Purchasing Data Collection Guide

Contents

The objective of this document is to outline the type of data the project team needs to
analyze your spend.

1. Introduction.
2. Required Data.
3. Operating Processes.
4. Purchasing practices assessment
5. Timing and Help available.
1. Introduction

 The Objective of this data collection project is to assess the purchasing practices and to capture
the amounts of money spent with the various suppliers within the purchasing sub-categories as
defined by the Purchasing Organisation. (Please refer to the appendix) Your accounting systems
will therefore be used to extract this data. The period we will be looking at is full year 2000 .

 The approach we have selected should meet the following criteria:

 To collect the data in a fast and efficient manner.
 To cover as much of the spend as possible.
 To minimize the workload we will ask of you.
 To match the detail we require to your ability to provide it.

 This document is to be distributed to all departments that could assist in the data collection or
who are « purchasers «  outside the Purchasing department.

 We would estimate that this will take up 1 to 2 man days for you to complete in the detail and
accuracy required.

 The completed data collection files in both electronic and hard copy are required to be returned in
two weeks (ie before Friday 15th June 2001).

 Should you be experiencing any problems please do not hesitate to contact Martin McCarthy who
will try to assist you directly. (see section 4.2 for details).
2. The required data

 The evaluation team will need from each accounting system a complete purchase file by
supplier. These suppliers will then need to be sorted by decreasing amount of spend.
 The file should at least provide us with the minimum following information in each supplier record:
 1) Internal supplier code( used to identify the supplier in the accounts payable file).
 2) The suppliers’ legally registered company name.
 3) The total pre-tax amount ( ie ex VAT) that the supplier has invoiced and been paid for in 2000
(full year), in local currency.
 4) Please state the currency used in your calculations.
 5) Add the purchasing group (sub-category) according to the attached list of sourcing groups
( category segmentation and corresponding codes for this supplier’s service).
 Items 1 to 4 should be available electronically in your accounting system, and can be extracted to the
file.
 Item 5 is to be provided by the relevant purchaser or user ( see operating process).

 The Evaluation team will also need the total external purchases for all the suppliers in your
subsidiary.
 This total is the sum of all the 2000 (full year) external purchases
 It should be able to be extracted from the accounting system.
 If it is possible it would also be most useful to have the total spend at a global level for the full year
1999 if this can be provided. It is not necessary to have this by supplier or by category.
3. Operating process

 The Supplier file needs to be fully extracted from the accounts payable system, and should
be available through the following steps :

 Step 1
 A full dump is required of all the suppliers accounts for 2000 from your accounting system to
deliver the following minimum information:
 The internal code for the supplier
 The suppliers legally registered full name
 2000 invoice totals , pre-tax and without supplementary charges ( see note 4.3) in the local
currency, right column justified and rounded to the nearest whole unit.
 Stating the currency that you have used

 Step 2
 Sorting the suppliers by decreasing amount and taking only the top suppliers that account for the
top 80% of your spend. This can be done on the spreadsheet provided in Excel format.

 Step3
 Selection of the suppliers to be put into the purchasing classification and categorized into sub-
family groups: this is to be limited to the number of suppliers that make up 80% of your total
spend in 2000. This is to limit your workload and make the analysis of spend more simple for the
evaluation group.
3. Operating process (cont’d)

 The Supplier file needs to be fully extracted from the accounts payable system, and should be
available through the following steps :
 Step 4
 The most relevant department such as purchasing, maintenance or accounting, should allocate a
purchasing sub –category code to each of your suppliers to detail exactly what is supplied by him.
 If you already have your own classification system then please use this to reference to the system
we have given you.
 Therefore if the supplier is identified as a capital equipment: static equipment: tanks and
accessories-fuels supplier it should be allocated the code (06) for capital equipment, followed by
(1) for static equipment, and (A) for tanks and accessories-fuels, giving a full reference of (061A).
For all suppliers a minimum of the first three digits is required.

 Step 5
 This has to be input into the spreadsheet provided for all of the suppliers in your top 80% spend
range.

