The process of procurement can be very complicated for companies. It takes a good amount of time and resources to set up a team full of expertise; able to retrieve the desired output from the process. However, the whole process can be handled by a third party, a procurement service provider. The very idea behind the arrangement is to save cost and time of the company. Procurement services enable companies to get quality goods and services at a lower cost, enhanced efficiency, and a better control on logistics.
The team provided under the services is trained to make the best decisions. It is proactive and has excellent communications. There are many companies providing topnotch services to all kinds of enterprises. One of them is PEMEX Procurement International.
Formerly known as Integrated Trade Systems, PEMEX Procurement International (PPI) is an affiliate of Petróleos Mexicanos (PEMEX) and was created as a result of PEMEX’s strategy to establish a closer presence in international energy markets and to develop direct relationships with key suppliers. Founded in 1994, it started with a mission to generate value for PEMEX by providing integrated Supply Chain Management solutions. In the span of 24 years, the company has shown flexibility in adapting a changing and demanding environment, both internationally and in Mexico, in terms of PEMEX’s regulatory framework, international industry practices, and overall market conditions. The company has also developed more than two hundred strategic agreements with key industry partners and produced over 1,700 contractual relationships with suppliers all over the world by working under conditions of innovation, quality, efficiency, and competitiveness.
PPI, on behalf of its customers, negotiates long-term strategic agreements with key players in the Oil and Gas Industry, particularly Original Equipment Manufacturers (OEMs) and providers of critical technology for PEMEX. Based on historical expenditure, demand aggregation, and PEMEX’s purchasing power, the agreements establish commercial and legal terms prior to purchasing. When the demand for the goods and services arises, the procurement activities become just a matter of preparing the purchase order from an authorized price list, obtaining approvals, and releasing it electronically to the supplier.
PPI contracts through direct assignment, restricted tendering, and international open bidding mechanisms. Additionally, once contracts have been executed, PPI expedites deliveries with suppliers and performs quality inspections, ensuring all conditions are met before shipping, and handles logistics and forwarding through third party service providers.
Salvador Escobedo is the President and CEO of PPI since May 2017. He established an overall strategic direction for the company in which transparency and ethical values, compliance with applicable regulations, and robust quality and internal control systems are the key pillars. Salvador also prioritized increasing the number of strategic alliances with key suppliers and service providers, vastly contributing to the improvement of the agility for the internal review and approval process for said alliances. In addition to strengthening PPI’s corporate governance principles and purchasing instruments, core to the procurement activities, Salvador has also contributed to the increase of PPI’s purchasing operations, which – as a result – lead to greater saving levels for its customers.
Journey of Eminence
The motive behind the creation of PPI was high degree of dependence on technology and services for the procurement operations that were not locally available in Mexico. By managing relationships with its partners, PPI has been able to identify opportunities and implement new procurement instruments to address the procurement needs of its customers. PPI facilitates communication, early identification of requirements, and evaluation and application of new technologies; all while providing continuous monitoring of key activities of the supply chain from beginning to end. All of it is possible due to the experience and knowledge accumulated throughout many years of operation, specialized workforce, and the implementation of best practices for the management of the company.
Prior to the Mexican Energy Reform, the regulatory requirements applicable to the public sector in Mexico did not allow for practical innovations to the procurement process. Balancing the compliance with Mexican regulations with international commercial practices was difficult and it involved a demanding effort from PPI to communicate and negotiate highly sophisticated commercial requirements with suppliers.
After the widespread of Energy reforms in 2012, PEMEX implemented various measures to simplify its administrative processes and make the overall operations more efficient. The regulatory framework changed correspondingly as part of the effort to turn what was, until then, an oil monopoly into a competitive world-class organization. In close coordination with the PEMEX’s Procurement Office, all within the new regulatory framework, PPI is continuously working on innovating and modernizing its operations to better serve its customers in the most effective and efficient way.
The implementation of contractual agreements with the strategic partners has been, and still is, one of the biggest achievements of PPI. It enabled the company to offer the clients flexibility and agility to solve their procurement needs, due to pre-negotiated terms and conditions. Moreover, it has given suppliers enough visibility of the goods and/or services that might interest PEMEX in the short-, medium-, or long-term. PPI is able to expedite the information exchange with its clients with the help of the development of custom transactional system, which was done with the purpose of incorporating business rules specific to PEMEX’s procurement process and PPI’s processes that support it, in addition to integrating electronically with PPI’s clients’ systems.
All of this, has been done under strict quality measures for which the company achieved its original ISO 9002 standard certification in 1996, less than two years after the company was created. Since then PPI has been developing and improving the quality management system through multiple certifications and, in May of this year, it successfully completed the re-certification audit for the new ISO 9001-2015 standard.
PPI covers the full cycle of the procurement process in an integrated manner, from beginning to end. This allows the clients to have full visibility of their operations. The company’s extensive experience on the procurement regulations applicable to the energy sector in Mexico, together with the best international commercial practices, have benefited its customers throughout the years. Moreover, PPI’s bilingual and multicultural personnel is able to overcome any cultural or language barriers between its customers and the suppliers, in a framework of transparent and ethical business practices that are compliant with the applicable regulations.
PPI strives to maintain and strengthen the strategic alliances with key suppliers, which provide PEMEX with the most favorable conditions in terms of price, availability, quality, and technology. Through these alliances, PPI contributes in generating significant savings as well as adding value for PEMEX and all its stakeholders
PPI assures to continuously generate value for PEMEX by running an efficient operation that maximizes Return of Investment (ROI). Moreover, it is directing the efforts to achieve a greater penetration of its services in every area within PEMEX in order to be able to aggregate demand, which could result in even greater savings for its customers. Looking at the long term aspects, PPI aspires to expand the reach of its services to other participants in the Mexican energy sector that could benefit from its proven experience in integrated supply chain management.
Additionally, PPI will continue to expand the scope of the strategic alliances to achieve the best terms and conditions for the procurement of goods and services for the whole energy industry in Mexico, as PEMEX continues to establish partnerships with major international players for exploration, drilling, production, and transportation among other areas.