Guide for Suppliers

Downstream Contracting & Procurement Guide for Suppliers
Making it easier to do business with Shell
“The Shell organisation places great
importance on building mutually beneficial
relationships with its suppliers and believes
that a principled approach to business
is key to our long-term success.”
Contents
Introduction
1
About Shell
3
Shell General Business Principles
4
Honest and open
5
Making our position clear
5
Diversity and inclusiveness
6
Conflict of interest
6
Commitment to sustainable development
6
Health, Safety, Security and Environment (HSSE)
6
Shell Downstream
9
Contracting & Procurement in Shell Downstream
11
Supplying to Shell Downstream
11
Health, Safety, Security and Environment (HSSE)
11
Working on Shell Downstream sites
11
Escalation
11
Master data
12
Prequalification of potential suppliers
12
Category management
13
Contracts
14
Electronic trading
14
Shell Downstream Supplier Portal
14
Purchasing routes
14
Deliveries
16
Confirming receipt of goods and services
16
Invoicing and payment
17
Disclaimer
This guide is solely for illustrative purposes.
Shell does not represent that the information contained herein is comprehensive. The guide is in particular not intended to form or serve as a basis for any contracting,
investment or business decision by any recipient, and Shell shall not be liable for any such decision. The recipient is advised to carry out her or his own analysis and
assessment and take appropriate advice from experts. This guide does not constitute any offer or legally binding commitment by Shell.
The information contained in this guide is up to date for July 2010. Shell reserves the right to amend this guide at any time. Prior to doing business with Shell please
contact us to validate any information and to obtain required additional information.
Downstream Contracting & Procurement - Guide for Suppliers
“Our vision is to achieve operational
excellence in our purchasing process and
to deliver the right goods and services, to
the right place, at the right time, in the most
cost-effective way.”
Downstream Contracting & Procurement - Guide for Suppliers
Introduction
Making it easier to do business with Shell
Shell companies are committed to providing both our
customers and suppliers with quality service and consistent
information wherever they are in the world. This means
that we are introducing simpler standard processes and
systems to improve the way we do business.
Our vision is to achieve operational excellence in our
purchasing process and to deliver the right goods and
services, to the right place, at the right time, in the most
cost-effective way.
Purpose of this guide
This guide outlines our core values and sets out how these
values are applied in the activities referred to in this guide. It
also describes the effect of our suite of standard procurement
processes on our requirements of our suppliers.
The guide provides an overview to existing and potential
suppliers to Shell Downstream companies on what:
- is expected from them
- our organisation looks like
-we require from our suppliers in practical terms and
standards of behaviour
-suppliers need in order to transact successfully with us in
practical terms
-our requirements are as we roll out our Global
Procurement processes.
Shell is committed to transacting with its suppliers in a
transparent and ethical manner, in accordance with the Shell
Code of Conduct and the Shell General Business Principles
Who is this guide for?
This document is intended for third party suppliers who
provide goods and services to any Shell Downstream
companies that have implemented the Global Procurement
processes and the Global SAP transactional system.
Downstream Contracting & Procurement - Guide for Suppliers
1
“To become the most competitive and innovative energy
company in the world. Powering progress together - we
work together with customers and partners to create better
energy solutions for a changing world.”
2
Downstream Contracting & Procurement - Guide for Suppliers
About Shell
Shell is a global group of energy and petrochemicals
companies. With around 101,000 employees in more
than 90 countries and territories, Shell helps to meet
the world’s growing demand for energy in economically,
environmentally and socially responsible ways.
We believe that oil and gas will be integral to the global energy
needs for economic development for many decades to come.
Our role is to ensure that we extract and deliver them profitably
and in environmentally and socially responsible ways.
Our strategy and priorities for the future are to become the
most competitive and innovative energy company in the
world. An energy company whose primary business area
is in oil, gas and chemicals. In this fast-changing world,
Shell needs to be an energy company that powers progress
together with its customers and partners.
At Shell we believe that a principled approach to business
is key to our long term success.
Our core values – honesty, integrity and respect for
people – have formed the basis of our General Business
Principles for 30 years and remain as important as ever.
Our aim is to meet the energy needs of society, in ways
that are economically, socially and environmentally viable,
now and in the future.
