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OFS Portal Presents

It’s about Digitising your Supply Chain

NOVEMBER

2008

STANDARDS BASED PROCUREMENT IN THE OIL AND GAS INDUSTRY
Dave Wallis

I t ’ s a b o u t S t r e a m l i n i n g y o u r P r o c e s s. It’s about giving your company the advantage.

Copyright 2001-2008 OFS Portal LLC

Our Oil & Gas Industry
’A

truly global business ’ Huge scale ’ Specific requirements ¾ Remote Operations ¾ Largely Outsourced ¾ Complex services ¾ Non-explicit spend – more than
75% of $300b/yr. is ‘buying a solution’ not a widget !
’ 1970s

R&D cutbacks by Oil Companies = outsourcing of technical solutions to Tier 1 suppliers
Copyright 2001-2008 OFS Portal LLC

This results in a tight industry vertical where internal interoperability is key to B.P. efficiencies. of spend in our industry it is estimated that ~ 66% is spent with less than 700 suppliers / solution providers globally.Our Oil & Gas Industry ’ ™ Of the $300b/yr. Copyright 2001-2008 OFS Portal LLC ’ .

e. and definitely not ¾ Complex products ¾ Complex pricing ¾ Services ¾ Non-explicit spend. i.Our Oil & Gas Industry ™ ’ However. Procurement toolsets couldn’t manage more than simple MRO materials. a ‘solution ’ Therefore the need to focus elsewhere in the P2P process Copyright 2001-2008 OFS Portal LLC .

Definitions eCommerce. etc eBusiness. = all the above and everything else Copyright 2001-2008 OFS Portal LLC 5 . usually characterised as Procure to Pay ™ Sourcing Ordering Fulfillment eTender Identification Selection Order Delivery Invoicing Payment Catalogs Transactions eProcurement HSE & Government Regulatory reporting.

or Semantic Interoperability ’ Needed to work together to develop standards that support unique requirements ’ Interoperability. but not efficient ’ Difficult to extend to the electronic exchange as lacked ¾ Industry standard structure. within our vertical Copyright 2001-2008 OFS Portal LLC ‫إﻧﻔﺴﻲ‬ ‫إﻧﻔﺴﻲ‬ INVOICE INVOICE FACTURA FACTURA .The move from paper and the need for Interoperability ™ ’ There has always been a need to establish a certain degree of interoperability ’ Effective. or Syntactic Interoperability ¾ Industry shared vocabulary.

. Often proprietary ’ Competing “open standards” ( Apologies to Scott Adams ! ) Copyright 2001-2008 OFS Portal LLC ’ Our unique Industry requirements challenged existing standards ’ Our industry looked to API & PIDX for leadership . PER YOUR SUGGESTION..Use my standard. I ASKED OUR CUSTOMER TO VOLUNTARILY USE OUR PROPRIETARY STANDARD TO MAKE IT EASIER FOR US ™ IT MIGHT SURPRISE YOU TO LEARN THAT OUR CUSTOMER DOESN’T LIKE THAT IDEA YOU PROBABLY MADE IT SOUND LIKE A BAD THING ’ Standards “land grab”..

Delivery. implementation guides & wiki based dictionaries Copyright 2001-2008 OFS Portal LLC . Reporting & Accounting ¾ Country-by-country eCommerce guides for Oil & Gas All supported by processes descriptions.HSE reporting ¾ Regulatory Reporting ¾ Product Classification >3900 templates ¾ Joint Interest Billing & Operating Data Exchange ¾ Downstream Bill of Lading ¾ Pipeline Nominations.Standard documents. standard processes ’ ™ ’ PIDX subcommittees have developed and maintain XML standards for ¾ All Procure 2 Pay processes ¾ NEW – sales tax reporting ¾ NEW .

The evolution of our standards GENERIC LANDSCAPE BUYER ERP MDM CONTRACT PURCHASE ORDER SERVICE ENTRY SHEET ™ SUPPLIER ERP E-COMMERCE in OIL & GAS MDM CONTRACT SALES ORDER FIELD TICKET INVOICE PO FT INVOICE INV Copyright 2001-2008 OFS Portal LLC 9 .

The evolution of our standards 1 ™ Define the PRODUCT &SERVICE Attributes with Industry Templates and store in Master Data Repository BUYER ERP MDM CONTRACT PURCHASE ORDER SERVICE ENTRY SHEET PRODUCT & SERVICES TEMPLATES SUPPLIER ERP MDM CONTRACT SALES ORDER FIELD TICKET INVOICE 1 UNSPSC Classification INVOICE Copyright 2001-2008 OFS Portal LLC 10 .

The evolution of our standards SUPPLIER CATALOGUES 2 Define the structure for a SUPPLIER CATALOGUE which includes the Template Schemas to use for PRODUCTS & SERVICES ™ 2 BUYER ERP MDM CONTRACT PURCHASE ORDER SERVICE ENTRY SHEET PRODUCT & SERVICES TEMPLATES SUPPLIER ERP MDM CONTRACT SALES ORDER FIELD TICKET INVOICE 1 UNSPSC Classification INVOICE Copyright 2001-2008 OFS Portal LLC 11 .

Invoice etc.The evolution of our standards SUPPLIER CATALOGUES 3 Define the XML schema for ™ DOCUMENT TRANSACTIONS such as Order. 2 BUYER ERP MDM CONTRACT PURCHASE ORDER SERVICE ENTRY SHEET PRODUCT & SERVICES TEMPLATES SUPPLIER ERP MDM CONTRACT SALES ORDER FIELD TICKET 1 UNSPSC Classification INVOICE 3 DOCUMENT XML SCHEMA INVOICE Copyright 2001-2008 OFS Portal LLC 12 .

