Supply Chain Management: “Safe, Clean & Lean ... - Pertaminascm.phe.pertamina.com/media/9f5a7b2c-2fdd-4dc9-b3a8-a7c4a65be… · HIGH HSE RISK . hence working with contractors and

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Supply Chain Management: “Safe, Clean & Lean”

Vendors Day 2016 (East Java Region) Surabaya - August 24th, 2016


AGENDA

Overview Safe (HSE) Clean (GCG & COC) Lean (Operational Excellence) Concluding Comments

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UPSTREAM

Exploration & Development

Hydrocarbon Production

Shipping

Refining & Handling

Storage

Distribution

Market

DOWNSTREAM

PETROLEUM VALUE CHAIN – UPSTREAM BUSINESS

• Operational Excellence • Maximized Value to Stakeholders


CAPEX cut OPEX optimization

USD (000)

OPEX

CAPEX

OPEX

CAPEX

~60% ~40%

$105 ~$40

ICP/Bbl

2016 GLOBAL CHALLENGE Efficiency & Cost Reductions Project Economis:

oRevisited at current oil price oPostpone if below expected IRR and NPV

Renegotiate contracts with contractors Review and/or freeze new hiring Reduce non-essential and non-urgent activities HSE/Safety remains top priority


Judul

Clerical

Process paperwork Confirm action of others Emphasis: Convenience Relationships: Personal Bottom-line impact:

Overhead Reporting: Very low level Data: Not available

Mechanical

Transactional focus React to requisitions Not involved in key source

selections Emphasis: Purchase price Relationships:

Transactional/adversarial Historical demand & stock-

outs drive replenishment Reporting: Low level Data: Used to expedite Computers process

paperwork

Proactive

Cross-functional team orientation

Develop Suppliers Long-term Contracts Involved in development of

requirements Supplier-Customer early

involvement Procurement adds value Active in source selection Near defect-free materials and

services Emphasis: Cost, quality,

timeliness Relationships: Transactional

and Collaborative Bottom-line impact: Profit

contributor Reporting: Upper management Data: Facilitates sourcing and

pricing Fulfill social responsibilities E-Commerce

World Class

Supply management a core competence

Strategic sourcing Monitor supply environment Develop and implement

commodity strategies Commodity teams Supply base by design Develop and manage

alliances and networks Increased value added

activities and process Virtually defect free materials

and services Leverage supplier technology Integrated supply strategy Manage risk Emphasis: Total cost Relationships: Transactional,

collaborative, and alliance Bottom-line impact: Increase

shareholder value Reporting: Member, executive

group Data: Facilitates strategic

planning Understand key supply

industries E-Commerce II

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The Progression to World Class Supply Management (Adapted from the American Keiretsu by David N. Burt and Michael F. Doyle)

1 – 3 Years

3 – 5 Years To be a world-class, best-in-class supply chain and a leading supply chain organization

To provide high quality supply chain solutions and services to fulfill end users’ procurement and logistics requirements in order to achieve their business goals effectively, efficiently, in compliance with pertaining regulations, in highly ethical business practices and by optimizing local content participation.

SUPPLIERS SUPPORT TO THE JOURNEY TO WORLD-CLASS STANDARD

On-Time Delivery Performance: < 75% PO Rejection Rate: > 5% TKDN Achievement: Below % Commitment


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HEALTH SAFETY & ENVIRONMENT


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“Contracted work accounts for 70-75% of EP’s total exposure hours and much of it involves HIGH HSE RISK hence working with contractors and early planning are essential to improve HSE at the workplace.” *

* Shell Exploration & Production Report

25-30%

Company - Contractor Hours Worked

2015

Man

-hou

rs

Con

trac

tor

WHY CONTRACTOR’S SAFETY MANAGEMENT SYSTEM?

Supply-chain generally accounts for between 60% and 90% of all company costs.

Rule#1

Pursuing the goals of no harm to people and no damage to the environment or equipment


Planning : Contract Preparation &

Risk Assessment

Pre- Qualification &

Selection

Pre Job Execution

After Job Execution

Final Evaluation / Close-Out

Execution / Working in Progress

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2

3

4

5

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CHSEMS (CSMS) PRE-QUALIFICATION SUMMARY

2015 2016*

*) Jul 2016

Highest Score : 92 Average Score : 68


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Supplier Management

Selection & Strategic Sourcing

Supplier Evaluation

Supplier Development/ Improvement

Supplier Qualification

Supply Base Rationalization

Supplier performance measurement Supplier scorecards Performance KPIs / metrics Pool of potentially capable suppliers

Automatic procure-to-pay business processes

Information exchange with suppliers

Seamless integration (XML, EDI) Strategic alliance

Supplier e-registration Administrative & HSE

assessment Supplier-commodity

classification Define key suppliers in the

supply base

Total spend analysis Cross-functional Team Supplier-commodity strategy Long-term relationships dev. Contract management process Total Cost of Ownership approach

Supply base optimization/ right-sizing Supplier

phasing out

* 200+ Suppliers/Contractors of total ~1,000 located in East Java

SUPPLIER RELATIONSHIP MANAGEMENT


20%

60%

20%

Preferred (Top Performance)

Standard (Average)

Phase Out (Poor Performance)

Sole Sources & Key Suppliers

Inactive Suppliers

Sole agents; sole distributors; providers of specific products/unique items; sole fabricators mandatory domestic products General suppliers with no single transaction in the last one year

