"One on One: An Interview with Jim Scotti" By Kristen Kioa, Fall 2000, Vol. 36, No. 4, p. 2
Journal of Supply Chain Management Copyright © November 2000, by the Institute for Supply Management, Inc.
Kristen Kioa, senior associate, media relations for NAPM
Jim Scotti, a company officer, is vice president of procurement and materials for Halliburton Company, a $16 billion revenue organization serving the energy services, engineering and construction, and manufacturing industries. A registered professional engineer, Mr. Scotti joined Brown & Root, a subsidiary of Halliburton, in 1990 following five years as vice president of procurement for CF Braun and 15 years with Dravo Corporation. He is a member of the National Society of Professional Engineers and NAPM, a trustee for CAPS, a member of the Board of Directors for the Houston Minority Business Council, and a member of the Board of Advisors for the Construction Industry Institute.
The Journal of Supply Chain Management:Halliburton has gone through some major changes recently. With the merger of Halliburton and Dresser, your organization will be globally structured to create customer value and satisfy customer needs, from discrete to fully integrated products, technology, and services. Keeping that in mind, what is your role within your organization?
Jim Scotti: I am responsible for all procurement at Halliburton. This includes both direct and indirect spend. My role is one of global process owner for all Halliburton procurement and supply chain strategy, policies, and processes. Each Halliburton business unit has a dedicated procurement and materials director responsible for day-to-day execution. In this role, I report directly to the company president.
The Journal:Considering the different business units that you are responsible for, does your role change based on the service or commodity you are dealing with?
Scotti: Yes. Halliburton has five business units; two of the units require buying mainly services and material commodities for field work and manufacturing. These units are very dependent on supply chain management tools. The other three units do engineering and construction work requiring major engineered equipment purchases as well as material and subcontracts. My role stays the same in each, but the spend in the engineering and construction business units is more core to the outcome of the work. Over 60 percent of the cost of the facilities we build are what we buy. I try to maintain a close relationship with the senior management of our key suppliers for all units.
The Journal: What challenges is your organization facing?
Scotti: Implementation of an ERP [enterprise resource planning] system across our company, as well as how to integrate the buy side of e-commerce, are two of our biggest challenges in procurement today. Also, how to continue to strengthen the strategic relationships we have with our key suppliers while at the same time lowering price and cost.
The Journal: How is purchasing and supply helping to resolve these challenges?
Scotti: We are very much a part of, and in some cases leading, the global process system designs needed to have a world-class procurement system. On the supplier side, we are bringing our suppliers on earlier in the procurement cycle in all of our businesses to help eliminate cost in both of our organizations. The Internet will also help this process, as we become more efficient at collaborating in "real time" with our suppliers on design issues.
The Journal: Where are you taking purchasing and supply management in your organization?
Scotti: To be more of a process-driven organization, rather than a function-driven organization, that can leverage our spend across all company business units. E-commerce and our global rollout of SAP across Halliburton Company will be the main drivers needed to fulfill this goal.
The Journal: What have been your successes and what areas are you working on?
Scotti: Being able to establish a solid global procurement and materials organization that leverages our combined knowledge has been a major attribute of our organization. We now need to apply todays technology to enhance this network and increase our decisionmaking capabilities. Another success has been the development and implementation of a cost savings program in procurement that has involved all procurement personnel worldwide.
The Journal: : What has been the biggest lesson you have learned in purchasing and supply chain management?
Scotti: The need to have senior operations management support for all procurement initiatives. Procurement cannot work in a silo as it once did in most organizations. To have an impact on the companys bottomline, you need the total buy-in of engineering, finance, etc., to produce "believable" value.
The Journal: What kinds of research would you like to see done on behalf of purchasing and supply management?
Scotti: I would like to see more unbiased research done on the "value" of the e-commerce tools that are currently on the market. Possibly research into expanding the role of the chief procurement officer to include responsibility for disciplines traditionally outside of procurements influence, i.e., engineering, accounts payable, etc.
The Journal: What is the future for purchasing and supply management in general and at your organization in particular?
Scotti:The future is the Internet, which will be as common as the procurement card. However, we are at the embryo stage of making it work. As far as Halliburton is concerned, this is the added value procurement can contribute to the bottomline. Also, with the caliber of people in todays procurement organizations, I see procurement growing to be more of a core business opportunity for corporations. It will no longer be the group that just buys things, but a group of strategic thinkers who contribute to the strategic plans and future goals of the company.
The Journal: How is your company preparing to use the Internet as it relates to future trends in purchasing?
Scotti: Halliburton is taking a very long-term strategic approach to its use of the Internet. Our desire is to form e-ventures by virtually integrating with other leading companies, rather than trying to build everything ourselves. We have also joined with 12 major oil field services firms, to form an oil field services portal to provide customers with a single source of standardized electronic catalog and service agreement information for upstream products and services provided by the participating suppliers. On the purchasing side, we are taking a similar long-term strategic approach. We are currently working with a leading e-procurement and supply chain solution provider company to create a Halliburton procurement marketplace that will leverage our spend and supply chain across all business units. This solution will enable us to collaborate online with our customers and suppliers by using various sourcing, purchasing, and auctioning tools.