My Houston visit also put me face-to-face with supply managers from some of the world’s largest oil and gas companies. These execs told me that, while profits at their firms were near all-time highs, their supply management groups were scrambling to secure scarce supply and combat inflation for oil drilling equipment and platforms. “When oil prices go up, we need more [drilling] services to try to increase supply and meet demand,” said one oil-firm supply manager. “We are paying three-times as much for off-shore drilling rigs than we did this time last year.”

Non-oil-types in on the conversation had little sympathy for this dilemma. However, all attendees were very interested to hear how Hess Corporation is driving global system adoption and alignment for its e-sourcing program. After piloting e-sourcing in 2003, the oil and gas giant transitioned to global adoption in 2005, mandating that all spending be sourced online — from tension leg platforms (TLPs) for ocean drilling to maintenance parts and services. However, an audit last fall revealed that the mandate was not being followed.

Carl Tatum, Supply Chain Specialist at Hess, said a spot check of several e-RFx projects found that inconsistent practices, incomplete data to support reporting, limited use of Hess’ e-sourcing tool’s full capabilities, and misalignment with sourcing and business strategies. “The mandate alone wasn’t working,” said Carl. “Buyers were not doing all sourcing in the tool and were not collecting key information on what was being bought, who it was for, or how much volume [was being sourced."

Hess' resolution was a simple but often overlooked tactic: it made e-sourcing usage part of the individual buyer's scorecard. Since instituting the metric at the end of last year, the percent of sourcing projects managed online has climbed from just 45% to greater than 85%. And the percent of required data entered into the e-sourcing system (e.g., category sourced, dollar volume, reason for sourcing, award details, etc.) climbed from 45% to greater than 95%. 

"Measuring buyers on compliance [with the e-sourcing tool] finally drove the change in behavior we needed to make the program a success,” said Carl. He added that Hess is also bolstering program compliance through “Lunch and Learn” training sessions designed to teach buyers online sourcing tactics, such as building better bid forms, leveraging online surveys for requirements definition and supplier intelligence, and using e-RFx templates. “We knew buyers would never pass up lunch. So we’ve been able to get high attendance at these sessions.” 

Once it gains program compliance, Hess will turn its focus to infusing strategy into its e-sourcing projects, using advanced negotiation approaches and evaluating e-RFx and awards to ensure all online sourcing events are structured to support optimal business objectives and strategy.