Shell integrates supply chain visibility

Shell has fluctuating demand levels for labour and materials at its oil platforms and refineries. Meeting those needs ‘just in time’ requires an effective, integrated approach to the management phases Plan, Source and Deliver, but this was lacking at Shell until a couple of years ago. Now, however, the company’s supply chains are becoming increasingly efficient and reliable. Integration and alignment are creating value.

“We have two types of supply chains,” explains Sanchay Roy, Supply Chain Transformation Lead at Shell. “Our primary supply chains handle the transportation of hydrocarbons, such as crude oil, gas and LNG as well as finished products that we make from those commodities. Those primary supply chains connect our plants – or ‘assets’ as we call them – both with each other and with our customers. Our secondary supply chains, which we call the ‘non-hydrocarbon supply chains’, run to our assets. They ensure that the right people and materials arrive on time for smooth-running production, for project-related work, for routine maintenance or for major maintenance or turnarounds. Just-in-time supply is very important, because any disruption can cost us tens of millions of euros a day.”

The people involved, many of whom are hired in as contractors, include engineers, maintenance technicians, contractors and turnaround teams. “The materials we source range from simple items such as filters to very complex components such as large valves.”

The Toyota Way

Until recently, each Shell asset managed its own secondary supply chain as a stand-alone supply chain, with no consideration of the needs of the other assets in the same country. Roy: “Besides that, there was no system that guided supply chain management. Companies like Philips – where I worked for many years – and Unilever are way ahead of us in that respect.”

Toyota is another interesting example. “Its renowned Toyota Way dictates how the company’s factories are run, regardless of where they are located. The Toyota Way also covers the leadership style, cyclical learning and a common language for continuous improvement. We wanted to develop a similar ‘Shell Way,” continues Roy. … … …

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