Supply Chain

Tiered System

The 2008 Oil & Gas UK code of practice compliance survey showed that there is a growing lack of application of the Supply Chain Code of Practice. The general attitude towards the Code remains positive and there is a consistent belief in the Code and its principals. However, there has been a notable relaxation in compliance with the Code’s best practice guidelines throughout 2007. This may be due in part to stretched resources, rising costs of the industry and code of practice champions moving on.  This relaxation in commitment and application was predicted by Oil & Gas UK, which recently urged companies to refresh their commitment to the Code by re-signing.  A seminar was also held in May to discuss Supply Chain best practice and future proposals to improve compliance via the Changing Gear initiative. Furthermore, the Oil & Gas UK Supply Chain Forum is planning to introduce a new, tiered compliance mechanism to encourage better application of the Code across the supply chain.

This new scheme aims to provide a structured system for continuous progression towards fuller compliance as far as is practically possible and achievable within the boundaries of companies’ corporate constraints. We recognise that some organisations may never be able to fully comply with all aspects of the code, despite reasonable efforts and the new tiered system will allow those companies to comply with the Code on a level that they feel most comfortable with.

The following 4 levels will apply:

Initial stage

For new code signatories initially signing up to the principles of the Code, with the aim to work towards fuller compliance. This is essentially a probationary period with an initial entry level classification with possible conversion to Bronze level. 

Bronze level

This is the first ‘earned’ level based on at least 5 FPAL Report 3 feedback reports and on receiving an average of at least ‘score 5’ for feedback received to the three Code of Practice compliance questions.

Silver level

The next ‘earned’ level based on at least 5 FPAL Report 3 feedback reports and receiving an average of at least ‘score 7’ for feedback received to the three Code of Practice  compliance questions, plus the completion and return of the annual code compliance survey.

Gold level

The highest possible ‘earned’ level based on at least 10 FPAL Report 3 feedback reports and receiving an average of at least ‘score 8’ for feedback received to the three Code of Practice compliance questions, plus demonstrable participation in Share Fair at least every second year and also completion and return of the annual code compliance survey.

Compelling application of the code will be tested by utilising FPAL type 3 performance feedback which captures the perceptions of a purchasing company’s supply chain on how well they are complying with the code and how ‘attractive’ they are for their customers to work with.

The new compliance mechanism was formally launched at Share Fair 10 on 11th November 2008. Initial tier ratings will be announced in August 2009.