Read more on our website www.shell.com
Downstream Contracting & Procurement - Guide for Suppliers
3
Shell General Business Principles
We aim to work with integrity and support fundamental
human rights in line with the legitimate role of business
wherever we operate. We continue to apply our General
Business Principles even as the search for oil and gas takes us
into challenging locations and politically sensitive countries.
We are judged by how we act - our reputation is upheld by
how we live up to our core values honesty, integrity and
respect for people. Our eight Business Principles are based
on these core values and indicate how we promote trust,
openness, teamwork and professionalism, and pride in
what we do.
Read more about the Shell General Business Principles on
our website www.shell.com
We would like to draw your attention in particular to, but
not limiting to, the following:
Shell Code of Conduct
Our Code of Conduct describes how the Shell General
Business Principles must be applied. We support our
staff and contractors in meeting our standards and react
appropriately when violations occur.
Shell Code of Ethics
4
Downstream Contracting & Procurement - Guide for Suppliers
“Integrity, mutual trust and respect are the key components
in our business relationships with suppliers.”
Honest and open
We aim to be fair, honest and open in every aspect of our
work and our relationships with others. Since 1997, we
have voluntarily reported on our environmental and social
performance. We believe that it matters to our staff, to our
shareholders, and to the governments and people of the
countries in which we work.
Making our position clear
Shell’s position is that business has no mandate to participate
in party politics, but Shell companies do have the right and
responsibility to make their position known on any matter
which affects them, their employees, their customers or
their shareholders.
They also have the right to make their position known
on matters affecting the community where they have a
contribution to make.
Shell companies do not make donations to political parties
and we treat this issue in the same way as bribery and
corruption. We report annually on the implementation of
our policy of no political payments.
Downstream Contracting & Procurement - Guide for Suppliers
5
Diversity and inclusiveness
Commitment to sustainable development
At Shell, we see a diverse staff and an inclusive work
environment as vital to building relationships with
employees, customers, suppliers, partners, governments and
other stakeholders.
We have a comprehensive set of business principles
and rigorous standards to cover health, safety, security,
environment and social performance.
Conflict of interest
Our commitment to business integrity is clear and
unequivocal. Shell companies insist on honesty, integrity
and fairness in all aspects of business and we expect the
same in our relationships with all those with whom we
do business.
We would like to draw your attention in particular to, but
not limiting to, the following:
Shell Code of Conduct
Shell Code of Ethics
6
Downstream Contracting & Procurement - Guide for Suppliers
Shell has publicly reported on its progress in contributing to
sustainable development since 1997.
You can download a copy of Shell’s latest Sustainability
Report from our website www.shell.com
Health, Safety, Security and Environment (HSSE)
Shell companies have a systematic approach to HSSE
management designed to ensure compliance with the law
and to achieve continuous performance improvement.
We expect our suppliers to meet our HSSE requirements.
“We comply with all applicable laws and regulations of the
countries in which we operate.”
Downstream Contracting & Procurement - Guide for Suppliers
7
“What matters to our business
matters to Contracting & Procurement.”
8
Downstream Contracting & Procurement - Guide for Suppliers
Shell Downstream
Shell’s Downstream business encompasses all the activities
necessary to transform crude oil into Shell petroleum
products and petrochemicals, and deliver them around the
world. Downstream Classes of Business refine, supply, trade
and ship crude oil worldwide, and manufacture, transport
and market fuels, lubricants, bitumen, LPG and bulk
petrochemicals for domestic, transportation and
industrial uses.
Read more on our website www.shell.com or visit your
local country website to find out more.
Downstream Contracting & Procurement - Guide for Suppliers
9
10
Downstream Contracting & Procurement - Guide for Suppliers
Contracting & Procurement
in Shell Downstream
We procure an average of $40m of non-hydrocarbon goods
and services from third parties on behalf of Downstream
businesses every day. The purchase and supply of everything
from pencils to pipelines is down to us.
Shell Downstream’s ability to establish robust and mutually
beneficial relationships with our suppliers and contractors
lies at the heart of all Shell Downstream operations.
Supplying to Shell Downstream
Health, Safety, Security and Environment (HSSE)
Shell Downstream expects its suppliers to maintain high
standards of health, safety, security and environmental
performance, for quality, innovation and commercial ethics.
