Achieve Third Party Spend Cost Savings

Keeping the right focus on cost management especially cost savings form third party spend gave the company, I worked with competitive advantage in achieving best costs, higher profit margin and project delivery on schedule. Managing “Third Party Spend Savings (TPSS)” was a very important component of executing the company’s Cost Ambition program.

Challenge: There were concerns and challenges on having a proper definition and understanding of ‘Third Party Spend Savings (TPSS)’ across the organization and also ensuring TPSS templates were timely signed-off by Finance in order to deliver a transparent and robust cost ambition program.

Responding to request by the Production Onshore Assets Leadership for support to enable delivery of Cost Ambition targets, the finance team took on the responsibility of designing and developing a robust structure for reporting cost savings. Our team had the challenge of setting stretched targets and securing the buy-in of project cost managers to ensure planned targets were delivered.

Delivery: Our team advised the Contracting and Procurement Leadership that the innovative solution that was sustainable is having greater collaboration between the Contracting & Procurement (CP) Function and Finance Function in driving the cost ambition program. We organized a TPSS workshop for the CP Leadership Team and Business Finance Managers.

Our detailed process flow-maps provided the needed transparency to the cost savings process and aided better understanding of cost savings. We provided clear cost saving definitions which ensured that resistance and barriers to the cost ambition programs were removed.

This piece of work was significant because it provided the basis for any “cost ambition assessment team” to have the required level of confidence that the cost ambition program was on track and will be delivered – because our team provided a structure for defining cost savings, capturing, verifying, and reporting of actual cost savings achieved.

With these transparency and understanding of the cost savings process, managers were willing to undertake more cost savings projects. Additional cost savings projects were identified as replacements due to setback on some earlier planned cost savings projects.

The result of our work was well acknowledged by top management and our designed cost savings template and reporting structure were recognized for adoption as best practice globally. The workshop discussions and presentations were well received leading to better understanding of the TPSS process and the need for quicker sign-off of cost savings achieved. The resultant review at the workshop led to existing guideline on “third party send savings” being revised, updated and re-circulated to operating companies globally. Regions.

Meet Dr Leesi Gborogbosi (Finance Manager, Shell Petroleum Development Company of Nigeria)