Energy Sector: How to overcome the complexity of today's operating environment

11. 07. 17 Marcus Kelly

It's ALL about cost control.

It doesn't have to be innovative. If the purchasing department spends $10,000 on new furniture but via a Google search, the finance department can find the same for less, ask why they chose to spend more?

Or where a staff member claims mileage for 100 miles but online directions says it only takes 75 miles, ask why they took the long way round..?

When the word gets around that both company spend and employee expense reimbursement are being scrutinised, the overspend culture begins to change.

Are you are receiving exactly what you pay for?

Accounts departments should be verifying that all invoices for physical purchases are supported by goods received notes. It's amazing how many short deliveries conveniently happen in the suppliers favour.

By taking any of the above actions, it is estimated that your business will save at least 2% per annum, which can often be the same as a revenue increase of 10%.

Companies, no matter their size need better insights into organisational cost structures and management must be trained to spot, understand and use these insights better.

Peter Davis, TouchstoneEnergy’s Business Unit Head comments;

Management, containment, and cost reduction should form part of every business’s strategy. It should be an exercise and not considered a chore, but it should also be inherent within your business culture.

Senior managers need to pay attention to value opportunity. We believe in strong organisational behaviour, meaning the organisation from the top on down must embrace the ‘cost management mind-set’.

Cost analysis and understanding your spend commitments all matter because Supply Chain Managers need to compare committed spend with something. Either against budget, spend history, items, services groups or other departments; you need to benchmark relevant costs to be able to make relevant decisions.

Organisational hierarchies are important and key in creating accountability throughout all levels of business. The key is the CFO must truly partner with business managers who are accountable for their own cost buckets.

Intelligent Spend Control

TouchstoneEnergy has been instrumental in driving change throughout the Energy sector by helping small, mid-cap and large Upstream Oil & Gas Operators to better manage and understand their spend.

The solution is based on Touchstone’s eProcurement and Spend Management solution PROACTIS.

PROACTIS is specifically designed to introduce spend management controls without stifling the procurement cycle. Key features and reasons such as;

- Real-time Budget checking

- Buying from approved suppliers and off agreed price contracts

- Follows an agreed DOA (delegation of authority)

- Receipting what has been ordered and rejecting over supply

- Querying price variances

- Taking advantage of early settlement discounts

- Full analysis & visibility throughout the buying cycle including supplier performance

- Employee Expense authorisation

- Fully integrated with AP function


If you feel your business needs to be more competitive at the same time can reduce its costs, and add 2% annual savings to your P&L, why don’t you call TouchstoneEnergy and seek some advice.

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Marcus Kelly

Written by:

Marcus Kelly

Marketing & Business Development Manager