May 17, 2020

Total begins production at $310mn La Mède Biorefinery, enhances palm oil procurement process

Total
Biofuel
palm oil
refinery
Harry Menear
3 min
French energy giant Total completes the transformation of its La Mède refinery into a biofuel production facility, alongside taking steps to enhance sustainability and transparency in its supply chain
Leading French energy company Total announced today the commencement of production at its new fuel refinement plant in southeastern France. The La Mède...

Leading French energy company Total announced today the commencement of production at its new fuel refinement plant in southeastern France. The La Mède biorefinery, previously a traditional oil refinery, now produces biofuel. The conversion project was launched in 2015 and represents an expenditure by Total of over US$310mn. 

The facility is now comprised of a biorefinery with a capacity of 500,000 tonnes of biofuel per year, an 8MW solar farm, a 1.3mn cubic meter logistics and storage hub, and a 2,500 annual capacity training centre. 

La Mède will produce both biodiesel and biojet fuel for the aviation industry. It was specifically designed to process all types of oil. Its biofuels will be 60 to 70% from made up of 100% sustainable vegetable oils (rapeseed, palm, sunflower, etc.) and 30 to 40% comprised of treated waste (animal fats, cooking oil, residues, etc.) to promote a circular economy.

As part of an agreement with the French Government in May 2018, Total has pledged to process no more than 300,000 tonnes of palm oil per year — less than 50% of the total volume of raw materials needed — and at least 50,000 tonnes of French-grown rapeseed, creating another market for domestic agriculture.

“I’d like to thank the teams for all their hard work these last four years to convert our La Mède refinery,” said Bernard Pinatel, President, Refining & Chemicals. “Biofuels are fully renewable and an immediately available solution to cut carbon emissions from ground and air transportation. When produced from sustainable raw materials, as at La Mède, they emit over 50% less carbon than fossil fuels. Our biorefinery will allow us to make biofuels in France that were previously imported.”

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In addition to the opening of the new facility, Total is taking steps to ensure that the 300,000 tonnes of palm oil that are processed each year are procured in the most sustainable way possible. 

The company has added its own tighter controls and auditing of sustainability and respect for human rights to certification, selecting responsible suppliers and limiting their number, so that improvement plans can be jointly drafted and verifiably deployed, according to a company press release. 

Suppliers will be required to join the Roundtable on Sustainable Palm Oil, an organization created in 2004 by producers, manufacturers and NGOs to promote responsible, sustainable palm oil production. 

In order to create further transparency in its supply chain, Total is publishing the list of mills from which its palm oil is sourced on its website after every delivery.

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May 13, 2021

EY and Harvard Law discuss barriers in Contract Management

supplychain
Procurement
EY
ContractManagement
4 min
EY and Harvard Law School Center discuss Legal Profession survey findings and inefficient contract management procedures among respondent organisations

Contract management is a crucial discussion for procurement professionals as negotiations require a more specific outcome. However, some organisations are experiencing significant barriers to developing their contracting processes. Ernst & Young and Harvard Law School Center have discussed survey results in relation to the current state of contracting and explain where the issues arise.

The Legal Profession survey (part of the 2021 EY Law Survey) highlights the perspectives of 1,000 professionals from across the globe in law, procurement, business development and commercial contracting.

Out of all the major companies surveyed, over half of them say they are experiencing significantly reduced revenue and are missing out on important opportunities due to poorly managed contracting processes. 

Some of the key findings from the survey:

  • 92% of organisations in the survey said they plan to transform their contract handling procedures.
  • 98% of respondents said they face critical barriers in the process of developing contract management.
  • 38% of organisations said they have tried and failed already to implement a better contract management procedure. 
  • 57% said they had experienced less positive revenue due to inefficient contracting systems.
  • 50% of respondents said they had missed profitable business opportunities.

Kate Barton, Global Vice Chair, EY, has expressed her opinion on the survey, “Revenue growth is a fundamental goal for any commercial organisation and effective contracting processes play a crucial role in making that possible. Contracting teams around the world know the value they can bring, and they are making real efforts to transform, but the survey brings into sharp focus a whole range of obstacles that they must navigate if they are to make the improvements they are aiming for.”

What will organisations need to address to develop their contracting methods? 

Cost-Reduction

Many organisations are under pressure to reduce costs, specifically contracting professionals. This is something that nearly all of the survey respondents will be looking to do in the next two years, while a third of larger organisations aim to scale this to a 30% reduction in contracting costs.

Decision-Making Issues

There is a certain lack of clarity among organisations as to who is responsible for contract management. It is unclear to most how the contracting process should be managed; perhaps this could be because it involves an agreement between various stakeholders. Around 59% of legal departments believe they have the leading role, while a similar number of contracting staff also share this view. 39% of business developments professionals believe they are to hold the decision-making power.

Utilisation of Technology

There seems to be a lack of capability among organisations to analyse and manage contracts. According to the survey, around 70% of organisations have a technology strategy in place to manage contracts; the majority still lack the necessary data to utilise it to full capacity. This is likely caused by insufficient knowledge for implementation that is likely a direct result of a skills shortage, which 34% of organisations have reported as an issue that limits them.

Insufficient Contracting Processes 

A lack of a defined contract drafting process will significantly limit how effective the contract will be. Global Legal Managed Services Leader at Ernst & Young, John Knox, explains, “the importance of getting contracting right cannot be underestimated.” 

Around 49% of survey respondents say they don’t follow a defined procedure, and 78% say they do not have a system for monitoring contractual obligations. 

Knox says, “with the right transformation efforts focused around people, process and technology, contracting can actually become a business enabler and differentiator. The survey shows that one way in which organisations aim to tackle these challenges is through working with subject matter leaders and external providers.” 

Meanwhile, David B. Wilkins, Lester Kissel Professor of Law, Vice Dean for Global Initiatives on the Legal Profession, and Faculty Director of the Center on the Legal Profession, Harvard Law School, says, “Contracts are at the core of every business. They determine how growth happens and how risks are managed. It is therefore absolutely crucial that organisations have effective systems and processes to manage every aspect of the contracting process, from negotiation and execution to termination or renewal, as well as an accurate understanding of the obligations, benefits, and risks across the entire spectrum of their contracts.
For more procurement insights, check out Procurement magazine.

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