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Chevron embraces digital transformation to simplify processes, and enable faster decisions

How its procurement organization is using Amazon Business to transform the way employees work.

Overview

Chevron is embracing digital transformation as a way to simplify processes and enable faster decisions. This transformation goes beyond technology—it’s about identifying or creating solutions that empower people to make better, faster decisions with the goal to drive business value and transform the way employees work.

 

 

A global energy company and a pioneer of progress

Chevron’s Procurement and Supply Chain (P/SCM) organization has leaned on digital solutions to simplify procurement activities, and improve the overall customer experience.

 

One example of how Chevron is simplifying procurement is their implementation of Amazon Business as an option for internal customers to purchase supplies in certain non-critical categories—such as office supplies. In a short period, the use of Amazon Business has progressed to support more critical supply needs such as those in the Maintenance, Repair, and Operations (MRO) category, supplying retail gas stations, and providing business continuity solutions during unexpected supply chain disruptions.

 

As with many enterprise organizations, Chevron leverages different types of purchasing systems to buy materials and professional services on a global scale. To optimize its $27 billion global procurement ecosystem to be more customer-oriented, the procurement organization started by identifying how they could centralize scalable solutions that could benefit the unique needs and functions of its various business units.

 

According to Ellen Nielsen, General Manager of Category Management at Chevron, the common denominator in creating a more customer-oriented ecosystem is the simplification of the procurement process, making it easier for customers across the company to find what they need within their existing eProcurement framework.

 

“For a lot of the materials we buy, the most important factors are getting them quickly, and for the best price. We don’t want to handle thousands of suppliers and go through a bid process with each one, negotiating prices—that’s not a commercially viable approach,” Nielsen said. Instead, Chevron has centralized spending for categories such as office supplies, safety and protection equipment, and IT peripherals. “We’ve moved purchases to Amazon Business to consolidate spending in a dynamic store environment, where everyone can find what they need, and still take advantage of large-scale ordering and bulk buying.”

 

Chevron has been an Amazon Business customer since 2018. Amazon Business is Chevron’s primary enterprise purchasing solution, and serves over 3,000 internal customers—over a 100 percent increase in its first year. This year, Chevron is finalizing its transition to a new system, Smart by GEP, where the integration with Amazon Business—known as a punchout—will create a seamless experience and unlock the full potential of the enterprise solution.

 

“What we value most is the ability to leverage our best-in-class capabilities to help our internal customers search for their unique needs. The Amazon Business dynamic store essentially drives pricing competitiveness automatically, without a manual process to handle it,” said Nielsen.

“We’ve moved purchases to Amazon Business to consolidate spending in a dynamic store environment, where everyone can find what they need, and still take advantage of large-scale ordering and bulk buying.”

— Ellen Nielsen, General Manager of Category Management, Chevron

Centralizing spending and elevating the internal customer experience

In Chevron’s supply chain, internal customers were predominantly purchasing supplies in non-critical categories with purchasing cards (P-Cards). As part of the onboarding process with Amazon Business, an audit showed that Amazon.com was driving a number of transactions for everyday non-strategic spending, with an increasing number of users procuring from it. This assessment identified some issues with the buy-and-expense approach, such as the lack of spend visibility and of auditing capabilities.

 

Within a year of integrating systems and consolidating P-Card spending to Amazon Business, the number of internal customers adopting this solution grew. With this successful growth, the Chevron procurement team launched a road show to promote the partnership, visiting the largest sites in the US, calling the visits “Amazon Business Day.” This was an opportunity to interact with Chevron employees, onboard users, identify and resolve issues, and educate teams. Building on this growth, Chevron launched Amazon Business in international locations, including the UK and Canada in 2020.

 

Sergio Cantarero, Global Category Manager at Chevron, plans to leverage the success with non-strategic purchases to expand to new categories. “Today, our employees are using Amazon Business to buy things like office supplies and IT peripherals, but the most valuable opportunity we see is to start the transition to more strategic spending, such as maintenance, repair, and operations and retail service stations,” said Cantarero.

 

“MRO is a fragmented category, and it’s very transaction-driven. With the new eProcurement integration up and running, we can use the same approach to consolidate suppliers in these categories quickly,” he said. “We plan to customize how we source low-critical MRO, using Amazon Business tools such as Pay By Invoice, which allows us to open Purchase Orders (POs) with flexible payment terms—a critical purchasing process for the MRO category where a P-Card isn’t an appropriate or approved method of payment.”

 

Supply chain optimization in remote production regions

Chevron’s oil and gas production generally happens in remote regions, including offshore, making the inbound and outbound movement of goods and services to rig sites a unique challenge. Transferring goods from The West Texas Permian Basin to central locations is an example.   

 

There’s limited infrastructure and roads, and in some cases no physical addresses to sites where Chevron has drilling and production operations in this region. Every drill site is unique, presenting logistical challenges to time the arrivals of materials to work sites. For drilling and production operations, there’s a wide range of items that internal customers order and procure. These items include specialized oil and gas materials that are managed by business partners on behalf of Chevron, as well as supplies not specific to oil and gas extraction that are important for the wellbeing of the crew that live on these sites for weeks at a time. These employees do not have the luxury of personally ordering what they need or going to the store for essential items.

 

In these areas, Chevron managers, like Kevin Jackson, Logistics Execution Manager, Mid-Continent Business Unit at Chevron, keep things running smoothly. In the past, managers created shopping lists for monthly shipments for these teams. Building the lists, getting quotes, approving a quote, ordering, and accepting delivery of the items would take four to six weeks.

 

“If they want something as simple as laundry detergent, they would need to proactively order it a month and half in advance to ensure it went through the process and arrived on time,” said Jackson. “It was a huge inconvenience for us, and we didn’t have a lot of control over getting exactly what we wanted, leaving many on these sites feeling disappointed.”

 

Additionally, there were many inefficiencies in the process. For example, Chevron was paying a markup for goods and services vendors procured on their behalf, increasing costs.

 

To solve this problem, Chevron enabled individual employees on the rig and production sites to order what they needed directly on Amazon Business. To facilitate this ordering process while maintaining established approval processes, Chevron uses the Approval Workflows feature on the Amazon Business store, which allows employees to order what they need, routed to the appropriate approver. The site automatically consolidates all orders into one P-Card for the region for master expense reporting, and consolidates the orders into a weekly delivery. This delivery option is known as Amazon Day, a feature that allows businesses to set a specific day to deliver on a weekly basis, and automatically combine orders to not only streamline the delivery, but also set specific instructions on where and how to deliver it.   

 

“There’s a huge morale boost,” said Jackson. “Everyone is getting what they need, when they need it, and we’re saving a lot of money and time. All too often in our line of work, we try to create solutions for everything – and we’re really good at that for oil and gas exploration and production—but when it comes to optimizing procurement we need to look at solutions that already exist, and in our case it was Amazon Business,” said Jackson.

“Everyone is getting what they need, when they need it, and we’re saving a lot of money and time."

— Kevin Jackson, Logistics Execution Manager, Mid-Continent Business Unit, Chevron