How About a Little R.E.S.P.E.C.T. for Suppliers?
Like donning a face mask in public and maintaining a 6-foot distance from strangers, there are certain behaviors conscientious people should embrace during the pandemic, even if they find them inconvenient. And if the head of procurement and supply chain management at BP has her way, we’ll be adding one more: Show some respect to your suppliers, people.
Leigh-Ann Russell, who became BP’s senior vice president of procurement today, told Energy Voice that sending letters to oil and gas industry suppliers demanding price reductions was “disrespectful” and “absolutely the wrong thing to do.” Russell was responding to a report that some major companies in her industry had demanded immediate 40% cost reductions from suppliers
“We were very clear during Covid-19 with our businesses, and I was with my team, that we would not be going out to the market and sending letters to people asking for a blanket drop in costs because we thought that was absolutely the wrong thing to do for our industry and the supply chain,” she said.
Instead, Russell said that companies should work with their suppliers to identify areas of waste, keeping in mind that profit margins have become quite narrow for many organizations.
“We are bidding and negotiating where it’s appropriate, but we’re doing that with a heavy understanding of where each of the supply chain companies is from a financial perspective,” Russell explained. “If we see a company in financial distress, we won’t ask them for rate negotiations. Getting prices right is going to be important for stability and keeping projects going in the short term, but what we really need to do is come together and tackle waste.”