The evolution of our standards SUPPLIER CATALOGUES 4 Define the secure encrypted ENVELOPE to wrap the TRANSACTION DOCUMENT in for routing and transmission across the Internet ™ 2 BUYER ERP MDM CONTRACT PURCHASE ORDER SERVICE ENTRY SHEET ENCRYPTED ENVELOPE DOCUMENT XML SCHEMA PRODUCT & SERVICES TEMPLATES SUPPLIER ERP MDM CONTRACT SALES ORDER 1 UNSPSC Classification 4 FIELD TICKET INVOICE INVOICE 3 Copyright 2001-2008 OFS Portal LLC 13 .

The evolution of our standards SUPPLIER CATALOGUES 5 Define the secure TRANSMISSION PROTOCOL to route the encrypted ™ ENVELOPE containing the TRANSACTION DOCUMENT across the Internet 2 BUYER ERP MDM CONTRACT PURCHASE ORDER SERVICE ENTRY SHEET SECURE TRANSMISSION PROTOCOL (AS2 or RNIF) PRODUCT & SERVICES TEMPLATES SUPPLIER ERP MDM CONTRACT SALES ORDER FIELD TICKET INVOICE 1 UNSPSC Classification 5 ENCRYPTED ENVELOPE DOCUMENT XML SCHEMA 4 INVOICE 3 Copyright 2001-2008 OFS Portal LLC 14 .

The evolution of our standards CONTENT STANDARDS SUPPLIER CATALOGUES Defines the CONTENT and ™ TRANSACTION standards for Secure E-Commerce in O&G 2 BUYER ERP MDM CONTRACT PURCHASE ORDER SERVICE ENTRY SHEET SECURE TRANSMISSION PROTOCOL (AS2 or RNIF) PRODUCT & SERVICES TEMPLATES SUPPLIER ERP MDM CONTRACT SALES ORDER FIELD TICKET INVOICE 1 UNSPSC Classification 5 ENCRYPTED ENVELOPE DOCUMENT XML SCHEMA 4 INVOICE 3 TRANSACTION STANDARDS Copyright 2001-2008 OFS Portal LLC 15 .

next ™ BUYER SUPPLIER Any other information / data that can benefit the trading partner relationship by being relayed / transmitted electronically.The evolution of our standards . such as HSE – REGULATORY – TAX – etc Copyright 2001-2008 OFS Portal LLC 16 .

Ok. it’s not that easy… ’ Pace of Development ¾ Volunteers have “day jobs” ¾ Challenge to maintain ’ Cost to Implement ¾ It must be accessible ™ to a momentum ’I wide audience ¾ Cost point must “make sense”. need it now. PIDX and AS/2 ’ Effort to Drive Adoption ¾ “Build it and they will come!”. backwards compatibility ’ Backwards compatibility ¾ Not always possible and they most likely won’t ¾ It takes effort. a standard won’t “adopt itself” ¾ Deep deployment must be driven and evangelism must be part of the process ’ Unilateral “Pilots” ¾ Leave it to us to can cause more issues work it out Copyright 2001-2008 OFS Portal LLC . but it’s not finished… ¾ Business moves on and can’t wait for standards to be “finished” ¾ Staged releases.

.Skinned knees… lessons learned ™ ’ ’ The broad and early involvement of all stakeholders is critical Limited pilot deployments of new or emerging standards are useful to road test the theory A balance between the general and specific cases and the balance between flexibility and specificity. is important Natural tendency of the entropy of systems to increase is unavoidable Extensions of Trading Partner specific business processes ‘beyond the firewall” should be avoided The management of existing deployments in an environment of ongoing standards development takes lots of work ’ ’ ’ ’ ’ BUT. we have growing successes …. Copyright 2001-2008 OFS Portal LLC .

800 Spend/wk $1.553 $4.201.168 $818.846 $1.159.000 Spend/wk $6.451.000 1.000 45.091 $421.At the forefront of eCommerce in Oil & Gas Chevron’s Top Supplier Statistics via PIDX XML as publicly stated in Aberdeen July 2008 „ ™ Services Supplier A B C D Transactions/yr 11.000 3.000 8.000 38.620 Spend/yr $323 MM $246 MM $75 MM $43 MM „ Materials Supplier E F G Transactions/yr 44.739.819 Spend/yr $60 MM $38 MM $22 MM Copyright 2001-2008 OFS Portal LLC 19 .485 $728.

At the forefront of eCommerce in Oil & Gas ™ How do PIDX standards enhance Chevron’s processes? „ „ „ „ „ „ Time to implement ( same process for everyone ) Major reduction in time & effort to add locations 98% Supplier Invoices now processed without intervention Attachments are included in XML format Security/encryption included Transaction integrity ensured from delivery through to acknowledgement Copyright 2001-2008 OFS Portal LLC 20 .

promote and use PIDX standards. for Products and Services.Who are we ? ™ OFS Portal. Transaction Documents and Business Processes. a non-profit API committee for Developing Electronic Business Standards. Copyright 2001-2008 OFS Portal LLC 21 . PIDX develop open and non-proprietary standards available to the public. The Petroleum Industry Data Exchange (PIDX). * In compliance with all Anti-Trust laws We have a growing community who have all agreed to a mutually beneficial contractual framework for eBusiness transactions. providing standardised information to B2B trading partners to facilitate eCommerce in upstream products and services. As a group we strongly support. Secure Data Exchange. a group of diverse suppliers working together* with a non-profit objective.

Thank you ™ Copyright 2001-2008 OFS Portal LLC .

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