In 2004, PETRONAS extended its purchasing ability by integrating a Supplier Portal to its legacy SAP system. It was initially implemented in 4 OPUs (Operating Units -PETRONAS Gas Berhad, PETRONAS Carigali Sdn Bhd, Malaysia LNG Sdn Bhd and the PETRONAS Holding Company) with 300 key suppliers. The total implementation time taken, including customization, integration, supplier enablement and training, was 6 weeks. The portal is now known as the PETRONAS eProcurement Portal and is used by more than 20 OPUs giving PETRONAS and its suppliers visibility, transparency and efficiency in their business transactions.

About PETRONAS CARIGALI:

PETRONAS is ranked among the Fortune Global 500 largest corporations in the world. Much of PETRONAS' success can be attributed to its ability to strike a balance between being a state-owned entity and a full-fledged commercial organization.

As a state-owned entity, PETRONAS is responsible for the effective management of Malaysia's oil and gas resources, for adding value to this national asset, and for ensuring the orderly and sustainable development of the country's petroleum industry. As a business entity, it must conduct its operations in the most prudent and commercial manner; and compete in the increasingly challenging business environment in order to maximize returns to its stakeholders.

►  Challenge

While PCSB's existing SAP procurement system incorporates the issuance of ePurchase Orders, the system did not allow users to reconcile Purchase Orders, Service Notifications (S/N), Goods Received Notes (GRN) and Invoices online or enable vendors visibility into payment processing, leaving them in the dark on the timing of receiving payment. Furthermore, the vendors still had to operate through faxed Purchase Orders and were responsible for compilation of documents by gathering appropriate forms from the appropriate PCSB department for approval before submission for payment. This often led to long delays in finalising bills.

PCSB was seeking a system that would provide optimised purchasing practices and a seamless integration to its existing back-end financial system introducing buyer catalogues, profiling and automatic reconciliation, all of which would save time and effort for PCSB and its vendors alike.

►  Solution

A Procurement Portal incorporating Covalence ™ BusinessRelationshipNetwork software was implemented This system was integrated with PCSB's existing SAP system, so information could be passed between systems with minimal relearning and disruption to existing PCSB SAP users. With tight integration between SAP and PePP and the training and enablement of vendors, a variety of purchase scenarios were shortened and made transparent according to corporate constraints and goals.

►  Results

Standardised and streamlined purchasing practices caused a reduction in paper work and duplicated records, resulting in improved transparency on all purchases and control of maverick spend. The time taken for issuance of Purchase Orders to Suppliers was reduced from an average of 4 weeks to 48 hours.

The Budget holders also have visibility and 'hands-on' control, and are able to deal directly to suppliers. Consequently, delivery times for generic items such as stationery have fallen from 5 weeks to 1 week.

Achieving purchasing best practice means that time taken to procure goods has been cut significantly, in some cases by 80%.

Supplier bills were also paid in timely fashion. Invoices which are processed electronically do not suffer the lead time necessary for manual approval, which necessitates execution by an approving authority who may be overseas. The time-savings here are especially apparent with time from issue of invoice to payment being cut from 82 days to 22 days. More importantly, staff have to field less enquiries with regard to invoice payment as details are available online, resulting in improved customer service.