23 August 2001 | Liam O'Brien
Procurement savings at Shell are set to exceed £2.8 billion as the Anglo-Dutch oil company posted its largest ever second-quarter profits for the European petrol business.
With its buying teams, which spend £15 billion a year worldwide, exceeding targets, the group is on course to deliver savings of £3.4 billion in 2001, said David Wood, commercial procurement manager for Shell UK.
"Procurement has been central to this second quarter result," he told SM. "Increased profitability has been sustained by improved performance. In addition, a significant contributor to that has been an added focus on procurement."
The procurement teams have concentrated on making supply chains more efficient. "Over the past couple of years we have realised that we can take a lot of cost out via the better management of third-party suppliers," Wood said.
At Shell UK's exploration and production division, significant savings were made in facilities management and catering. Shell was able to reduce offshore catering shipments to oil rigs from weekly to fortnightly. It was also able to reduce wastage by improving the containers used to transport the food.