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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- Within six months, PS&M personnel will be provided with chances for capacity building through partnerships with educational institutions to gain knowledge and skills for implementing category management.
- The PS&M would become more motivated in the long run by providing recognition and benefits for pursuing category management implementation.
- Within a year, an effective change management strategy would be pursued, focusing on tracking the change and spotting change resistance
1.0 Introduction
1.1 ADNOC Organisation Background
In this report, the organisation of focus is Abu Dhabi National Oil Company (ADNOC). This is for understanding the impact of contract terms and conditions on distribution of risk and power with their suppliers. This is an organisation which began its operation in 1971 and today is ranked as the leader in diversified energy group which is owned by Abu Dhabi Government (ADNOC, 2022). The organisation network of holistically integrated business has based their operations across the entire energy value chain assisting their capacity for meeting overall demands of the consistently changing energy markets. For remaining competitive, the organisation has allocated $15 billion for advancing and accelerating lower-carbon solutions, investment in new energy solutions and decarbonisation technologies for lowering their carbon intensity with 25% by 2030 and successfully facilitating their NetZero by 2050 target. The company has a network of fully operational companies that operate throughout the entire hydrocarbon value chain, handling tasks including exploration, production, processing, storing, refinement, and supply in addition to manufacturing a wide range of petrochemical products. I work as a Contract Engineer for ADNOC Offshore, one of the company's divisions. The offshore division of ADNOC is responsible for the delivery and development of oil and gas resources in the waters surrounding Abu Dhabi. With OPEX and CAPEX, ADNOC Offshore spends over 3,000 million dollars annually. The organisation structure is as illustrated in figure 1; Figure 1: ADNOC Organisation Structure1.2 Identified Category Management
The deployment of the iSourcing system, a technology-focused procurement procedure, was chosen as the category management in this study. The need for oil and gas has significantly expanded in the modern era since the Covid-19 epidemic. As a result, ADNOC is forced to spend money on equipment to help them process and refine more oil and gas products. In light of this, the team leader's responsibility is to see that an iSourcing system is in place and can be utilised to purchase the new machines that the company needs to upgrade its operations. Locally in UAE, regionally in the Middle East, and internationally in Western nations, this would apply. This project aims to produce a report outlining the implementation of the change approach. This is done while ensuring the team members and leader have the necessary abilities to carry out the plan successfully. Implementing the new category management strategy is the kind of change being sought. The learner will be the team leader throughout the full category management process since a team has been chosen to oversee the deployment of iSourcing. The practical approach would be utilising various tools and strategies that demonstrate leadership and best practices in change management, along with a focus on the category management data from the ADNOC firm.2.0 Change Management Approach
2.1 Introduction of the Required Change Process
In its Procurement Supply and Management (PS&M) budget, ADNOC had allocated roughly 10 million UAEis before the COVID-19 epidemic. Up to 5,000 domestic and foreign providers are currently utilised in this. Because of the significant financial allocation in PS&M, the ADNOC sourcing method is crucial to their operations in this scenario. Logistics, equipment, and facility administration are all purchased separately by the organisation, all of which fall under the organisation's primary spending categories of computers and technical systems. As a result, they lack a centralised system that would allow all departments to be involved in aiding the procurement procedure (CIPS, 2020). The Burke-Litwin Model (Coruzzi, 2020) can pinpoint the internal and external factors that contributed to the identified change. This model ranks the many change drivers according to their importance and provides evidence of each one in figure 2; Figure 2:Drivers of Change Model When taking into account the ADNOC organisation and indicated change, these elements have the following effects, as stated in Table 1: Table 1:Summary of the Drivers of Change in ADNOC OrganisationFactors of change | Explanation |
External environment | Supply chain networks have been significantly impacted since COVID-19. ADNOC's ability to replenish stock, equipment, and machinery has been affected. Therefore, ADNOC would participate in strategic alliances by including diverse actors and intermediates in the complete value chain through iSourcing |
Individual and oganisational performance | ADNOC's investment in iSourcing would reduce PS&M turnover, everyone's performance, and supply chain network satisfaction. |
Leadership | To ensure iSourcing success, the PS&M will lead and manage efficiently. This inspires and guides other organisations to iSourcing success. |
Mission and strategy | The achievement of ADNOC's aim to provide high-quality oil and gas products would be ensured by the deployment of iSourcing. The justification for this is to quickly and effectively engage highly qualified vendors. |
Organisation culture | Implementing iSourcing would promote the collaborative and teamwork-oriented organisational culture of ADNOC. This is due to the platforms offered by iSourcing that provide suitable options for teamwork and collaboration. |
Task requirements and individual skills | Employees at ADNOC lack the knowledge and skills necessary to deploy iSourcing. This deficit might be filled by offering possibilities for professional advancement. Implementation of the change would be successful. |
Employee motivation | This report's proposal suggests that providing monetary and non-monetary rewards is necessary to encourage people to adopt iSourcing. This is for employing remarkably contemporary systems of practice. |