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Out-sourced procurement delivers considerable savings to oil companies

Thursday, September 10, 2015

Craig International's research has revealed that typically oil company buyers spend 85% of their time on managing only 15% of their spend.

Craig Group is re-launching its global oilfield procurement division at Offshore Europe tomorrow to demonstrate the major cost-savings it can offer the oil and gas industry. This is in response to the need for greater efficiencies to cope with the sharp drop in oil prices.

Craig International, the new name for Craig International Supplies (CIS), has evolved from an oilfield supply company to a provider of out-sourced procurement services. These services are resulting in major savings for oil companies in time and resources, combined with considerable savings on spend on oilfield products.

Out-sourced procurement management now accounts for almost 90% of Craig International's revenues and this is anticipated to grow dramatically in the next 12 months. By providing a complete procurement service, from raising the requisition, obtaining quotes for best price and issuing the purchase order to organising receipt and delivery of the goods, Craig International guarantees major savings on administrative time as well as the best price for the service or product.

Craig International's research has revealed that typically oil company buyers spend 85% of their time on managing only 15% of their spend. This small percentage of overall spend is largely related to oilfield consumables including chemicals, oils and paints, pipe and fittings, tools, electrical and welfare items and services such as travel and accommodation, project management, data management and processing, hospitality, facilities management and general repair and maintenance.

Out-sourcing the procurement of these goods and services results in major cost-savings, reducing expensive overheads and freeing up personnel to focus on the company's core business.

Jill MacDonald, joint managing director of Craig International explained: 'Historically we have been seen as simply a supplier of oilfield consumable products, but we now have a recognised track-record in delivering a much wider procurement service which allows companies to out-source their entire procurement function.

'With the current, pressing need to make savings across the oil and gas supply chain, we felt the time was right to re-brand and demonstrate how we can act as a full trading house for the industry globally. By being part of our customer's business, not just a supplier, we can better serve that business and guarantee savings. Our people and processes are driven by efficiency and in passing this on to our customers.'

In addition, Craig International's consolidated global buying power allows them to pass on further savings to customers. They also operate a gain share model with several key clients where the cost savings of their combined spend are shared across them all equally. Further efficiencies are delivered through smart use of cutting edge e-procurement, reducing administration resources. Craig International's electronic, on-line processes integrate fully with internal systems used by their customers.

Steve Johnson, director of Simply Joined Consulting Limited, Fellow of the Chartered Institute of Procurement & Supply and formerly a steering committee member of FPAL said: 'I have been very impressed with Craig International and, as a former customer, have seen how they effectively combine smart processes with smart buyers who are motivated to source the best products and services at the best price for their customers, resulting in reduced costs and real value creation.'

Craig International has a global network of pre-qualified suppliers, over 70 experienced and qualified buyers in six countries covering every continent, proven out-sourcing experience, recognised international accreditations and on-line procurement tools and processes.

'With access to a wide variety of market sources for goods and services, we can satisfy the full range of sourcing strategies from low cost country sourcing initiatives through to specific local content demands,' added Ms MacDonald.

'We can streamline a client's vendor list and take care of the pre-qualification of second tier vendors. We are able to benchmark vendor pricing to make sure our customers get the product or service for the best price and then provide detailed reports on-line and in real-time. Our processes integrate seamlessly with our customer's procurement systems.'

With bases in Houston, Calgary, Cape Town, Warsaw and Hamburg, Craig International saw its turnover rise from over £48million in 2013 to almost £66million in 2014. It is a division of Aberdeen head-quartered global shipping and energy service firm, Craig Group.

Craig Group remains one of Scotland's top 100 companies, is in the Sunday Times TopTrack 250 list of UK private mid-market companies and the top 20 of offshore service companies in the North Sea.



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