|
Computer technology transforms procurement for the North Slope The oil companies and their suppliers are continuously improving efficiency by automating the procurement of goods and equipment Alan Bailey PNA Contributing Writer
The rapid growth of computer technology and the Internet has caused fundamental changes to the ways in which the oil companies procure equipment and supplies. Paper based processes for issuing purchase orders, invoices and receipts have largely given way to the automated flow of electronic data across computer and communications networks. The recent emergence of Internet based trading sites is starting to cause further dramatic change. Electronic commerce increases business efficiency Electronic commerce first appeared in the Alaska oil business in the early 1990s. Mike Carpenter, purchasing supervisor for Phillips Alaska Inc., explained that in 1991 ARCO introduced Electronic Data Interchange, commonly known as EDI, for purchasing goods. “About 75 percent of our (purchase order) lines go out by EDI,” said Carpenter.
According to Mike Cortez, procurement manager for BP Exploration (Alaska) Inc., BP started using EDI in Alaska in 1995.
EDI involves the use of private communications networks to transmit computer generated procurement documents, such as purchase orders. The computer generation and transmission of documents saves the time and cost of manual processing.
Automation also enables companies to simplify the purchasing process. For example, Phillips has eliminated the need for invoices by cross matching goods received with the original orders that were sent to the vendors.
Linkages between Phillips’ EDI system and the company’s internal purchasing system enable payments to be triggered automatically. “A lot of companies do electronic invoicing … we just didn’t see the value in it,” said Carolyn Ellingwood, supervisor of business applications and electronic commerce systems for Phillips Alaska. The Internet is opening up new possibilities The rapid evolution of the Internet gives all businesses easy access to a worldwide communications network. The Internet “network” provides an alternative to the private networks of a traditional EDI system.
Cortez said that BP has embarked on an aggressive program to use the Internet for its procurement activities. “The beauty of using the Internet for (procurement transactions) … is that it is faster, cheaper and more efficient for both supplier and customer than using a custom built (network),” said Cortez.
In the past year Alaska Supply Chain Integrators, BP’s supply contractor, has built a web site for handling BP’s procurement business in Alaska. The site enables a vendor to use an Internet web browser to hook into BP’s procurement process. Alaska Supply Chain Integrators has linked the web site directly into BP’s internal computer systems. The computer systems can track and process orders from purchasing through delivery to payment. “It’s a complete cycle from purchase to pay,” said Cortez. In Alaska, 96 to 97 percent of BP purchase orders for materials now go through the Internet.
BP’s latest foray into on-line trading is the Internet auction, in which vendors bid competitively for supply contracts. Electronic commerce is a win-win approach for both the oil companies and their suppliers Both the oil companies and their suppliers benefit from the efficiencies of electronic commerce.
Phillips takes particular care to ensure that its electronic commerce processes mesh into its suppliers’ operating practices. Where necessary, Phillips will adjust a process to accommodate an individual supplier’s needs . “We work very closely … with our vendors and our trading partners, to make sure that it’s a win-win situation,” said Ellingwood.
BP believes that Internet will broaden the procurement market for suppliers, especially in Alaska. All companies now enjoy easy access to the Internet. “By virtue of this [Internet based] process, we were actually able to open up our purchasing process to a wider group of suppliers,” said Cortez. With BP’s growth plans in Alaska, Cortez expects to engage the entire supplier community. Phillips and BP are partners in a new global Internet procurement site This summer both Phillips and BP partnered with 15 other oil and petrochemical companies, to establish an Internet web site for the global trading of supplies. The site, called Trade-Ranger, is still in early development, but seems likely to bring about the next step in the evolution of electronic procurement.
No-one yet knows how Trade-Ranger will effect Phillips’ or BP’s current electronic commerce operations in Alaska. Cortez thinks that the global site will be used to purchase industry commodities, such as well casing.
“For local goods … we’re certainly going to stick with our local Alaska build, buy and hire processes,” he said.
With initiatives such as Trade-Ranger moving electronic commerce to the next stage of development, the oil industry continues to seek new ways of leveraging technology to do things cheaper, faster and better. It’s all part of the drive to keep the Alaska oilfields competitive.
| 