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  • 1. VENDOR MARKET ANALYSIS PROCUREMENT OUTSOURCING SHELL GERMANY, DECEMBER 2009 1
  • 2. INTRODUCTION Oil Market Q408 marked an inflection point* Lower oil & gas prices; weak energy demand Prudent approach to economic downturn Standardization , cost reduction and process optimization is required Outsourcing *Source: Shell Annual Report Q109 2
  • 3. INTRODUCTION Vendor Market BPO services increasing in quality, accuracy, efficiency Tradicional BPO market increasing CAGR 24%, $450Bn by 2012* Vendors are getting better...market is growing Vendors Specialization *Source: Infosys Market Report, 2009 3
  • 4. AGENDA 1. INTRODUCTION 2. OBJECTIVES---METHODOLOGY 3. PROCUREMENT OUTSOURCING (PO) 4. GENERAL COMPANY OVERVIEW-WHY TO IMPROVE? 5. BPO ENGAGEMENT SCOPE-MAIN SCENARIOS 6. PO-VENDOR MARKET INSIGHTS 7. FINAL COMMENTS 4
  • 5. OBJECTIVES INTERNAL VENDOR SELECTION IMPLEMENTATION SG&A Ratio Top vendors Selection criteria Work plan Posible Characteristics Recomendations engagement Locations scenarios Clients ADVISORY VENDOR ANALYSIS REPORT 5
  • 6. PROCUREMENT PO Highlights Procurement processes Activity %SSC Direct- Indirect Procuremet Transactional Processes Catalogue 80% Captive vs. BPO solution Management Supplier Help Desk 90% Supplier Credit Check 90% Quantity Transactional 90% Purchasing Small Item Purchasing 90% Nature Value Ordering 95% Frecuency 6
  • 7. COMPANY Deutsch Shell Holding GmbH OVERVIEW Shell Germany AG -> lack of corporate information Deutsche Shell Holding GmbH Annett Buchholz (Shell Deutschland Oil GmbH Exploration Information und Presse) ...thanks! & Production Manufacturing, transportation and marketing of hydrocarbons Revenue 2008: 2,200 mEuro Oil Sands Gas & Power COGS: 1,800 mEuro SG&A: 110 mEuro * Procurement Pers.: 100-120FTE 7
  • 8. COMPANY SG&A Ratio OVERVIEW Company SG&A Sales/rev. SG&A ratio Rank BP 15,412 361,143 4.27% 3 EXXON 15,873 459,579 3.45% 1 MOBIL DUTCH SHELL 17,028 458,361 3.71% 2 SHELL 110 2,200 5.00% 4 GERMANY Cost Savings Oportunities-> Reach Benchmarks 8
  • 9. COMPANY SG&A Ratio OVERVIEW SG&A Sales/revenue SG&A ratio 500,000 10% 450,000 9% 400,000 8% 350,000 7% Revenue (mEur) 300,000 5.00% 6% 250,000 4.27% 5% 3.45% 3.71% 200,000 4% 150,000 3% 100,000 2% 50,000 1% 0 0% BP EXXON MOBIL DUTCH SHELL SHELL GERMANY Company Cost Savings Oportunities-> Reach Benchmarks 9
  • 10. BPO ENGAGEMENT Procurement Process Costs (PPC) SCOPE Procurement Process Costs (PPC) are 1.49% of COGS (2008) Europe segment Income for 2008 corresponds to 8,809 mEuro, which represent the 33.25% of the total Income of the period for Royal Dutch Shell*. Shell operation in Germany will be estimated considering**: Revenue 2008: 2,200 mEuro COGS: 1,800 mEuro PPC = 0.0149 x 1,800 = 26.82 mEuro SG&A: 110 mEuro ** Procurement Pers.: 100-120FTE *Source: Shell Earnings by Business Segment and Identified Items 2008, Financial reports, shell.com **Informed by communications department of Deutsche Shell Holdings GmbH 10
  • 11. BPO ENGAGEMENT Scope SCOPE Procurement processes in Scope Activity Employees and Costs Procurement Process Catalogue Management 26.82 M Costs (yearly basis) Supplier Help Desk FTE in Scope 120 FTE Supplier Credit Check Average Tenure 11.5 years Transactional Purchasing Fully Fringed Costs 56,500.00 Small Item Purchasing Retained FTE 15%*** Procurement expected Ordering +25%* savings Countries /Locations 1 location Germany (Hamburg) *Source: http://logisticstoday.com **Informed by communications department of Deutsche Shell Holdings GmbH ***Similar businesses retained FTE 11
  • 12. BPO ENGAGEMENT Scope SCOPE 20000 10000 0 1 2 3