Procurement & Contracting
David Jacoby assists operators and other stakeholders such as banks, regulatory agencies, and EPC firms, in:
- Supplier prequalification
- Technology selection, including migration path of platforms and models
- Development of tendering procedures to ensure legality, fairness, sound ethics, and the optimal price, including establishing a protocol for buyer-supplier interaction
Jocoby offers a thorough audit of key or strategic suppliers. Alternatively, click here for low-cost supplier profiles through our affiliate, OGPnetwork. Standard supplier profiles include: Revenue, Ownership, Headquarters, Year Established, BSI Rating, BSI Commentary, Key Competitors, Competitive Advantages, Plant Locations, and Top Customers
For strategic and long-term commitments where technology is rapidly changing, buyers need to decide which technology platform to adopt, even before the platform is known or specified. From a procurement point of view, the problem is that the cost of the up-and-coming technologies is usually unknown. David Jacoby provides economic analyses that are designed to help make the best technology and supplier selection in these situations, through his teams of technical experts, oil and gas economists, and analysts. Recent technological assessments include, for example:
- Comparison of alternative technologies for energy storage on offshore platforms
- Comparison of alternative technologies for accessing stranded gas at economical cost
- Comparison of alternative technologies for processing heavy oil
- Survey of available technologies for small and mid-sized LNG processing facilities
- Comparison of alternative technologies for pipe coating
- Survey of newly-commercialized technologies for improving steam turbine efficiency
PREPARATION OF INVITATIONS TO BID
David Jacoby plays an advisory role in tenders that involve a long lead time and early supplier involvement. He helps with decisions that inevitably need to be made, such as for example:
- When to begin sharing information with various key and less preferred suppliers
- How to protect intellectual property rights during the long period of communication between buyer and supplier(s)
- What criteria to use in choosing suppliers and eliminating others at various stages in the process
- When to begin assembling budgetary prices (if too early, this may be counter-productive)
- How to assess the impact of potential economies of scale and potential erosion of competition by consolidating with one supplier for a long-term project
- When to begin negotiating on price
- How to best structure the institutional linkages between buyers and suppliers during the bid cycle and afterward, between supplier selection and project start date
- When to commit by signing contracts, approving budgets, and disbursing funds
Jacoby manages strategic sourcing programs from concept through new supplier onboarding. Often with onsite teams, he deploys a proven 16-step methodology guaranteed to generate tangible and rapid savings, and train your junior and senior staff along the way. Whether the category is engineered or standard, services or materials, capital or expense, he has you covered.
David Jacoby offers negotiation support through his proven and proprietary frameworks, combined with his deep industry knowledge, that ensure you are fully prepared for meetings and communications when they occur. Consideration is given in a fully documented work plan, to factors such as:
- Timing and sequence of negotiating events
- Number of rounds and type of discussion to be had at each stage
- Optimal level of depth to be addressed at each stage to achieve the desired end state
- Price and non-price strategies for win-win agreement
- Monetization of risks, including unique risks such as currency inconvertibility, local content requirements, quality gaps, and untimely release of milestone payments.
- Identification of high-value leverage point
- Industry: Chemicals
- Key Challenge: Decreasing profit margins connected to fully decentralized procurement
- Why BSI was Selected: Proven track record of achieving savings through strategic sourcing
- Project Scope: Transportation, logistics, IT, lab supplies, packaging, and other categories
- Project Approach: Spend analysis, supplier qualification, sourcing strategy, RFx, negotiation, and implementation
- Operational Benefits: Better control over corporate expenditures, and a large cadre of well-trained staff
- Financial Benefits: 14% “ready-to-sign” savings, and up to 24% potential savings with restructuring
Click here to read the full case study.
- Industry: Electric and Gas Utility
- Key Challenge: Regulated industry structure had sheltered suppliers from competition for years
- Why BSI was Selected: Track record of impressive savings from sourcing projects
- Project Scope: Six operating companies with 47 stocking locations
- Project Approach: Analysis of spend, preparation of negotiating strategies, face-to-face negotiations, contract awards
- Operational Benefits: 75% reduction in the number of suppliers
- Financial Benefits: 24% savings on purchased materials
Click here to read the full case study on Negotiation Support.
SELECTED ARTICLES ON STRATEGIC SOURCING & CONTRACTING
High-Impact Sourcing: Precision-Guided Strategies for Maximum Results (State of Strategic Sourcing Study)
Single-sourcing is twice as prevalent in aerospace and defense as in other industries. Packaging buyers award 80% of their spend to 11% of their suppliers. Transportation buyers award the top supplier 23% of the business. How many suppliers should you have, and are you developing the right ones? This study quantifies the success that over 100 companies, of which half are in the Fortune 1000, have had with 12 different sourcing techniques.
50 pages, 27 charts, tables and diagrams, 10 chapters, 2 appendices, ©2005 Boston Strategies InternationalClick here for free download.
On the Cutting Edge of Strategic Sourcing (State of Strategic Sourcing Study)
Transportation and logistics companies are reducing their use of auctions by 45%. Paper companies are negotiating long-term agreements. 20% more than other companies. Consumer goods companies are purchasing in consortia 25% more than other companies. Which tools and techniques are you emphasizing, and why? This study examines how senior procurement executives at over 100 companies, of which over 20% are in the Global 1000, use 13 sourcing strategies, and which ones will they emphasize over the next four years. Over 60% of the participants hold Vice President or Director-level procurement positions.
65 pages, 39 charts/tables/diagrams, 10 chapters + self-assessment, ©2008 Boston Strategies InternationalClick here for free download.
Energy Price Volatility and How to Avoid it Through Better Contracting
Oil price shocks cause extended supply chain disruptions, resulting in inefficiencies at producers, refiners, equipment OEMs, and component suppliers. Oil companies pay higher equipment prices than they otherwise would. Equipment OEMs make excessive capacity investments that are underutilized when the market turns down. And component suppliers are left holding excess inventory when the bubbles burst.
Please click here to download our article, which offers tips for structuring long-term contracts that minimize these costs.
Contracting in a Volatile Market (Strategic Sourcing Study)
Volatile oil prices have wreaked havoc up and down the supply chain for oilfield equipment, indicating the need for new supply agreement methods to balance this risk. Boston Strategies International used a supply chain simulation model to quantify how much value is lost when the price of oil spikes and freefalls. Part of the answer is political in nature, but equipment buyers and suppliers can mitigate the problem through “very long term contracts” (VLTCs) that share risk and maximize flexibility. VLTCs require a different way of looking at the buyer-supplier relationship and flexible mechanisms such as indexation of cost and prices, layering of incremental requirements onto a base load, and providing the option to reserve capacity.
Click here for free download.
Sometimes You Get What You Pay For
Everything costs money, so there are no “bargains.” You get what you pay for. If you want to get something cheap, you can. The trick is to get something that is uniquely valuable to your operation for the price of a commodity service. In order to get off the standard price: service curve, you need two pieces that are not readily available: 1) what should the target service profile be?, and 2) what should the price be for that service?
Please click here for free download.