Supply Chains for Fast Track 2014

8/10/2019 Supply Chains for Fast Track 2014

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ENM616 Socially Responsible

Management

Supply Chain Management (SCM)and its role within a companyCorporate Social Responsibility (CSR)

strategy

Dr Sarah Buckler

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Supply

Over 27 billion revenue (Ernst & Young 2012)

High cost of producing hydrocarbons in North Sea

Leads to greater emphasis on efficient, streamlined,

coordinated, highly skilled, asset based processes Globalisation of energy sector also leads to these

processes becoming interwoven across regional and

national boundaries in increasingly complex logistical

and contractual arrangements UK world leader in subsea engineering with 45%

global market (Oil & Gas UK 2013)


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Supply and Demand

Product Supply

Chain starts before particular customer enters chain

Standardised products

Customer demands products and services

Customised

Often start with customer who initiates chain of

manufacturing, design etc.

Rising influence of broad spectrum of shareholders,

media, NGOs and globalisation upon issues of supply

and demand which has changed relationships and levels

of control.


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Supply Chain Management

In oil and gas SCM is for

products, services and

expertise

Local and global

How to develop, maintain

and sustain organisations

and regions positions

within energy sector


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Offshore Oil & Gas Supply Chain Categories

Source: Oil & Gas UK 2010a 6


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Offshore Oil & Gas Supply Chain Structure

Source: Oil & Gas UK 2010a7


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Three Tiers

Tier 1end users, operators in exploration andproduction, energy providers & asset holders

Tier 2Major contractors and consultants involvedin E & P, patent parts, system and solutions tooperators specifications, well management and

decommissioning

Tier 3Services, parts, specialist equipment,software and materials required by Tier 2 (and 1)

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Who is in the Chain? (196k in

Scotland) Own company

Employees

Clients

Suppliers

Suppliers suppliers Customers customers

Look at page 40http://www.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=753

Procurement throughout the life of a project:

Development

Production

Decommissioning

Must adapt to meet fluctuating resources and perceptions
http://www.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=753http://www.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=753http://www.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=753http://www.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=753http://www.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=753


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Strategic approach

Dept of Business, Innovation & Skills (BIS), Oil &

Gas UK & DECC developed related strategies

Look at economic production of resources

Sustain national & international supply chain

Promote collaboration within industry and with

government

Mapping supply chain is one of biggest challenges.Aim to promote national & international growth &

capabilities

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Activity

Identify a major TNC project on the West ofShetland

Where do you think the company andactivities fit into the supply chain of this

sector?Establish which other types of organisations willbe part of supply chain

Consider how the chain can be managed and

how far reaching are organisations socialresponsibilities in terms of: Ethics

Geography

Layers of interaction 13


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Economic:

Prices for product from planning to sale In/direct costs including staffing, training, timing, lead

times, idle transportation, measuring risks of failure/non

delivery and subsequent costs

Hidden economic costs and contributions to neighbouringcommunities, government etc.

Mergers and economies of scale

Does cheapest prove value for money in short and longer

term? Direction of the supply and demand markets, bank rates,

share prices and their influences

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Outsourcing, contractors and suppliers of

equipment, systems & services

Complexity & size of oil concessions have

increased chain. Top tier companies coordinate exploration &

production

Benefits of involvement

Extent to which apply & regulate same

regulations and policies

Impact of reputation varies down the chain

Supply Chain


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Green Chains

Sustainable development within CSR

Green sustainable chains which acknowledge impactof chain beyond immediate partners

ISO standards Improve or do not harm ecological and social

systems

Link between innovative companies and

sustainability within SCM = new ways of working

Shifts focus within and beyond organisations

Need to align finance with environmental and social

elements


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SCM Framework


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SCM across the chain requires:

Shared objectives Planning

Code of practices - consistent

Long term relationships

Contracts Risk management

Payment arrangements

Feedback mechanisms

Governance and audit framework Training

Measurements

Corporate commitment and compliance


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Potential Problems include:

Identifying and aligning shared objectives Inter and intra organisational communication

