Every procurement team I see in oil and gas spends 80% of their time on things that don’t move the needle.
They're obsessed with perfect compliance records: POs after the fact, P-card spend tracking, policy documentation. They're building detailed spend and savings reports, managing complex approval processes, and maintaining supplier scorecards.
Meanwhile, what does the executive team actually care about? Who's driving innovation. Why competitors deliver faster. Where growth and margin improvement will come from. How to enter new markets faster. What's killing project profitability.
See the disconnect? Procurement is answering questions nobody's asking.
In energy, that disconnect carries an opportunity cost: the revenue lost while perfecting the wrong metrics. Procurement celebrates a 5% cost reduction while field operations lose 15% productivity waiting on materials. Every lost day on a drilling or capital project burns hundreds of thousands, sometimes millions of dollars.
The field perspective
I spent five years working overseas in upstream operations, 10 000 miles away from our supply chain team in Houston. Nobody wrote worse emails back to headquarters than I did. When our companies merged, they brought me home to run the project supply chain, probably because I was the guy in the field who complained the most.
That experience taught me something important: The tension between operations and procurement isn’t about personalities. It’s about traditional processes that create barriers to execution.
Consider this scenario. An operations engineer identifies a critical need on site. The well is connected, the crew is ready, and they need a specific valve tomorrow to keep things moving. But procurement wants to go out for three bids and follow the proper approval process. That's going to take three days minimum, maybe a week.
The operations guy doesn't care about saving 10%. He cares about keeping productivity moving. And he's right to care about that, because the cost of delays far exceeds any savings from competitive bidding on routine items.
As Sarbanes-Oxley requirements became more enforced in publicly held companies, controls and purchase orders slowed everything down even more. The friction between operations and procurement only got worse.
What mega projects reveal
I once walked onto a mega project site: one mile by one and a half miles, with 3000 pieces of equipment and crews ramping up from 300 people to a peak of 10 000. The project director stopped me on my first visit.
"They tell me you're the director of global supply chain," he said. "You're going to help me. I've got 300 people now, and I need to scale to 10 000. I can't get tools, supplies, and equipment out here to support what I have now, much less when we peak. How are we ever going to execute like this?
"I looked at their processes. Twenty supervisors out of 500 people on site were writing requirements down on paper for their teams. A pool of about ten buyers was trying to handle all those requests, going out for three bids on each one. It was taking a month to get from requisition to delivery.
Here's what stood out: they were buying the same stuff over and over again, treating every transaction like it was the first one they'd ever done. No fixed-price agreements. No strategic contracts. No catalogs.
Ford doesn't go out for three bids every time they need a set of lug nuts. But that's exactly what this team was doing on a ten billion dollar project.
They were also walking around the job site getting approval signatures on paper requisitions. When we stood up DocuSign for them, they acted like we'd performed a miracle.
This was one of the largest engineering and construction companies in the world. They eventually went bankrupt, but so did a lot of others. The ones still standing have workarounds and band-aids to create efficiencies, but most of their systems still have significant limitations.
The systems problem
Your SAP and Oracle systems were never made for execution. They were built to be accounting depositories for data. That's it.
These systems work fine for manufacturers doing demand planning and negotiating long-term contracts with suppliers. That's a completely different type of supply chain than what exists in oil and gas operations.
When you're Toyota managing relationships with parts suppliers for a manufacturing line, you have time to plan. When you're an operations engineer in the field who needs a valve right now, you don't.
You can't just improve these processes. You have to eliminate the friction entirely.
Time on tools
In the capital projects world, they measure something called "time on tools." How much of the workday are people actually doing productive work versus standing around waiting for materials or dealing with administrative tasks?
When you're burning millions of dollars per day on a multi-year project, inefficiencies compound into hundreds of millions of dollars in waste. While procurement is perfecting compliance metrics, operations crews are waiting for materials to arrive.
That's the real cost. Not whether you have perfect PO hygiene or detailed supplier scorecards. It's the productivity lost, the projects delayed, the wells waiting to be connected.
What success actually looks like
In a recent conversation with a VP at an oil and gas company, I brought his whole operations team into the room. One of them said, "So let me get this straight. You're telling me I don't need field area accountants anymore, I don't need procurement people anymore, and we could probably cut our accounts payable back office by 80%?"
I told him I didn't say that, but yes, he was absolutely correct.
Here's the reality: AI-driven automation can now handle about 80% of accounts payable work. It can digitise and automate the friction that slows everything down. It can code invoices, route approvals, and manage transactions that used to require people sitting in the middle.
But more importantly, it can compress cycle times. Fixed-price contracts and strategic sourcing reduce costs, stabilise prices, and speed up execution. Automated procure-to-pay eliminates the delays that kill productivity.
Oil and gas is cyclical. It's been feast or famine for decades, and companies have no problem cutting positions when commodity prices drop. There's no loyalty when oil hits US$50/bbl and companies stop making money. Everyone in this industry knows that, regardless of what HR says.
So the real question is whether your procurement function is actually contributing to what matters: productivity, efficiency, and profitability.
Measuring what matters
If your procurement team is measuring success by compliance records and savings reports, there are more important metrics to consider. The real measures are:
- Total cycle time from requisition to delivery.
- Productivity impact on field operations.
- Working capital improvements.
- Project profitability and on-time completion.
- EBITDA contribution, not policy compliance.
These metrics align procurement with what executives actually care about. They measure procurement's contribution to growth, margin improvement, and competitive advantage instead of just whether the paperwork is perfect.
The space where this matters most is among operators who don't have mature supply chain organisations: the independents, the smaller players, the project teams moving fast. They can't afford the overhead of traditional procurement, and they can't afford the delays.
What they need is a procurement function that gets out of the way while still maintaining visibility and control. That means automation. It means self-service catalogs. It means AI handling routine transactions. It means eliminating the administrative burden that procurement has traditionally created.
The bottom line
Compliance reports don't move barrels, build pipelines, or connect wells. Execution does.
Every day spent perfecting metrics that don’t drive performance is a day your competitors are getting faster, your projects are losing money, and your field teams are getting more frustrated.
Better compliance isn't the solution. You need to eliminate the opportunity cost of inefficiency. You need to realign procurement with performance instead of paperwork.
In a cyclical, cost-conscious industry, that distinction isn't just important. It's survival.