Analysis of BP Upstream Reverse Auction: Cost Reduction Model for Indonesian Oil and Gas Industry
Supply Chain Management (SCM) has been recognized as a driver for a company to achieve a cost-effective operation and an efficient business process. The information technology breakthroughs have given windows to enable SCM creating and using e-procurement tools to deliver cost reductions not only from the direct materials or services prices but also from the more efficient business processing flow. Reverse auction, as one of ihe e-procurement tools, has been used to save the company cost by obtaining materials or services with lower prices compared to the historical ones.nThis thesis is intended to analyze the reverse auction practice within BP Upstream worldwide and to come up with conclusion whether the theoretical price reduction is recognized. The thesis is also to study whether this online bidding is applicable for implementation within Indonesian Oil and Gas industry. The researcher has done in-depth research to answer those questions. A secondary type of research is the major work for the thesis while the field survey is performed to support it.nThe result of the research is significantly needed to give a complete overview of reverse auction practice especially the implementation possibility within Indonesian Oil and Gas industry. The researcher found this application is workable in Indonesia especially for Oil and Gas industry and an average of 10% reduction can be achieved from materials/services price. Key success factors and recommended preparation are offered along with the rigorous supplier performance management system as the tool to mitigate the un-performing work resulted from the reversed auction contract.
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