Staff shortages and fluidity of energyemployment market exemplified by insufficient

supply of engineers Silo mentalities

Tensions between technological and logisticalsystems and levels of knowledge

Personalities


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Further Problems include:

Different socially responsible approaches and contradictions

Range of company sizes and capabilities

Who governs and imposes penalties

National, EU and international demands and standards

Political, economic and ethical changes

Changing demands and expectations in rapid markets

Fluctuations in prices and demand. E.g. reduction in lendingmeans that smaller companies struggle to raise revenuerequire for investment in order to develop or even maintain

market position


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Global Standards include Social Accountability 8000

ISO 14001 Global Reporting Initiative

UNs Global Compact, a set of core values in the areas ofhuman rights, labour standards, the environment and anti-

corruptionhttp://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html

Who designs the standards

Western imposition?

How to impose?

Weaker than law

Malleability
http://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.htmlhttp://www.unglobalcompact.org/AboutTheGC/TheTenPrinciples/index.html


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Activity Assess implications for North East Scotland SCM of

economic downturns and upturns at the level of:

UK

Global

How could SCM and CSR more generally help managethe implications?

dd l f


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Additional References BIS , Department for Business Innovation & Skills [Website] Employment rights,

http://www.bis.gov.uk/policies/employment-matters/rights (Accessed Aug 2012)

BIS, Department for Business Innovation & Skills [Website] Corporate Responsibility Report.

http://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibility (Accessed Aug 2013

FPAL [Website] First Point Assessment: Supply Chain Database,http://www.fpal.com/pages/about/whoweare.htm(Accessed 2013)

HSE, [Website] Leading Health & Safety at Work Act: Leadership Actions for Directors,http://www.hse.gov.uk/

Oil & Gas UK, [Website] Economic Report 2013

http://www.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=753 (accessedNovember 2013)

Oil & Gas UK, [Website] Supply Chain Structure

http://www.oilandgasuk.co.uk/knowledgecentre/SupplyChainCodeofPractice.cfm

(Accessed Nov 2013)

Oil & Gas UK, [Website] Promoting SuccessA Policy Framework for the UKs Offshore Oil

and Gas Industry http://www.oilandgasuk.co.uk/governmentrelations.cfm(Accessed Aug2013)

Oil & Gas UK, [Website] Environmental Legislation: Statutory Regimehttp://www.ukooaenvironmentallegislation.co.uk/contents/pages/statutory.htm(AccessedAug 2013)

(PILOT, [Website] Activity areas, http://www.pilottaskforce.co.uk/data/aboutpilot.cfm(Accessed 2012)

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http://www.bis.gov.uk/policies/employment-matters/rightshttp://www.bis.gov.uk/policies/employment-matters/rightshttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.fpal.com/pages/about/whoweare.htmhttp://www.fpal.com/pages/about/whoweare.htmhttp://www.hse.gov.uk/http://www.hse.gov.uk/http://www.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=753http://www.oilandgasuk.co.uk/governmentrelations.cfmhttp://www.ukooaenvironmentallegislation.co.uk/contents/pages/statutory.htmhttp://www.ukooaenvironmentallegislation.co.uk/contents/pages/statutory.htmhttp://www.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=409(Accessedhttp://www.pilottaskforce.co.uk/data/aboutpilot.cfmhttp://www.pilottaskforce.co.uk/data/aboutpilot.cfmhttp://www.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=409(Accessedhttp://www.ukooaenvironmentallegislation.co.uk/contents/pages/statutory.htmhttp://www.oilandgasuk.co.uk/governmentrelations.cfmhttp://www.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=753http://www.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=753http://www.oilandgasuk.co.uk/publications/viewpub.cfm?frmPubID=753http://www.hse.gov.uk/http://www.fpal.com/pages/about/whoweare.htmhttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.bis.gov.uk/policies/business-sectors/low-carbon-business-opportunities/sustainable-development/corporate-responsibilityhttp://www.bis.gov.uk/policies/employment-matters/rightshttp://www.bis.gov.uk/policies/employment-matters/rightshttp://www.bis.gov.uk/policies/employment-matters/rights

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Supply Chains for Fast Track 2014