The European Supply Chain Excellence Awards 2007, Team Award Winner: TNK-BP

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Teamwork can mean almost anything – who hasn’t been baffled by a job application asking you to ”demonstrate teamwork”? It’s safe to say though that any organisation making it onto the shortlist of finalists in these Awards must be displaying teamwork of no mean order – in the internal supply chain, with other organisational functions (since we are looking for that strategic dimension, and you can’t achieve that in a silo), and with customer and supplier partners where appropriate.

But from this year’s finalists, perhaps four stood out. UTL, for the way its operations on behalf of Vodafone are so totally integrated with the customer that, in compiling these brief reports there has been real doubt as to who should comment on behalf of whom; Vodafone’s own entry, which shows how you can get a real grip on cost structures by working with, not against, your customers and suppliers; and Homebase, where the level of improvement achieved without any authorisation to spend money is a clear indication of effective teamwork.

But for scale and scope in creating an effective supply chain team effectively from scratch, across a geography that extends from Eastern Europe to the Sea of Japan, the Teamwork Award had to go to TNK-BP, the Anglo-Russian oil and gas joint venture.

Our judges commented ”This very interesting transformation represents a total change in the infrastructure, mindset and culture of the company. Where no concept of supply chain existed, they have now brought the company into the 21st century, achieving scores from near average to Best in Class for the Oil & Gas sector – in just two years.

”In an environment that had no idea what supply chain strategy was, there has been excellent process architectural change backed by training and collaboration with both government officials and internal company senior management and workers”.

Almost every aspect of supply chain has been worked over – planning processes, procurement, inventory management. An information management system (mySAP) has new or improved warehouse management, procurement planning, purchasing controls, management of demand change and excess stocks, sales order management and – particularly vital in this high risk business, improved purchasing and materials management for complex equipment with new controls on integrity.

These central processes have been adopted so successfully that it has already proved possible to delegate areas of activity in upstream operations to Regional Procurement Centres.

Supply chain re-engineering project director, Dr Neil Yates, is the sole subject matter expert, leading a team of around 50 other Russian staff and consultants. He says ”Over the three years I have been here, I have seen the expertise, interest and maturity of my direct and consultant staff blossom and grow. What is unique for me about this project is how the normally suspicious, sceptical and sometimes hostile reactions in the business have turned into approval and enthusiastic support. We have indeed created world class procedures for buying strategies and supplier performance management, and systems for demand management, purchasing, fulfilment, receipt, storage and issue. But it is the thirst for improvement in the Russian staff that delivers the value. Yes, we have invested significant capital in processes and systems, but people make the difference and the staff I work with and those in the business line have embraced fundamental change and are now fast delivering the value”.

Yates continues ”At least in regard to the way the supply chain in TNK-BP is being managed going forward, the promise to the Russian government is being delivered. I believe TNK-BP is increasingly seen as an example of excellence with regard to supply chain processes and systems in the Russian oil and gas industry, if not Russian industry as a whole. Indeed some of the lessons learned on this journey could be exported back to TNK-BP’s international shareholders with significant impact”.

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