Deutsche Shell Holding GmbH commissioned a vendor market analysis to evaluate outsourcing its procurement processes. The document analyzes Shell's operations, procurement costs, potential cost savings of 50% through outsourcing, and the major BPO vendors. It recommends outsourcing procurement to achieve 25% minimum cost savings, selecting a vendor based on expertise, culture fit and language abilities, and negotiating costs and control through a long-term contract and shadow operations.

1. 1 VENDOR MARKET ANALYSIS PROCUREMENT OUTSOURCING SHELL GERMANY, DECEMBER 2009

3. Lower oil & gas prices; weak energy demand

4. Prudent approach to economic downturn

5. Standardization , cost reduction and process optimization is required

6. Outsourcing2 *Source: Shell Annual Report Q109

8. Tradicional BPO market increasing CAGR 24%, $450Bn by 2012*

9. Vendors are getting better...market is growing

10. Vendors Specialization3 *Source: Infosys Market Report, 2009

11. AGENDA INTRODUCTION OBJECTIVES---METHODOLOGY PROCUREMENT OUTSOURCING (PO) GENERAL COMPANY OVERVIEW-WHY TO IMPROVE? BPO ENGAGEMENT SCOPE-MAIN SCENARIOS PO-VENDOR MARKET INSIGHTS FINAL COMMENTS 4

12. OBJECTIVES ADVISORY VENDOR ANALYSIS REPORT 5

14. Direct- IndirectProcuremet

15. TransactionalProcesses

16. Captive vs. BPO solution6

19. Revenue 2008: 2,200 mEuro

20. COGS: 1,800 mEuro

21. SG&A: 110 mEuro *

22. ProcurementPers.: 100-120FTE7

23. COMPANY OVERVIEW SG&A Ratio CostSavingsOportunities-> ReachBenchmarks 8

24. COMPANY OVERVIEW SG&A Ratio CostSavingsOportunities-> ReachBenchmarks 9

26. Europe segment Income for 2008 corresponds to 8,809 mEuro, which represent the 33.25% of the total Income of the period for Royal Dutch Shell*.

27. Shell operation in Germany will be estimated considering**:

28. Revenue 2008: 2,200 mEuro

29. COGS: 1,800 mEuro

30. SG&A: 110 mEuro **

31. ProcurementPers.: 100-120FTEPPC = 0.0149 x 1,800 = 26.82 mEuro *Source: Shell Earnings by Business Segment and Identified Items 2008, Financial reports, shell.com **Informed by communications department of Deutsche Shell Holdings GmbH 10

32. BPO ENGAGEMENT SCOPE Scope *Source: http://logisticstoday.com **Informed by communications department of Deutsche Shell Holdings GmbH ***Similar businessesretained FTE 11

33. BPO ENGAGEMENT SCOPE Scope 50%Savings At least 5 yearsContract Scenario 12

34. VENDOR MARKET Mayor Players 2008-2009 *AccordingRank Procurement Vendors, Source: The Black book of Outsourcing, Brown-Wilson Group 13

35. VENDOR MARKET Mayor Players 2008-2009 14

36. VENDOR MARKET Mayor Players 2008-2009 15

37. VENDOR MARKET Mayor Players 2008-2009 16

38. VENDOR MARKET Mayor Players 2009 17

39. VENDOR MARKET Mayor Players 2009 18

40. VENDOR MARKET Mayor Players 2009 7.5% % of Revenue from PO Sources: AnnualReports of eachcompany, financialstatements 2008 19

41. VENDOR MARKET Chilean Player 20

42. VENDOR MARKET Mayor Players 2009 7.5% % of Revenue from PO Sources: AnnualReports of eachcompany, financialstatements 2008 21

43. VENDOR SELECTION CRITERIA Weightedselection 22 **Expertise, Culture,language, PO capabilities, SAP

44. VENDOR SELECTION CRITERIA Weightedselection 23

45. VENDOR SELECTION CRITERIA Workplanproposal Basedon Offshoring Instituteapproach 24

47. SG&A and economicaldownturn

48. Expertise, cultural and language fit, market participation

49. Differentengagementoptionsshouldbeevaluated

50. +25% costssavings as base

51. PO-growingmarket-control required-ShadowOperations

52. CPI (Country and from Vendor provider)->Negotiation structure25

53. END Thanks! Questions?? 26 How can Companyobjectivesregarding BPO projectaffectthevendorselection?

54. END Thanks! 27 References Global Sites http://www.shell.com/ http://www.wikipedia.com http://www.genpact.com http://www.capgemini.com/ http://www.accenture.com http://www.infosys.com http://www.theblackbookofoutsourcing.com/ https://www.ebundesanzeiger.deNews/ News/Blogs sites http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20090707005016&newsLang=en http://logisticstoday.com/mag/outlog_story_5576/ http://www.outsourcing-journal.com/dec2009-chile.html http://www.everestresearchinstitute.com/Product/10972