Procurement Management Strategies of Shell in Nigeria

0Running head: RISK MANAGEMENT
Risk Management
Name of the Student
Name of the University
Author Note

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Table of Content
Introduction................................................................................................................................2
Critically investigating the souring methods and suppliers base-..............................................2
Examining the supplier base and supplier management............................................................6
Proposing a strategic source framework which leading to procurement excellence and value
growth........................................................................................................................................7
Conclusion -.............................................................................................................................11
References................................................................................................................................12

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Introduction
This report provides a detailed evaluation and analysis of procurement management
strategies of the organization Shell in Nigeria. It has been identified that minimization on
firm’s supplier strength is often a potential objective of any sort of procurement professional
in an emerging professional. As put forward by Yusuf et al. (2014), a supply base is
characterized as the proportion of supply network, which is effectively managed by buying a
business. This report particularly discusses the sourcing techniques in the supply chain
management process. The purpose of the report is to evaluate the current procurement
management strategies followed by Shell in Nigeria and develop more useful techniques
related to sourcing method and supplier base.
Critically investigating the souring methods and suppliers base-
When it comes to supplier base, the business or the organizations must have to be
confident that a supplier could manufacture or produce a regular supply of goods and deliver
them in a timely manner. An, Wilhelm and Searcy (2011) particularly mentioned that an
interruption of raw materials could be costly, as human resource as well as plant machinery
may not be used for an indeterminate time. As put forward by Zhu, Sarkis and Lai (2007), an
organization’s sourcing strategy can be characterized by three significant decisions- such as a
proper criteria for developing a supplier base, criteria for selecting suppliers who are
supposed to receive an order from each supplier selected. As put forward by Gold, Seuring
and Beske (2010), quality and delivery are strategically important supplier
Strategic Evolution of Sourcing
The strategy of sourcing involved in corporate field is more crucial or important as the
competition in the global environment and rapid technology changes may move faster. As
mentioned by Hannevik et al. (2014), supplier management orientation of a firm is usually

3Running head: RISK MANAGEMENT
reflected in its contracting policy for the external purchase. Particularly, in Shell, contracting
and procurement provides a wealth of opportunities in their upstream and downstream
operation developing relationship with suppliers and supporting the global delivery of
services. As Shell operates a global operation, the firm has applied several method of
sourcing in supply chain but the idea of minimizing cost is just emerging one. Handfield,
Primo and Oliveira (2015) argued that today souring and procurement executives of many
global businesses are under a firm pressure to extract cost saving from supply base and at the
same time trying to enhance and maintain the quality of service ensuring supply continuity.
In the case of Shell in Nigeria, as always is on an aggressive growth path; they make large
investment in new and advanced technologies to maximize production, storage and
distribution, focusing on increasing their product quality and omitting the environmental
hazards.
Notwithstanding, Pagell and Shevchenko (2014) argued that large global organization
like Shell and BP (British Petroleum) often face the fluctuation in supply, unpredicted
global demand market dynamics as the challenge. However, when it comes to sourcing, Baily
(2017) mentioned about the supplier selection which is also a sourcing strategy where the
buyer selects products and services from offerings made by the suppliers presently operating
in the market. The authors have particularly insisted on the fact that an anti-arm relationship
could sustain between the buyer and supplier consisting a low level of collaboration as well
as interaction . In the case of Shell, this buyer and supplier relationship requires a pre-set
criteria to form because Shell uses a global system to pre-qualify the suppliers informed for
the upcoming contacts (Shell.com 2018). It is identified that Shell designs “Supplier
Qualification System” (SQS) to gather and stock information on suppliers on suppliers
approached to do business with Shell. Nevertheless, this SQS delivers a high-quality as well
as streamlined approach to pre-qualification method and make sure that suppliers finish this