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B2B Model for North Oil Company
Transcript of B2B Model for North Oil Company
North Oil Company(NOC)
What is E-procurement ?
The Business Case
A typical system Design for NOC to carry out Procurement process electronically.
The main characteristics are:
- seamless process flow
- fast and easy communication and interaction
- Provide security
- Maintaining well organized data
Current Supply Chain Description
NOC is an Iraqi state owned company undertaking the following activities:
- Production of crude oil and natural gas.
- Treatment of oil in process units and transporting it through pipelines to refineries and export terminals.
- Separation and compression of associated gas and production of dome gas to be transported to North Gas Company (N.G.C) gas processing complex to produce L.P.G for domestic consumption and dry gas as a fuel for industrial use.
- Sponsoring oil well drilling, work over and completion operations by Iraqi Drilling Company (IDC) and other foreign drilling contractors, in addition to geological control of those wells.
It is a B2B model that automates procurement processes using web-based applications to carry out part or all of the procurement actvities electronically.
E-procurement system can connect firms and their business processes directly with suppliers and managing all interactions.
Empowering firms to have a better and well organized supply chain.
Building a well organized data base.
Why e-procurement ?
Convenient and efficient electronic ordering.
Shorter requisition and fulfillment cycles results in cuttingcost (Efficiency).
Facilitates the flow of information among the buyers and the suppliers.
Improves relationship between buyers and suppliers.
Increases competition among suppliers which leads to lower price.
Better enforcement of regulatory compliance to prevent corruption and achieve transparency.
Better information management through integration with other systems.
Upstream Midstream Downstream
Business Analysis & Strategic Plan
B2B E-commerce Model for North Oil Company
E-procurement as B2B Model
Key Drivers of E-procurement Value
Improved Process Efficiency
Critical Factors Influencing the Success of E-procurement
Security and Authentication
ROI and Expected Savings
Early adopters of e-procurement claimed savings on their spending between 8 and 15% within 12 month project payback.
purchase price and process cost are the main factors to acheive fast ROI.
Estimated amount of investment is 1-1.5 million dollars
The estimated cost savings that NOC will achieve.
Type of savings Estimated savings
Process cost 25-35% 40-50%
Price reduction 10-12% 18-20%
Which E-procurement Model is the Best for NOC ?
One-to-many interaction pattern initiated by a single supplier that supports many buyers.
Many-to-one interaction pattern initiated by a single buyer to interact with many suppliers.
Many-to-many interaction pattern initiated by a single firm to bring buyers and sellers on one platform.
The Business Model
NOC's business model in adopting e-procurement is cost reduction based on:
- Elimination of the manual process ( paper work).
- Reducing errors resulting from manual process.
- Reducing the process cycle time which leads to more savings.
- Prevention of corruption.
Intangible benefits achievable from e-procurement:
- Cultural change and enabling e-business into the organization.
- Employee motivation through elimination of cumbersome tasks and redundancy.
- Establishment of trust between company and suppliers.
Suggested Strategic Plan
The strategic phase consists of the following parts
Workshops for the key organizational leaders to unify the visions.
Program and Project planning.
Strategic Direction, guiding principles and project goals.
Target Performance Measures.
Completing project readiness assessment and developing a plan of work which includes:
- System selection
- Implementing and assessing the system
NOC’s supply chain is deficient in the following key areas:
• Supply chain management skills and expertise.
• Developing value-added relationships and greater levels of trust between the company and suppliers.
• Reducing inventory throughout the supply chain.
• Conducting joint process meetings to improve and enhance the supply chain.
• Deploying technology effectively to achieve supply chain efficiency
• Implementing cost reduction opportunities.
Other Factors to Be Considered
HR capacity is vital for a successful implementation of e-procurement in NOC
Vacancies to be filled when adopting e-procurement:
E-procurement (Senior manager, IT manager, System administrator, Supply chain manager and Consulting manager-External expertise).
Legal and Regulatory Environment
Outlined extensively by the OECD & MENA thorugh the analysis of the public contract requlations set by CPA in 2004 and subsequent regulations set by the Iraqi gov. in 2007 and 2008.
Expected hurdles are:
E-procurement might be met with stiff resistance because the Iraq oil procurement system has no current provision for it.
Bureaucracy and conflicts within Iraq legal framework might hinder the implementation of the e-procurement system.
Manual Procurement Process at NOC