Working on Shell Downstream sites
Safety is the number one priority for Shell Downstream and
strict conditions apply for working on Shell Downstream
sites; these are non-negotiable. Therefore provision of the
service must be according to the contract, the conditions
for working on site, and the agreed time schedule including
completion of the work by the agreed date and according to
relevant Shell Downstream HSSE standards.
Escalation
The Shell Global Helpline provides suppliers with the means
of reporting to us any concerns over unethical behaviour on
the part of Shell employees. This confidential helpline can be
accessed via our company website www.shell.com
Downstream Contracting & Procurement - Guide for Suppliers
11
Master data
The integrity of our master data is key to the efficiency
of our operations. When appropriate we will work with
suppliers to develop product master data.
Content provided by Shell, Public Exchange and Direct
Suppliers is also supported, which enables suppliers to create
data once and publish many times. This facility makes it
easier to update information and reduces errors.
Prequalification of potential suppliers
Shell Downstream is no different from any other responsible
organisation in that it needs to be satisfied that potential
suppliers are suitable to supply to Shell Downstream
companies. Therefore all potential suppliers to Shell
Downstream must undergo an appropriate appraisal to
ensure that the HSSE, Quality, Commercial and Financial
status of their organisation matches the robust standards
set by Shell Downstream. This means that no business can
be committed to with potential suppliers until they have
undergone successful prequalification. Typical, but not
exhaustive, criteria include:
• Technical expertise
• Organisation (people, facilities, equipment) and
capabilities
• HSSE policy/record
12
Downstream Contracting & Procurement - Guide for Suppliers
• Quality Assurance system
• Industrial and employee relations history
• Financial status
• Continuous improvement ethos/innovation capabilities
• Sub-contractor management
• Reputation management/business ethics policy/record.
“The integrity of our master data is key to the efficiency
of our operations.”
Category management
Value
Like any other sensible organisation Shell Downstream looks
for best value from its suppliers. However, we aim to buy a
package of attributes from suppliers and competitive pricing is
just one of the attributes that make up the total lifecycle cost,
so our decisions are not made purely on price.
Quality
It is essential that goods and services supplied to Shell
Downstream are fit for purpose and comply with our
specifications.
Innovation
Shell Downstream believes in working in partnership with
its suppliers. It is important for us to develop and build
relationships with suppliers who strive for continuous
improvement and have the ability to take the initiative and
offer suggestions for improvements.
Category management and contracting process
Shell’s procurement processes are designed to identify,
evaluate and select suppliers based on merit and their
capabilities to meet Shell’s requirements. Shell will award
business to suppliers based on best total value principles.
Shell has a commitment to high ethical standards in all
of its business relationships and expects the same level of
commitment from all of its suppliers. We actively manage
supplier performance and relationships and readily seek
supplier input to improve processes and lower costs.
Shell’s key suppliers should expect to participate in regularly
scheduled business performance review meetings and be subject
to periodic audits. Integrity, mutual trust and respect are the
key components in our business relationships with suppliers.
Downstream Contracting & Procurement - Guide for Suppliers
13
Contracts
Purchasing routes
Prior to and as a prerequisite to any supplier relationship,
either a full contract or the acceptance of Standard Terms
& Conditions of Purchase is obligatory to doing business
with Shell.
Shell Downstream has three approved purchasing routes:
Depending upon the part of the Shell Downstream business
that you supply you may be required to agree a Service Level
Agreement. This will be part of the commercial terms.
Electronic trading
Shell Downstream supports electronic trading. We will
inform you of the preferred electronic exchange. Shell
Downstream will work with suppliers to develop the most
efficient means of transacting and help both parties to
reduce processing costs and avoid errors and rework.
Shell Downstream Supplier Portal
Shell Downstream is able to provide selected suppliers
with access to the Shell Downstream Supplier Portal. The
Portal is a single-sign-on web-based portal that enables
selected suppliers to view and update purchase orders,
review remittance advice documents and access other useful
functions. This dispenses with the need for fax and paper
orders by enabling suppliers to collect and acknowledge
purchase orders from a web portal.
