Analysis Of SINOPEC Global Procurement System

Under the background of economic globalization and in face of increasingly fierce competition from the market, manufacturers need to look for more cost-effective resources and more potentially promising market. Once manufacturers are equipped with Ownership Specific Advantage, Location Advantage and Internalization Advantage, they are qualified to conduct international business.With the development of international business by enterprises, procurement, which has been acknowledged by management level as key part within supply chain, becomes no more as the simple behavior of hold-money-to-buy or pure sector of purchase execution. It has become the most concerned issue for enterprises to pay attention to how to optimize distribution of inner and outer resources, to reduce operation cost and to elevate competition power in the market. The global procurement is oriented to seek those high-rate resources with universal vision and to ensure enterprise’s international business by reasonable distribution of resources through diversified purchase strategies.China Petroleum and Chemical Corporation(abbreviated as “Sinopec”) is the largest integrated energy and chemical company in China. After years of overseas business, the balanced development of projects in both home and abroad has achieved. Sinopec realized the total capital expenditure of RMB273.7 billion in 2013, where overseas oil and gas exploration & production and refining & chemical projects achieved RMB90.7 billion.Sinopec has domestically advanced managerial philosophy and proving successful operation experience, though, the existing procurement system fails to satisfy demands on fast development of international business.This essay gives introduction of international business scenario of Sinopec and summarizes characteristics of material procurement in petroleum and chemical industry. Meanwhile, it has also analyzed current material procurement system and operation status of Sinopec. The main emphasis is put on SWOT model for analysis of global procurement by Sinopec and suggestions on improvement are proposed accordingly.