Supplier Matrix

ELIGIBLE SUPPLIERS LIST


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GOOD CORPORATE GOVERNANCE


GOOD CORPORATE GOVERNANCE

Clean Competitive Confident Customer-Focused Commercial Capable

Transparency Accountability Independency Responsibility Fairness

Corporate Values – 6C’s Pertamina’s GCG Principles

Legal, Rules and Regulations PHE WMO Employees Business Ethics PHE WMO Suppliers Code of Conduct

COMPLIANCE


No Bribery No Kick Back No Luxurious Hospitality No Gifts No Conflict of Interests No Confidential

Information Sharing No Favoritism

Fully Committed To GCG and CoC


o Do follow the Code of Conduct Policy o Do read and understand PHE WMO Procurement

Policy o Do understand the contents of a supplier contract o Do ensure contracts are signed and dated by the

supplier o Do review each page of the contract for alterations o Do keep your manager informed of contract

compliance issues o Do engage Contract Management or Legal on any

modification prior to acceptance of contract o Do ask for guidance and/or help whenever you’re

uncertain o Do understand and adhere to the policies for

confidential information o Do treat suppliers with the highest level of

professionalism and respect at all times o Do ensure that we challenge our Clients to use

appropriate Procurement Process o Do treat all suppliers fairly

o Do not provide false or give misleading information

o Do not alter documents in any way o Do not use side letters: written or oral

assurances regarding discounts, credits, returns, contract terms

o Do not bypass procurement procedures o Do not subdivide contracts or split

Purchase Orders to avoid review based on established authority levels

o Do not backdate documents o Do not falsify records to support fictitious

transactions o Do not manipulate input for approval o Do not forge signatures

Uncompromised Integrity Leadership

PROCUREMENT DO’s & DON’Ts


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Operational Excellence


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LEADERS TOP 20%

Performance; the accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed. http://www.businessdictionary.com

LAGGARDS BOTTOM 20%

Based on PwC’s Global Supply Chain Survey 2013 in determining Laggards & Leaders of the Industry

75 KKKS

15 15 45

Suppliers of Choice Customers of Choice

200 SUPPLIERS

40 40 120

LAGGARDS vs. LEADERS

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=XeHESkyVIcf1-M&tbnid=4CPRWo84j8YwhM:&ved=0CAUQjRw&url=http://updconsulting.wordpress.com/2010/10/25/for-whom-the-bell-curves/&ei=ZuqBUbOELdDQrAelvoGoBA&bvm=bv.45960087,d.bmk&psig=AFQjCNFaN-ADXJ3DqmayCCceCGC-dzxLQQ&ust=1367554909501282

http://www.businessdictionary.com/



ISO 9001:2008 Quality Management Logistics Warehouse

ISO 9001:2008 Quality Management Procurement

ISO 14064 Green House Gas Accounting and Verification

ISO 14001 Environmental Management Certification OHSAS 18001 Occupational Health and Safety Management

PROPER Green (Gold Award Candidate)

Penghargaan Cinta Karya Nusantara dari Kementerian ESDM

INTERNATIONAL STANDARDS & SOME ACHIEVEMENTS


KPI DASHBOARD & BALANCED SCORECARD

Develop Competent Workforce Index level of competency, 0.7 Number of Proc staffs PTK certified, 95% Build Conducive Working Climate System & technology improvement, 70%

Optimized Budget Utilization Budget spending, 90-110% Supply Chain Mgmt Cost Total SCM Cost to Opex, <7.5% Cost Saving, >US$10 Million

Effective Sourcing & Inventory Mgmt Supply agreement/VMI, 500 items+ Inventory turn over ratio, 2.2x Service level of MRP items, 94% Inventory Accuracy, 95% Effective Logistics Process % Masterlist timely approved, 95% Logistics transport performance, 100% Warehousing & distribution, 100% Fuel Monitoring, 100% Environmentally Friendly Operations Number of environmental case, <2 Green SCM Initiatives, 5 Improved Safety Performance NLTA, RIR (1.2 for corporate) STOP Card performance, 140/mo

Highly Compliance Number of major audit finding, 0 % Regulation compliance, 100% TKDN Achievement (Goods) >55% Invoice verification, 10 d* Competitive Position SKK Migas SCM KPI, 85 points On time Provision of Goods/Services Contract finalization cycle time, 18d* PR to PO cycle time, 19d* PO on time delivery, 70% PO rejection rate, <5%

HOW DO WE LOOK TO SHAREHOLDERS?

WHAT MUST WE EXCEL AT?

CAN WE CONTINUE TO IMPROVE AND

CREATE VALUE?

HOW DO CUSTOMERS SEE

US?

Vision &

Strategy


SUPPLY CHAIN VALUE CREATION & COST DRIVERS

TOTAL COST OF OWNERSHIP

(TCO)

END-TO-END SUPPLY

MANAGEMENT


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Goods/Services Providers Associations Other KKKS Government

SCM (HSE Built In)

SCM ROLES

SCM : ESSENTIAL TOWARDS HSE, GCG, OPERATIONAL EXCELLENCE


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Supply chains are: becoming strategic key to HSE and operational excellence front end for good business practicess important in national/local capacity development main contribution to cost saving & efficiency becoming more complex

Supply chains must address critical challenges

Right Metrics Right Capabilities Right Culture

CONCLUDING COMMENTS



http://scm.phe-wmo.com/

Vendor Management Contact: [email protected]

Documents

Supply Chain Management: “Safe, Clean & Lean ... - Pertaminascm.phe.pertamina.com/media/9f5a7b2c-2fdd-4dc9-b3a8-a7c4a65be… · HIGH HSE RISK . hence working with contractors and