14
Downstream Contracting & Procurement - Guide for Suppliers
• The Global Credit Card should be used where
appropriate. Suppliers may be expected to arrange for
acceptance of such credit card before they can do business
with Shell Downstream.
• Purchase Order is the default if a credit card is not used.
An official purchase order will be issued. To ensure
prompt payment the purchase order number must be
quoted on invoices.
• Invoice Only process is an exceptional process used for
a very limited number of categories. This means that an
official purchase order will not be issued. The supplier
will be advised if the category is ‘invoice only’.
In addition, we will inform you where we make use of
Consignment Inventory – Maintenance Repair and
Operating (MRO) materials.
Consignment inventory will be managed by Shell’s Enterprise
Resource Planning (ERP) system regardless of whether
inventory is managed by Shell or by the supplier. The details
will be defined in a specific consignment agreement.
“Shell’s procurement processes are designed to identify,
evaluate and select suppliers based on merit and their
capabilities to meet Shell’s requirements.”
Downstream Contracting & Procurement - Guide for Suppliers
15
Deliveries
Deliveries of goods must be according to Shell
Downstream’s requirements and must be made to the
address stated on the purchase order. Deliveries to the wrong
address will be returned.
Confirming receipt of goods and services
All goods and services will be formally receipted through Shell
Downstream Enterprise Resource Planning (ERP). Inability
to receipt may prevent the payment period from starting.
Suppliers must ensure that:
• Delivery documentation is accurate and clearly references
Shell’s purchase order and applicable material numbers
• Appropriate certification is supplied where required
(e.g. mill certificates, certificates of analysis)
• Material Safety Data Sheets (MSDS) are supplied
where required
• Material is packaged in compliance with Shell’s
requirements
• Invoices are sent only when the work is complete.
16
Downstream Contracting & Procurement - Guide for Suppliers
“Shell Downstream believes in working in partnership
with our suppliers.”
Invoicing and payment
Invoice Format
Invoices
Where allowed the preferred format is PDF. Country
specific address and additional requirements will be detailed
within purchase orders.
In order for the payment period to start invoices must be
correct and complete. Suppliers should not accept any orders
without an official purchase order number unless it is a
credit card purchase. This means invoices must:
Electronic payment methods
• Be legible and not handwritten
• Shell Downstream supports EDI (Electronic Data
Interchange).
• Quote a valid purchase order number
• Shell Downstream supports EFT (Electronic Funds Transfer).
-Official purchase orders have 10 digits and always
start with 4500
• Shell Downstream supports ERS (Electronic Receipt
Settlement), also known as Self Billing.
• Not quote more than one purchase order number
• Quote the correct invoice address
• Quote the agreed price and quantity
• Quote the agreed payment term
• Meet legislated VAT requirements
• Be arithmetically correct
• Be sent to the correct central address
Incorrect invoices will be returned.
Downstream Contracting & Procurement - Guide for Suppliers
17
“The East is an increasingly important and growing
market for Shell.”
Standard payment terms
Shell Downstream has standard payment terms that are
applied globally and locally. The Payment due date will be
calculated from the date of receipt of a correct invoice that
complies with all tax and legal requirements as well as any
requirements Shell may request.
Remittance advice
• Shell Downstream has the capability to email remittance
advice documents, which informs suppliers of invoices
that have been passed for payment and removes the need
for telephone enquiries.
• Selected suppliers will be able to view their remittance advice
documents via the Shell Downstream Supplier Portal.
18
Downstream Contracting & Procurement - Guide for Suppliers
The companies in which Royal Dutch Shell plc directly or indirectly owns investments
are separate entities. In this document the collective expressions “Shell”, “Group”,
“Shell Group” and “Shell Companies” are sometimes used for convenience where
references are made to the companies, including Royal Dutch Shell plc, in which
Royal Dutch Shell plc either directly or indirectly has control either through a majority
of the voting rights or the rights to exercise a controlling influence or to obtain the
majority of the benefits and be exposed to the majority of the risks. These expressions
are also used where there is no purpose in identifying specific companies.
© Shell International Petroleum Company 2010
Restricted. Permission should be sought from Shell before any part of this publication
is reproduced, stored in a retrieval system or transmitted by any other means.
www.shell.com
Produced by Visual Media Services (London) 596224 02/10 Version 1.0