Establishment of an overall strategy for procurement at an international exploration well project: characteristics and challenges
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“Strategy is the direction and scope of an organization over the long term. Ideally, the strategy has to match its resources and its changing environment and in particular its markets, customers or clients so as to meet stakeholders’ expectations”. This quotation related to the meaning of strategy is stated by G. Johnson and K. Scholes and includes several important features of the strategy concept. Statoil is currently building a global exploration unit with the ambition to become a leading exploration company. Consequently, the company’s supply chain management strategies have to be aligned with this corporate objective. Three supply chain management strategies are stated in Statoil’s management system including category strategy, project strategy and specific procurement strategy. Strategic alignment between supply chain – and corporate strategies is a question of sharing information, the status of the procurement function, managing organization change and the knowledge and skills of the procurement personnel. An overall strategy for procurement at an international exploration well, requires a strategy per goods and services. Statoil’s framework in order to manage future demand is basic category management. Category management is a strategic approach to maximize business profitability. In general, the approach is about changing sourcing in a radical way or a way that provides radical improvements. This could include competition to drive down prices, changing internal processes or use suppliers to change value of products. The potential benefits of category management in a supply context are numerous. For instance, category management can support in delivering dramatic results in terms of price, risk, cost and value. It can make a clear contribution to the bottom line in an organization, as well as making a solid contribution to shareholder equity. Category management enables the organization to improve the respond to demands of the end customer and link these to supply – chain possibilities. Based on category management, strategic actions can be identified within each category. Therefore, the category strategies form the basis for project – and specific procurement strategies, and these have to give guidelines at international exploration well projects related to such as demand, spend, main cost drivers and market. The category strategy should also document relevant facts, different analyses, experiences, risk and uncertainty measures and goal settings. The different elements have to be updated in order to achieve the best agreements for the company. Category management achieves a practical and systematic approach to handle facts, experiences and risks that influence each category. This master thesis examines characteristics and challenges related to an overall strategy for procurement at an international exploration well project. The single – case study design utilized in this research is related to an international exploration well project in Statoil termed “the Amundsen #1 exploration well project”. In particular, several of the valid category strategies at the Amundsen #1 exploration well project, are evaluated based on relevant theory and presentations by the category responsible group in Statoil. Several remarkable findings were identified in relation to this master thesis. Although the findings are linked to the concrete research questions and the organization utilized in the case study, I believe that the findings could be of interest for other global companies involved at international projects as well.
Master's thesis in Industrial economics