(Solution) CIPS ADNOC APGSS impact of market changes on the supply chain
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Description
Solution
An effective evaluation of impact of market changes on supply chain lead to improvement of an organisation financial positioning through value delivery associated with corporate strategy. According to CIPS (2023) market changes which impact supply chain are largely due to fluctuations of clients demand patterns. For ADNOC case, these factors entail changes in market trends, economic condition, unforeseen occurrences all having significant implications on the supply chain operations.
2.1 Models for determining external environmental factors influencing and impacting supply chain
For the external factors, the analysis can be pursued by the application of different models as supported by the CIPD Module Notes. These include the following;
2.1.1 STEEPLED Analysis
This is identified as a strategic planning approach relevant in different business functions for discovering, evaluating, organising and tracking external risks. According to CIPS (2023a) this is through a focus on the following factors summary;
Table 1:STEEPLED Factors Analysis Summary
Source: Summarised from CIPS (2023a)
| STEEPLED Factors | Explanation |
| Social | · Post COVID-19, demand for oil and gas has increased globally influencing need to broaden supply chain networks
· Generation Z and Millennials increasing in number influencing need for innovative supply chain network |
| Technical | · Technology has substantially been in an upward trend in UAE
· Demand for integrating IT and innovation in organisations supply chain networks has increased |
| Economic | · Reduced government spend in ADNOC hence affecting available resources for managing their supply chain
· Transition from Oil and gas dependent economy in UAE impacting success of supply chains |
| Environmental | · ADNOC gets involved in variations CSR strategies
· By 2045, ADNOC is investing in eliminating carbon emissions |
| Political | · MENA region political conflicts disrupting regional supply chain network |
| Legal | · Suppliers relations influenced by existing UAE legislations |
| Ethical | · Increased in UAE population inclusive of Emiratis and expatriates informing need for improving supply chain networks |
In summary, STEEPLED analysis findings highlight that majority of the factors have positive impact on the supply chain. These changes starting with social dimensions, technology development and economy influence need for having a broader supply chain network. This is with an intention of accommodating Post COVID-19 challenges, Generation Z and Millennials increase, resources available and transitioning from oil and gas dependent economy. Further, the need for environment, political, legal and ethical considerations inform on need to embrace innovation and online sourcing strategy for success in having a harmonised supply chain (Munir et al., 2020).
2.1.2 Porter’s 5 Forces Analysis
This is used as a market analysis tool for ascertaining an industry attractiveness and competition scope. According to Munir et al. (2020), for long-term based market sustainability, profits must be acquired in business environment. A summary of the components of Porter’s 5 Forces is as illustrated in the following;
Figure 3:Summary of Porter’s 5 Forces Analysis
Source: Summarised from MindTools (2023)
Considering ADNOC operations in UAE oil and gas sector, this model detail on level of competition impacting supply chain. For example, in figure 2, having upstream and downstream tiers of their supply chain, this has an influence on their power towards their suppliers. According to Huo et al. (2017), the scope of influence evidence how ADNOC relates with their suppliers, their number, costs and availability of substitutes. Also, with ADOC having a high buying power, they influence the steps of their supply chain network and how the different players are involved in this relationship. This is with the costs invested in running of their supply chain dependent on specifications of their suppliers.
For ADNOC, most of their supplies particularly the IT system has low bargaining power form their suppliers. Hence, OEMs are required to guarantee quality of the products and services being sourced. Finally, threats of new entrants in oil and gas sector suppliers is very high. The best practice is hence to benchmark on operations of other oil and gas industry players in terms of their suppliers to manage complexity and uncertainties. This is the case since the competitive rivalry influence how the supply chains are structured and information flow (Madenas et al., 2014). As illustrated in figure below, the outcome of this would be development of strategic and functional integration;
Figure 4:Strategic Alignment Summary
Source: Summarised from CIPS Module Notes
As summarised in figure 4, the best practice would be aligning the external and internal factors which are defined by business strategy and organisation infrastructure and processes respectively. Similarly, the supply chain would need to be aligned with IT strategy and infrastructure and processes put into account.
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