It was the chilly winter of year 2010 in Shanghai, and Dr. Zeb Feng was becoming more and more aggravated. As procurement director for the Asia at British Petroleum (BP), Dr. Feng was intensely aware of the growing burden that quality control demanded over his business's worldwide operations. Chinese suppliers were masters of cost-cutting, but quality often suffered as a result, which led to raising needs for development and inspection efforts in turn. Almost five years back, Dr. Feng's company established an international procurement office (IPO) in Shanghai, which served as a common service centre for internal customers throughout the BP organization worldwide.
Since that time, the IPO had been largely sourcing non-hydrocarbon goods and services, for example drilling services and materials, packaging, catalysts, chemicals and additives, marketing products and retail gear, in addition to manufacturing equipment and good-finish services. After a corporate board meeting with Christina De Luca, the vice president of procurement and supply-chain management for BP's downstream operations, it was decided the business would start to enhance its international competitive sourcing. As the number one provider marketplace in the whole world, China was obviously highly prioritized for further investigation. The imperative point that troubled Dr. Feng was whether Chinese providers were sufficiently ready to provide mission-essential supplies for oil drilling, extraction and refining. During a recent conference call, De Luca had reiterated, "Zeb, our opponents are way ahead of us in their sourcing operations, and they have achieved substantially lower costs. We've got to do something!" Dr. Feng put down the receiver and went back to his office to collect his team for a preparation conference. He had known that the supply quality was the pioneer issue, however could it be resolved?
PUBLICATION DATE: March 28, 2012 PRODUCT #: W12835-HCB-ENG
This is just an excerpt. This case is about STRATEGY & EXECUTION
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