Global Drilling Company: Procurement Transformation

Accenture helped this global drilling company identify nearly $3 million in savings through the streamlining and improvement of its procurement processes.

In fact, the project realized three times that saving; more importantly, it helped create a procurement function that supports the company’s drive to achieve high performance. The client is a leading global drilling company.

In recent years, the global drilling company has maintained a sharp focus on acquiring oil rigs and quickly integrating them into its operations. This strategy has paid off as the company has achieved roughly 30 percent annual growth for the past five years.

Following this impressive accomplishment, the global drilling company recently set out to improve coordination and operational efficiencies among its largely decentralized regional operations with a particular focus on strategic sourcing. The ultimate goal was to more effectively utilize its significant scale to reduce costs in key indirect categories.

Recognizing the initiative could benefit from outside expertise, the global drilling company’s management team began looking for an external partner that could bring the requisite skills and capabilities to the project. The company ultimately chose Accenture for its broad skills in sourcing and procurement, proven strategic sourcing methodology, deep industry experience, and ability to tap into a global network of category experts to generate sustainable savings.

Together, Accenture worked with the global drilling company to conduct a thorough procurement diagnostic. Leveraging Accenture’s proprietary database of high-performance procurement metrics allowed the team to compare the company’s performance against industry-specific benchmarks.

The assessment identified $14.7 million worth of improvements to pursue during the project, and $2.9 million was selected for realization.

To achieve these benefits as rapidly and as cost-effectively as possible, Accenture designed three high-priority work streams to be executed in parallel.

The capability development work stream was designed to help the global drilling company create a powerful internal procurement capability that would generate greater value for years to come.

In parallel, the company wanted to implement Accenture’s proven strategic sourcing methodology in one of the company’s most important categories: travel. Accenture’s methodology is readily customized for specific goals and challenges.

Working closely with the global drilling company, Accenture identified a number of other categories ripe with potential savings that could be uncovered quickly via an abbreviated version of Accenture’s strategic sourcing methodology.

Focus on rapid cost reduction extended to the company’s purchasing of courses and training as well. Perhaps most importantly, Accenture and the company worked collaboratively with potential vendors throughout this process, sharing details of the company’s demand for training to receive better-informed proposals. The approach has empowered the company to direct buyers of training services to the best, most competitive supplier in each location where the company does business.

Procurement has become one of the most important areas of the business, and a prime function for efficiency and sustainable cost savings improvements. In fact, Accenture’s High Performance Business research has found that developing effective linkage with trading partners, including suppliers, is one of the characteristics of supply chain masters, as it enables companies to identify and capitalize on some of the greatest opportunities for operational improvement.

By taking advantage of Accenture’s deep sourcing experience across categories, the global drilling company has achieved significant savings and performance improvements. In just four months, Accenture helped the company achieve nearly $8.8 million in savings, approximately three times the project’s $2.9 million initial target.

Even more importantly, the global drilling company has laid the groundwork to sustain these savings over time. It now has a more powerful internal sourcing capability, a strategic approach to sourcing, and the insights and tactics it needs to continue to reduce costs in a host of important categories. In summary, by teaming with Accenture, the company has sophisticated resources needed to continue on its journey toward high performance.