provided an overview of Fluor’s supply chain material planning and how this benefits Fluor’s construction projects. The supply chain discipline is responsible for ensuring the ‘right material, at the right place and at the right time’. Schedule and material data are used to plan ahead and meet construction’s work packaging needs. Enter the concept of advanced work packaging (AWP) defined by the CII as ‘the overall process flow of detailed work packages (construction, engineering, and installation), in a planned, executable framework for productive and progressive construction’. Prerequisites for the AWP include accurate material, work package and schedule data. A focus on ‘bulks’ (material) is key to AWP success as this is where there is the most risk. On surpluses and ‘bump factors’ Houtz opined that it is hard to influence bump and emergencies, but ‘we must do our part to assure that data is trustworthy as a loss of confidence in material data is a major cause of surplus’.

Chevron’s Raquel Clement, who is also on the board of the Oil and Gas Blockchain Consortium enumerated some oil country blockchain pilots. These included truck ticketing (Equinor), AFE balloting (ConocoPhillips), seismic entitlements (Repsol) and joint interest billing (ConocoPhillips). The truck ticketing pilot is said to have ‘transformed’ the salt water disposal payment cycle and Equinor aims to realize ‘over 25% operational cost savings’ from here on. Better still, ‘suppliers can finally expect to be paid on time!’. The system is ‘paving the way for automated vendor validation of any delivery of goods and services’.

Requis CEO Richard Martin wants to transform the supply chain into the ‘ultimate value network’. The Requis supply chain platform was inspired by consumer platforms and ‘built for the enterprise’. Requis covers asset procurement, management and disposal ‘with unprecedented visibility, simplicity and efficiency’. A survey* of 500 supply chain professionals found ‘disconnected, siloed, highly manual enterprise procurement processes’ resulting in ‘billions in surplus assets and dismal returns on asset sales’. The Solution? A shift from the ‘supply chain’ to a ‘value network’, that brings supply and demand together to ‘drive efficiency and market equilibrium on a local, regional and global basis’. The value network is driven by digitisation using Requis’ network of around a million ‘listed assets’ and some 300 enterprise clients including BP, Chevron, Ineos, Shell Siemens and Worley.

The 2020 Energy Conference Network Oil & Gas Supply Chain and Procurement Summit is scheduled for 2-3 December in Houston.

* Probably Deloitte’s 2019 Chief Procurement Officer survey.

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