1. The New Oil and Gas Industry Supply Chain Code of Practice
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ADD TITLE AS APPROPRIATE

2. Supply Chain Code of Practice
Initially developed by a work group established by ILT / PILOT under the Progressing Partnership banner (PPWG)
The Supply Chain CoP is one of over 10 initiatives launched by PILOT and outlines a set of best practice guidelines  
First adopted by the industry in 2002, signatories undertake to work towards full compliance with the Code
Signatories include major purchasers (operators and principal contractors) and suppliers (providers of goods and services) 
The Code is endorsed by PILOT, the Industry Leadership Team and the key Trade Associations
In July 2005 the PPWG SCCOP Work Group was disbanded and replaced with a new Supply Chain Steering Group which reports directly to ILT / PILOT
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3. SCCOP Industry Involvement
PILOT
Industry Leadership Team
Major Purchasers and Suppliers
Operators
Supply Chain Steering Group
ILT (Supplier & Operator) 2
DTI 1
Standard Contracts
FPAL
SCMN
UKOOA / LOGIC
Marketing / Communications
Supply Chain Steering Group (9)
Supply Chain Managers Network (50+)
Supply Chain Managers Network
Operators 30
Trade Associations 6
Major Contractors 10
Industry Groups
Work Group
Work Group
SCCOPWork Group
Work Group
Work Group
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SCCOP Work Group
Operators 2
Major Contractors 4
Industry Groups 3
DELIVERY

4. The PILOT 2010 Vision
To make the UKCS the safest place to work in the worldwide oil and gas industry
Production at 3bn BOE per day in 2010
UKCS capital investment sustained at £3Bn per annum
Prolonged self-sufficiency in Oil & Gas
Supporting up to 100,000 more jobs than there otherwise would have been by 2010
A 50% increase in oil and gas exports by 2005
£1 billion per annum additional revenue from new business
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5. PILOT Initiatives Access to Infrastructure CoP Commercial CoP
Subsea Effectiveness
Technology
Progressive & Innovative Licensing
Decommissioning
UK Norway Co-operation
Wells Share Initiative
Stewardship
The Fallow Process
Step Change in Safety
Workforce Capacity & Capability
Supply Chain Efffectiveness
Supply Chain CoP
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6. Code of Practice Objectives
Increased UKCS Supply Chain competitiveness through improved efficiency and reduced waste
Improve working practices, commercial behaviours and purchaser / supplier relationships
Regular and detailed forecasting of activity levels.
Enhance and simplify the bidding process.
Prompt payment.
Active two-way relationship management.
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7. The original Code comprised 6 sections
Supply Chain Code of Practice
The original Code comprised 6 sections
Commercial Stage - Forecast/Planning all activity up to the point of tender
Commercial Stage – Tendering all activity up to the point of contract negotiations, including elimination of bidders
Commercial Stage - Negotiation agreement of contract terms
Commercial Stage - Implementation and review through the life of the contract and at the end of the contract
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Commercial Stage - Monitoring and Evaluation of Code
Implementation and Adoption of the Code
… commitment received from 80+ Operators and Major Contractors

8. Code of Practice for Suppliers was developed in 2003
Supply Chain Code of Practice
Code of Practice for Suppliers was developed in 2003
Stage 1 Forecasting and Planning – To provide more effective business cycle planning.
Stage 2 Tendering – To reduce the cost of bidding.
Stage 3 Negotiations – Cut waste and reduce unnecessary paperwork.
Stage 4 Implementation and Review – Getting the job done right.
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Stage 5 Monitoring and Evaluation of the Code – Assuring process is in place.
… commitment received from 300+ suppliers and contractors

9. The Code is endorsed by:
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The Code is endorsed by:
PILOT, Industry Leadership Team, Supply Chain Steering Group, Supply Chain Management Network, DTI, EIC, FPAL, IMCA, OCA, UKOOA, WSCA
… it’s a real achievement for the Industry
For latest information see PILOT Website
… it has significant sign-ups already

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11. Supply Chain Code of Practice
New clean and simple format
Signed by CEO and Supply Chain Manager
Simplified structure
New features include
Industry Model ITT’s
“Fair” contracting principles
“Value based” contracting
More efficient Code implementation survey
Drafting party represented all industry groups
PLAN
CONTRACT
PERFORM & PAY
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12. Supply Chain Code of Practice
PLAN
CONTRACT
PERFORM & PAY
Communication of forward plans to industry
Provide support for Share Fairs
FPAL purchaser profiles
Suppliers to make use of information provided
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13. Supply Chain Code of Practice
PLAN
CONTRACT
PERFORM & PAY
Restricting bidders to FPAL registered companies
Eliminate duplication of data by using FPAL
Providing debriefs
Using standard contract forms
Payment in 30 days
Use of industry Model ITT’s
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14. THE OPPORTUNITY Supply Chain Code of Practice
IADC analysis of Rig ITT’s undertaken
Highly fragmented approaches evident
Extensive duplication of FPAL data
Patchy use of standard contracts
ITT quality extremely variable
Tender compilation slow and expensive
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15. THE SOLUTION Supply Chain Code of Practice
Create a standard ITT structure
Simple, logical organisation
Easy buy-in
Standard documents for those that want to go further
Aimed at ease of production
A quality ITT
A swift offer
A trouble free evaluation
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16. Supply Chain Code of Practice
ITT Index
Commercial Sections
Contractual Sections
Technical Sections
Guidelines on completion
Tendering instructions
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17. Supply Chain Code of Practice
Templates are clear, simple and pragmatic
Focus is on principle not prescription
Uses industry documents where they exist
Nomenclature is standard
Modular design gives flexibility
Designed to allow substitution
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18. Supply Chain Code of Practice
ITT’s are Easier, Faster and Cheaper to issue
Bids are Easier, Faster and Cheaper to return
Simplifies the contracting process
Code recommendations incorporated
Creates a vehicle to introduce better practices
Operators can decide their own scale and pace of adoption
Creates step out opportunities with Well Services, Operational and Construction ITT’s
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19. Supply Chain Code of Practice
Model Rig ITT currently available on FPAL website, is now in use and is easy to access …….
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20. Supply Chain Code of Practice
Model Rig ITT currently available on FPAL website and now in use
ITT drafting groups launching Model ITT’s in 2006
Well Services suite of Model ITT’s
Marine Construction Model ITT
Platform services, plant and equipment Model ITT’s
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21. Supply Chain Code of Practice
CODE OF PRACTICE SURVEY METHOD
Easier method of surveying Code adherence
Use of FPAL Type III feedback uses existing industry scheme and little additional effort
Input now verified
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3 additional elements

22. Supply Chain Code of Practice
PLAN
CONTRACT
PERFORM & PAY
Include performance Indicators in all significant contracts
Provide and receive FPAL performance feedback via Type 1 and Type 3 mechanisms
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23. Supply Chain Code of Practice
PLAN
CONTRACT
PERFORM & PAY
Submit complete and valid invoices
Pay all valid invoices within 30 days
Adopt a prompt payment policy for own suppliers
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24. Profitability decreasing
Supply Chain Code of Practice
PLAN
CONTRACT
PERFORM & PAY
Why does the Code of Practice matter to Contractors?
WSCA 2005 Report
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Revenue increasing
Profitability decreasing
The Industry still cannot afford non-value adding costs in Supply Chain Management processes

25. …… work on sign-ups continues
Supply Chain Code of Practice
…… work on sign-ups continues
Code covers in excess of 80% of UKCS expenditure (on an operated reserve basis)
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