Italy, South Korea, China and India are Petrofac’s biggest sources of manufactured material. They are also some of the countries hardest hit by the coronavirus crisis, particularly in the early stages of the outbreak.
When lockdown restrictions started to put huge pressure on the supply chain, the relationships the Petrofac teams had built with key suppliers over the years paid off when they were needed most.
The team also procures locally from countries such as UAE, Oman, KSA and Kuwait and places a strong emphasis on local sustainability and in country value. From the Middle East, Far East and Europe, they worked closely with all their suppliers to expedite material to keep the disruption to the possible minimum.
“We stayed loyal to our suppliers and worked with them to jointly find ways to mitigate risks,” explains Karim. “These are long-term suppliers, vendors and sub-vendors who are absolutely central to our success.
“We have always focused on the three ‘Cs’ in our suppliers: capacity, capability and competitiveness, and these attributes have become even more important in the current environment.”
Building strong partnerships with suppliers and embracing technology has helped supply chain cope with the challenges brought about by the Covid-19 pandemic, says Senior Vice President of Supply Chain Karim Osseiran and Principal Supply Chain Engineer Rodrigue El Chemaly
HOW WE WORK
WORDS CHRISTINA McPHERSON
PUBLISHED AUGUST 2020
OUR THREE PILLARS: DIGITALISING PROCUREMENT
As well as strong partnerships with our suppliers, another factor that has made a difference during this difficult time is technology.
But as Karim points out, procurement has been embracing digitalisation long before the pandemic shook the world.
“Underpinning our digitalisation strategy are three pillars: data, integrated systems and automation,” he explains. “This has helped us during the crisis, and will even help us more in the future.”
The first pillar highlighted by Karim is data – we have thousands of suppliers and issue thousands more purchase orders every year. Just think of the millions of data points available around our vendors and spend.
Data can help us better understand our suppliers and their capacity, capabilities, offering, costs and performance, continues Principal Supply Chain Engineer Rodrigue El Chemaly: “Our decisions are only as good as the information we have but the more we can harness data, the more intelligence we have and the better decisions we can make,” he says. “But we need to ensure our data is in the right systems and accessible for good decision making.”
The past period has seen the team focus on integrated systems to bring together this data, while digitising processes where possible. “Being able to properly manage our materials while having full visibility along the supply chain is very important – this can help us become more efficient in managing our suppliers, subcontractors, and our construction activities at site,” says Rodrigue.
“From internal stakeholders including engineering, quality, finance or construction, to external stakeholders like our vendors – there has been a big focus on increasing collaboration. Our supplier portal is our main tool for understanding a supplier’s offering, and to collaborate with them in the procurement cycle.”
The third step is automation. The portal employs a digital assistant called Buybot that can perform specific procurement activities. The bot has been trained to collaborate with the suppliers during the tendering process to manage their participation, bidding requests and offer submission process, while keeping the buyer apprised of progress. “BuyBot will help us eliminate many of the manual tasks our buyers do in the procurement cycle, from data feed of our systems to updating progress and reporting, so they can focus on value-add tasks and more strategic work,” says Rodrigue.
The team liaises with between 2,000 and 3,000 suppliers a year, which can be a time-consuming activity. BuyBot can communicate with the suppliers via email and understand if they need additional information on a tender, collect their bid acknowledgment and intention to participate, and remind them to submit their offer before the bid due date. It then feeds this information to the buyer, so they can have a holistic view of the tender.
“We have introduced predefined hashtags as a new communication protocol. Once put in an email, the bot will understand the task the buyer is requesting it to perform,” adds Rodrigue.
When lockdowns came into force in countries across the world, one of the most pressing challenges our teams faced was how to conduct inspections, which would usually be done in person. Hussein Sawalha, who is Project Manager for the Ain Tsila project in Algeria, explains.
“The project is currently in the advanced stages of engineering and procurement and we had a number of items being inspected which we had to be present for – so, in order to maintain the pace of manufacturing and ensure the products met the client specifications, we had to come up with a solution.
“Some of our suppliers have been able to offer remote inspections. The first we conducted was a mechanical run test for a gas turbine generator manufactured in Italy – the supplier put up a live stream where we could see the test and even the client participated in it.”
Remote inspections have been carried out for other packages too, including compressors manufactured in France and MV switch-gears in India – preventing any significant delays in getting materials to site.
Hussein believes remote inspections could become the “new normal” for testing individual components and there could be many time and cost-savings associated with this.
However, our presence will still be required for more complex packages. “For example, centrifuge compressors where the package itself comprises of many systems,” he adds. “We are not at the stage where the supplier can show us everything we need to see remotely – but there is an opportunity to build on what we have started.”
And, what’s the experience been like? “It’s a different experience but our engineers have been able to adapt. It has been successful so far and we’ve able to identify some of the punch points during inspections by working with local inspectors and guiding them remotely.
“We understand this is what is available to us in these abnormal working conditions and we have to use all the tools available to keep the wheels running.”
Inspections in the time of coronavirus
Procurement in a Covid world
Encouraging a culture that adopts and harnesses technology has paid dividends.
When everyone began working from home, the team with the help of IT Group was quick to introduce software that allows them to add signatures electronically to documents.
When lockdowns were enforced and travel came to an abrupt halt, the team likewise used the strong partnership built with our suppliers to find a new way to conduct inspections. Many ‘remote’ inspections – using software like Microsoft Teams and strategically placed cameras – have now been carried out on projects (see box).
“It’s about the art of the possible,” says Karim. “Also not all vendors have got the right technological infrastructure and there are varying degrees of IT maturity within our vendor community.
“So I’m not saying business travel is not required, but we have to do it more intelligently. It could be the new normal. Even before Covid-19, we were trying to promote a culture that leverages technology so that we didn’t have to travel as much.”
So, what does the future hold? Rodrigue believes Covid-19 has given us an opportunity to further embed technology in our supply chain systems and processes.
“With Covid-19 we’ve had no choice but to accept digital technology and realise its benefits – the flexibility, the ability to do more with less, the cost savings. The world won’t be the same after coronavirus.”
Rodrigue El Chemaly