Oil and Gas Industry: Suppliers Selection

1505 Words4 Pages

GENERALITIES OF THE STUDY Over the last decade, the supply chain management has influence to business all over the globe. Purchasing is one function within supply chain which becomes the most important element to establish value-added products or services. The major aspect of purchasing is supplier selection. It is recognized that selecting appropriate supplier is one of the key success factors of a firm. Selecting the right supplier is always a difficult task for purchasing manager (Liu et al., 2005). Right suppliers selection can lead the company to success and achieve the objectives. On the contrary, wrong supplier selection can lead the company to financial problem. Therefore, purchasing departments need to emphasize about supplier performance evaluation which not only concern one criterion such as price, but also consider of multi criteria for evaluating suppliers in order to select the right supplier. 1.1 Background of the Study Nowadays, oil and gas industry plays a major role to driving the business in both local and global level. It provides energy and essential chemical for industry, homes and transport which is increasingly consumed by user every day. There are around fifty oil and gas companies located in Thailand and ten out of fifty are ABC Company’s customer. The ABC Company is one of the leading trading, stockist, sole distributor and engineering company who supply industrial process equipment of piping materials for instance pipeline, flanges and fitting. The company was established in May, 1998 with 100% Thai shareholder. The company caters the materials and supply to oil and gas industry in order to construct and maintenance for transmission pipeline project and shutdown plants. Figure 1.1: Piping Material of ABC Company Description Picture Pipeline Flange Fitting Source: ABC Company The company is growing gradually 4.42% in trading materials likewise the purchasing amount is also incessantly increased 11.87%. The increasing in purchasing is from the company committed to stock the material in order supply anytime when customer needed to fulfill the customer’s satisfaction. Table 1.1 shows the comparison of sales data and purchase data from 2012 to 2013 of the ABC Company. Table 1.1: Sale and Purchasing data of the ABC Company Year % Increase 2012 2013 Total Sales (Million THB) 747 780 4.42% (Approx. 33 Million THB) Total Purchasing (Million THB) 438 490 11.87% (Approx. 52 Million THB) Source: ABC Company During the year, the ABC Company has to purchase piping materials which compose of pipeline, flanges and fitting as the proportion shown in figure 1.2. Figure 1.2: Purchasing proportion of the ABC Company Source: ABC Company Source: ABC Company From figure 1.2, the amount purchase of ABC Company from year 2012 to 2013 of pipeline, flange and fitting are approximately equal 68%, 18% and 14% respectively.

Open Document