Shell Map Description
Shell Chemicals employ a sales and purchase model which can be broken down into three distinct elements.
1. The financial and contractual relationships are traditional. A customer or a supplier reaches a contractual agreement with Shell, and payments made accordingly.
2. The product ordering process is less traditional, with minimal involvement from Shell staff. There in house Supply Chain Management software (originally SIMON, now Elemica) receives supply information from each customer such as stock holding level, run rate and delivery information, and then automatically raises fulfilment orders internally or to their suppliers based on this information. This enables just in time delivery of Inventory. Shell manage this process themselves as customers only pay as and when they use the product, not when it is actually delivered.
3. The actual supply of products occurs direct from Shell or from the supplier to the customer with little interaction, enabling the customer to always have products to hand when needed, but with the minimum of cost to Shell.
The traditional sell side and buy side divisions have been blurred by the automation of the supply chain and the on-site Just in Time delivery of products.
You are right, things become blurred when companies decide to make more efficiencies, eliminate intermediaries or even decide to explore new market opportunities or save costs.
ReplyDeleteThe software also makes those distinctions blurred between buyers, sellers and the like. This is good when a company knows what they are doing, but not good when they buy software without a clear idea of what to use it for.
Many failures of software implementation occur given that a company either tries to do too much (be in both sides of the network) or too little (failing to network with suppliers or sellers in better ways).
Next lecture we will look at strategy part 1, as a way of addressing potential sources of failure.
Shell is a good example because they have done lots of strategic planning resulting in a company that cares about the environment whilst continue being successful. The IT function helps in exploring and serving markets worldwide.
Have you heard of downstream and upstream?
Take care,
Interesting depiction of the buy-side and sell-side of Shell. With regards to the product ordering and delivery process of Shell, you discussed how these are automated to reduce costs and increase speed/efficiency, however, do try looking into the challenges and drawbacks associated with minimal involvement from Shell staff and little interaction. For example, could the lack of involvement from the company staff also reduce their control over the ordering/delivery processes?
ReplyDelete