Date post: | 28-Mar-2015 |
Category: |
Documents |
Upload: | katherine-clark |
View: | 216 times |
Download: | 2 times |
The New Oil and Gas Industry Supply Chain Code of Practice
ADD TITLE AS APPROPRIATE
Initially developed by a work group established by ILT / PILOT under the Progressing Partnership banner (PPWG)
The Supply Chain CoP is one of over 10 initiatives launched by PILOT and outlines a set of best practice guidelines
First adopted by the industry in 2002, signatories undertake to work towards full compliance with the Code
Signatories include major purchasers (operators and principal contractors) and suppliers (providers of goods and services)
The Code is endorsed by PILOT, the Industry Leadership Team and the key Trade Associations
In July 2005 the PPWG SCCOP Work Group was disbanded and replaced with a new Supply Chain Steering Group which reports directly to ILT / PILOT
Supply Chain Code of Practice
Supply Chain Steering Group (9)
Supply Chain Managers Network (50+)
PILOT
Industry Leadership Team
Major Purchasers
and Suppliers
OperatorsSupply Chain Steering
GroupILT (Supplier & Operator) 2
DTI 1
Standard Contracts 1
FPAL 1
SCMN 2
UKOOA / LOGIC 1
Marketing / Communications 1
Work Grou
p
Work Grou
p
DELIVERY
SCCOP Industry Involvement
Supply Chain Managers NetworkOperators 30
Trade Associations 6
Major Contractors 10
Industry Groups 6SCCOPWork Group
Work Grou
p
Work Grou
p SCCOP Work Group
Operators 2
Major Contractors 4
Industry Groups 3
To make the UKCS the safest place to work in the worldwide oil and gas industry
Production at 3bn BOE per day in 2010
UKCS capital investment sustained at £3Bn per annum
Prolonged self-sufficiency in Oil & Gas
Supporting up to 100,000 more jobs than there otherwise would have been by 2010
A 50% increase in oil and gas exports by 2005
£1 billion per annum additional revenue from new business
The PILOT 2010 Vision
Supply Chain CoP
Access to Infrastructu
re CoP
Commercial CoP
Subsea Effectivene
ss
Technology
Progressive &
Innovative Licensing
Decommissioning
UK Norway Co-
operation
Wells Share
Initiative
Stewardship
The Fallow Process
Step Change in
Safety
Workforce Capacity & Capability
Supply Chain
Efffectiveness
PILOT Initiatives
Increased UKCS Supply Chain competitiveness through improved efficiency and reduced waste
Improve working practices, commercial behaviours and purchaser / supplier relationships
Regular and detailed forecasting of activity levels.
Enhance and simplify the bidding process.
Prompt payment.
Active two-way relationship management.
Code of Practice Objectives
1. Commercial Stage - Forecast/Planning all activity up to the point of tender
2. Commercial Stage – Tendering all activity up to the point of contract negotiations, including elimination of bidders
3. Commercial Stage - Negotiation agreement of contract terms
4. Commercial Stage - Implementation and review through the life of the contract and at the end of the contract
5. Commercial Stage - Monitoring and Evaluation of Code
6. Implementation and Adoption of the Code
The original Code comprised 6 sections
… commitment received from 80+ Operators and Major Contractors
Supply Chain Code of Practice
Code of Practice for Suppliers was developed in 2003
… commitment received from 300+ suppliers and contractors
Stage 1 Forecasting and Planning – To provide more effective business cycle planning.
Stage 2 Tendering – To reduce the cost of bidding.
Stage 3 Negotiations – Cut waste and reduce unnecessary paperwork.
Stage 4 Implementation and Review – Getting the job done right.
Stage 5 Monitoring and Evaluation of the Code – Assuring process is in place.
