To gain a competitive advantage within the oil and gas industry, Shell must leverage its overall buying power. P&T is accountable for deriving value from Shell’s annual third-party spend of about $65 billion. So P&T helps Shell subsidiaries focus on what and how much should be bought, and at what price. The priority is on getting the most value out of purchases, not just the lowest cost. By putting its global internal demand for certain categories of goods and services into a small number of contractual packages in the marketplace, Shell can gain in terms of safety, quality of goods and services, costs and technical innovation. The selection of preferred suppliers enables a far closer oversight of delivery and performance, better mechanisms for quality control and significantly lower prices. Such contract-management improvements, coupled with increasingly efficient operations and collaborative relationships with suppliers, saved about $5 billion between 2010 and 2012.
The Contracting and Procurement unit within P&T analyses the market, enabling it to be forward-looking in its sourcing strategies. In addition, the unit has a key role in helping Shell subsidiaries to work with contractors and suppliers who are economically, environmentally and socially responsible.