5 ways to enhance procurement in the energy sector
Energy is at the heart of our lives. It powers our homes, workplaces, and transportation systems. In many ways, it defines who we are as a society. The energy industry has been shaped by innovation and technological advances that have helped to keep the world running smoothly for over a century now—and will continue to do so for generations to come. But with all this progress comes new challenges: sourcing sustainable resources while limiting greenhouse gas emissions; protecting against cyber threats; meeting 21st-century customer expectations in an increasingly competitive landscape; and more. To address these challenges effectively, procurement professionals need a set of skills that go beyond traditional supply chain management roles—skills like supplier sourcing or technology adoption when negotiating contracts with customers or vendors alike.
1. Find the right suppliers for your products
Connecting with the right suppliers for your products is imperative. Unfortunately, finding quality suppliers in the Oil & Gas and Renewables space is difficult due to fragmented markets, personnel turnover, and a lack of marketing expertise by vendors. Other industries are leveraging e-procurement to connect with suppliers. No, we're not talking about outdated and stale online directories. They're leveraging platforms that ensure wholistic reviews of suppliers, up-to-date contact and payment information, and seamless transactions.
2. Improve product quality to increase customer satisfaction
Quality is everything in the energy business. If one of your products fails on a job, it's possible your company will lose that work or not be called back next time. Supplier relationships are imperative to your product quality, response speed, and delivery in the Energy business. If you've never worked with a new supplier before, it's difficult to know if they're going to deliver a superior product. Procurement and supply chain professionals are searching for recommendations and reviews. They're interested in learning about others' experiences with particular suppliers before they enter an agreement with a new supplier. Review information ensures all companies are pushing to offer high-quality goods and services, to innovate, and to beat the competition.
3. Create a system that allows you to quickly respond to customer demands
Response speed ensures you will win more work. Responding quickly to RFQs allows your team to time to speak to the customer you're working with, and to better understand and meet their needs. If you're slow to respond, you likely won't have time to visit with the customer and make changes if necessary. Providing your procurement and supply chain team with dynamic tools for rapid and accurate response will allow you to send out more proposals and increase the likelihood of driving revenue growth.
4. Use technology wisely
Technology has historically been viewed with a negative stigma. Software development in the oil and gas space is often outsourced to offshore teams that do not leverage best-in-class tech stacks. The end results are often closed API platforms that take days, weeks, or months to implement, and often do not meet customer expectations. When your team is analyzing a new technology, it's wise to seek references outside of the oil and gas space.
5. Automate where possible, like requesting quotes and ordering supplies
Lastly, the industry tends to throw people at problems. Given the capital-constrained environment, this approach no longer proves profitable. Increasing headcount during an upswing and headcount reduction during a downturn is the tried and true method of the oil and gas space. However, with modern technology that's easy to implement, learn, and leverage, companies servicing the traditional and renewable energy space can automate manual processes like connecting to vendors, identifying new vendors, and ensuring those vendors comply with internal requirements.
One of the most important aspects of running a business is finding and keeping suppliers that can provide your company with quality products at an affordable price. By focusing on improving product quality, you increase customer satisfaction and allow for more time to respond to their demands quickly. Create systems in your supply chain which help automate where possible like requesting quotes and ordering supplies. Technology has made it easier than ever for businesses leverage these methodologies; if you're not already using them, we encourage you take advantage. We'd love to know how innovative your team has been when it comes to optimizing the supply chain--let's chat.