Supply Chain Code of Practice
The Code is endorsed by:
PILOT, Industry Leadership Team, Supply Chain Steering Group, Supply Chain Management Network, DTI, EIC, FPAL, IMCA, OCA, UKOOA, WSCA
… it has significant sign-ups already… it’s a real achievement for the IndustryFor latest information see PILOT Website
http://www.pilottaskforce.co.uk/
New clean and simple format
Signed by CEO and Supply Chain Manager
Simplified structure
New features include
Industry Model ITT’s
“Fair” contracting principles
“Value based” contracting
More efficient Code implementation survey
Drafting party represented all industry groups
PLAN CONTRACT PERFORM & PAY
Supply Chain Code of Practice
PLAN
Communication of forward plans to industry
Provide support for Share Fairs
FPAL purchaser profiles
Suppliers to make use of information provided
CONTRACT PERFORM & PAY
0
20
40
60
80
100
120
140
Poor Quite poor Average Good Excellent
Structure/Format
Supply Chain Code of Practice
PLAN CONTRACT PERFORM & PAY
Restricting bidders to FPAL registered companies
Eliminate duplication of data by using FPAL
Providing debriefs
Using standard contract forms
Payment in 30 days
Use of industry Model ITT’s
Supply Chain Code of Practice
IADC analysis of Rig ITT’s undertaken
Highly fragmented approaches evident
Extensive duplication of FPAL data
Patchy use of standard contracts
ITT quality extremely variable
Tender compilation slow and expensive
THE OPPORTUNITY
Supply Chain Code of Practice
Create a standard ITT structure
Simple, logical organisation
Easy buy-in
Standard documents for those that want to go further
Aimed at ease of production
A quality ITT
A swift offer
A trouble free evaluation
THE SOLUTION
Supply Chain Code of Practice
Guidelines on completionITT IndexTendering instructionsTechnical SectionsCommercial SectionsContractual Sections
Supply Chain Code of Practice
Templates are clear, simple and pragmatic
Focus is on principle not prescription
Uses industry documents where they exist
Nomenclature is standard
Modular design gives flexibility
Designed to allow substitution
Supply Chain Code of Practice
ITT’s are Easier, Faster and Cheaper to issue
Bids are Easier, Faster and Cheaper to return
Simplifies the contracting process
Code recommendations incorporated
Creates a vehicle to introduce better practices
Operators can decide their own scale and pace of adoption
Creates step out opportunities with Well Services, Operational and Construction ITT’s
Supply Chain Code of Practice
Model Rig ITT currently available on FPAL website, is now in use and is easy to access …….
Supply Chain Code of Practice
Model Rig ITT currently available on FPAL website and now in use
Well Services suite of Model ITT’s
Marine Construction Model ITT
Platform services, plant and equipment Model ITT’s
ITT drafting groups launching Model ITT’s in 2006
Supply Chain Code of Practice
Easier method of surveying Code adherence
Use of FPAL Type III feedback uses existing industry scheme and little additional effort
Input now verified
3 additional elements
CODE OF PRACTICE SURVEY METHOD
Supply Chain Code of Practice
Include performance Indicators in all significant contracts
Provide and receive FPAL performance feedback via Type 1 and Type 3 mechanisms
Assessment of Client Compliance with Supply Chain CoP
KPI and Review Mechanism for Contracts >$1mm
0
1
2
3
4
5
Co
mp
an
y F
Co
mp
an
y M
Co
mp
an
y I
Co
mp
an
y E
Co
mp
an
y H
Co
mp
an
y B
Co
mp
an
y A
Co
mp
an
y Q
Co
mp
an
y N
Co
mp
an
y C
Co
mp
an
y D
Co
mp
an
y G
Co
mp
an
y Y
Co
mp
an
y K
Co
mp
an
y J
Co
mp
an
y O
Co
mp
an
y L
Co
mp
an
y W
Co
mp
an
y X
Co
mp
an
y R
Client Company
Pe
rfo
rma
nc
e E
va
lua
tio
n
(0 P
oo
r -
5 E
xce
lle
nt)
Some improvement from 2004 report Majors generally higher rated than small companies Not enough use of FPAL two way feedback
June 2005
PLAN CONTRACT PERFORM & PAY
Supply Chain Code of Practice
Assessment of WSCA Member (as Supplier) Compliance with Supply Chain CoP
Invoicing Quality
0
1
2
3
4
5
WS
CA
Co
D
WS
CA
Co
I
WS
CA
Co
F
WS
CA
Co
C
WS
CA
Co
G
WS
CA
Co
K
WS
CA
Co
E
WS
CA
Co
B
WS
CA
Co
J
WS
CA
Co
H
WSCA Member
Perfo
rman
ce E
valu
atio
n(0
Poo
r - 5
Exc
elle
nt)
June 2005
Submit complete and valid invoices
Pay all valid invoices within 30 days
Adopt a prompt payment policy for own suppliers
PLAN CONTRACT PERFORM & PAY
Supply Chain Code of Practice
Why does the Code of Practice matter to Contractors?
1
1.2
1.4
1.6
1.8
2
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005(est)
Gro
ss R
even
ue
($B
n)
WSCA 2005 Report
Revenue increasing
The Industry still cannot afford non-value adding costs in Supply Chain Management processes
Profitability decreasing
PLAN CONTRACT PERFORM & PAY
Supply Chain Code of Practice
UKCS - Gross Operated Reserves by Operator(Data: Wood MacKenzie December 2005)
0
500
1,000
1,500
2,000
2,500
Operator
Gro
ss O
per
ated
Res
erve
s (M
Mb
oe)
Code Acceptance Yet to Sign Declined
…… work on sign-ups continuesCode covers in excess of 80% of UKCS expenditure (on an operated reserve basis)
Supply Chain Code of Practice