Page 1: Introduction
What would happen if Christmas trees were not available until Easter? How would you feel if you tried to buy a coffee at your favourite high street café only to be told they had run out of coffee beans? Making sure the key components that a business or service relies on are available when needed is the responsibility of the purchasing role.
Purchasing and supply – also known as procurement – may appear to be a ‘hidden’ function in many organisations. In fact, procurement is a highly strategic role, whether the organisation is manufacturing or service-orientated, in the public or private sector, for profit or not. Procurement is complex. It covers the full supply chain from contracts (negotiating), procurement (purchasing) and logistics (storage/distribution).
All businesses need inputs in order to be able to operate. These might be physical inputs, such as raw materials, like engine components for a car manufacturer. They may also be service-based, such as specialist engineering consultancy when trialling new technology or distribution services for a high street retailer. It is vital that inputs not only meet the required quality and reliability standards, but also that they are competitively priced.
Purchasing and supply focuses on sourcing, pricing and buying the right things, at the right price and at the right time in order to deliver a service or product. Effective purchasing can help an organisation to reduce costs, maintain quality and manage the levels of risk to its supply chain. The scale or importance of the item is relative to the level of risk to the business. Missing coffee beans will affect the day’s profits; getting the wrong size of engine for a car could close down the production line.
OPITO and CIPS
For the oil and gas industry with its high levels of risk, the Chartered Institute of Purchasing & Supply (CIPS) is providing training to improve the efficiency and effectiveness of purchasing and supply. OPITO, the focal point for skills, learning and development in the oil and gas industry, undertook a labour market survey of the industry which identified a sector-wide skills shortage. Oil & Gas UK then undertook a supply chain survey. This showed that there is both a current shortage and a likely future need for purchasing and supply chain specialists for the oil and gas industry.
CIPS and OPITO are therefore working together to promote career opportunities and develop specialised training to meet this need. This case study explores the role of purchasing and supply in the oil and gas industry.