 Step 6
 Please then dump the whole suppliers file that you have completed on the spreadsheet provided,
with any supplementary information that you wish to provide by e-mail or on a 3 ’’1/2 disk ( only if
e-mail is NOT available) to Martin McCarthy at the address in the appendix.
 You should also provide a hard copy of the file with any written comments you wish to make. This
is particularly important if you have experienced any problems with the category allocation, have
multi categories for one supplier or multi division entries.
 3. Operating process (cont’d)

Outline of the process flowchart to be followed in producing the data required

Step 1 Step 2 Step 3 Step 4 Step 5 Step 6

Manual
input

Name... Amount Name... Cat. Descr. Name

Amount Amount
------------- 100
------------- 90 ------------- 100 005 a ----------- 100
Select all ------------ 90 Allocate 213 b ----------- 90
Extract Sort by ------------- Input in
Accounts supplier's file decreasing ------------- suppliers that -------------- purchasing -----------
50 file/save
payable make 80% of ------------- 50 categories 172 c ----------- 50
to Excel amount ------------- on disk
system the spend ------------- and divisions -----------
------------- 10 E-mail or
------------- 10 311 a ----------- 10
------------- 5
------------- .... ------------- 5 ----------- 5 Floppy
------------- .... ----------- .... disk

To be To be
sent sent
3. Operating process (cont’d)

This is a picture of the spreadsheets to be used in the download of the information from your
accounting system (content as illustration)

Supplier data
Total 2000 pc-
VAT invoice
Family Category
amount in
code code
currency of Supplier Existence of
payment Supplier Legal name Parent
coverage legal
reference of supplier company
zone contract
4. Purchasing practices assessment

 An other part of the project consists in an assessment of the purchasing practices for each
segment on a scale from 1 to 3:
 Method
 For each purchasing category the main “good practices” have been identified and ranked
 A coefficient has been attached to each “good practice”.
 You should apply 1 or 0 to each “good practice”, 1 meaning the practice is applied and 0 it is not.

 Aim
 The aim of this assessment is to enhance the potential of improvement .

 Use
 You will find here after a few definitions of the different categories

 Purchasing practice levels

According to our methods our purchasing policy can be ranked at one of the following levels:
 Level 0: purchasing is made without anticipation. No key purchasing levers are being used except
maybe negotiation.
 Level 1: only a few standard key purchasing levers are being used (putting in competition, needs
anticipation, negotiation)
 Level 2: upstream purchasing techniques are being used. Cost analysis, supplier performance analysis
are realized. A consolidation of the needs is being looked for.
 Level 3: All the key purchasing levers are mastered. Purchasing is realized with a view to continuously
improving performance
4. Purchasing practices assessment

 Purchasing segmentation

1. Non- production purchases.

• Purchasing of Goods and Services used in the general business function, not specifically
aimed at a manufacturing process and with no strategic or technical constraints
2. Standard production supplies, Tools, Containers
• Systematic purchasing of industrial goods, consumables, packaging, accessories
3. Chemicals Products, Materials, Additives, Gas, Catalysts
• Purchasing of raw materials for an industrial process, or products for immediate resale in a
raw state
4. New Construction Projects
• Purchasing of major engineering or construction services, Turnkey projects, major works
(services and materials usually related to the construction of new installations)
5. Site Upgrading Projects, Turnaround and Inspection
• Purchasing of engineering services and works, with a project management function on site
(services and materials usually related to improvements, modifications or turnarounds for
existing installations)
6. Capital Equipment
• Purchasing or long term rental ( or leasing) of major industrial material and IT equipment
(purchasing or rental without associated new works and projects)
7. Industrial Subcontracting
• Purchasing of goods or services linked to maintenance activites or to industrial explotiation
( without associated new works or turnarounds)
4. Purchasing practices assessment

 Purchasing segmentation

8. Repetitive Freight
• This is principally the purchasing of what ever kind of repetative transportation, which
responds to a complexe need to optimise the flow and maximise use of capacity.
9. Non Repetitive Freight
• Non recurrent purchasing of any kind of transportation.
10. Intellectual Services
• Purchases of value added services (“grey matter” relating to a desired objective)
11. (Only for the exploration / production activity)
12. Power, Water, Telecoms
• Purchasing of energy, water or Telecoms related to improvement of consumer related tariffs.
13. Products for Resale (excluding chemical products)
• Purchasing primarily of products destined to be resold in network service station shops, to the
general public, at a commercial margin managed by the marketing departments.
14. Products not included in Scope
• Purchasing of crude oil, insurances, land or buildings etc.
5. Timing and help available
5. Timing and help available

 Other information

 All spend amounts should be declared WITHOUT any Value added Tax included, however, if import
duties or general sales tax are normally paid these should be included in the total sum.

 In the case where Central Purchasing at Outre-Mer head office have been used to procure for you then
you should use the supplier name of « RM/OM Siege »

 Any service charges paid as a consequence of using RM/OM Siege as a supplier should be broken
down into the charge type ie technical assistance, procurement assistance/ charges etc.

 Please use the purchasing classification that most closely matches the activity of the supplier in
question. If you have any doubts use the first level of classification and provide a description of the
goods or services provided in the comments section of the spreadsheet.