Solution

Executive Summary

In this report, the various sourcing approaches for a selected spend category in ADNOC organisation has been identified. The spend category selected in this report is the chemicals. Apart for the chemicals spend category, other spend categories compared are valves, consumables and instruments all procured from the same department. In order to analyse the sourcing approaches, a set of tools and techniques have been used which are the Kraljic analysis, Mendelow’s analysis technique for stakeholders analysis and business hierarchy of needs. Further, by use of SWOT analysis technique, SWOT analysis tool has been used. Additionally, Peter Block Grid has been applied for further pursuing analysis of the interests of stakeholders in sourcing approaches in tandem with their position. The different approaches which have been applied include single sourcing, sole sourcing, dual and multiple.

Further, a supplier appraisal has been developed for chemicals spend category in ADNOC organisation by following Carter’s 10Cs technique. The various findings analysis evidence the need for ADNOC to holistically make an investment on strategic sourcing approaches to guarantee dominance of the entity in the oil and gas sector with profits acquisition evident. For the various sourcing approaches evidenced, Multiple Sourcing include immense suppliers inclusion with single-sourcing integrating single suppliers services. For sole-sourcing, this is inclusive of engagement of a single monopolistic supplier involved in active market practices with dual sourcing integrating suppliers with their needs conflicting.

Finally, considering the recommendations, they can entail;

• Selecting the best sourcing approach informed by the spend category different characteristics
• Prioritising on the policy development in procurement while successfully ensuring technology is integrated in their active e practices
• To simplify the entire procurement process in ADNOC by making sure stakeholders interests are prioritised
• To integrate technology and innovativeness in the different product lifecycle inclusive of their RFQ, RFP and Negotiation e-Auction. Currently, in ADNOC Ariba system, they ought to harness information flow as evidenced from their sourcing approaches

Table of Contents

1.0 Introduction. 3

1.1 ADNOC Organisation Background. 3

1.2 Scope of the Report 3

2.0 Selected Category of Spend and Positioning. 4

2.1 Kraljic Analysis Matrix Technique. 4

2.2 Business Hierarchy of Needs. 6

2.4 SWOT Analysis. 9

3.0 Sourcing Approaches. 10

3.1 Multiple Sourcing. 10

3.2 Single Sourcing. 11

3.3 Dual Sourcing. 11

3.4 Sole Sourcing. 12

4.0 Sourcing Appraisal Checklist 12

4.1 Supplier Appraisal of ADNOC Chemicals sourcing. 12

5.0 Conclusion and Recommendations. 15

5.1 Conclusions 15

5.2 Recommendations. 15

References. 17

1.0 Introduction

1.1 ADNOC Organisation Background

ADNOC organisation has been operating in UAE, Middle East and global oil and gas sector in the past 50 years. It occupies the number one position in the UAE oil and gas sector with immense fleet sizes and the regional initial provider of integrating their drilling services provision (ADNOC, 2021). Its operations entails linking the upstream value chain, facilitation of ADNOC with a chance to increase their overall oil production of approximately 5 million barrels every day and to increase by 2030. In its refineries, the organisation is recorded to be producing upto 40 million metric tons of high-quality refined oil and gas products offered to global markets. The organisation leverages on a high-level capability to refine upto 922,000 barrels of crude oil and to condensate every day to form various products. The categories include liquefied petroleum gas, Naphtha, Gasoline, Jet fuel, diesel, base oil and petrochemical feedstock (ADNOC, 2021a).

For ADNOC to leverage on achievement of Vision 2030 for UAE, green practices by lowering greenhouse gas emissions (GHG) level by upto 25% by 2030, the organisation intend to expand their strategy for Carbon Capture, Utilising and Storage (CCUS) with 500% capacity. This is by leveraging on procuring high-level chemicals. Also, in current COVID-19 pandemic, interruptions in the supply chain and delivery, achieving value for money has been instrumental. The chemicals are supposed to be of intense quality, lowered risks from the competitor’s ability to seizure opportunities available. Hence, the chemicals spend category selected in this assessment is critical for ADNOC.

1.2 Scope of the Report

As evidenced in the introduction of this report, the focus is on evaluating four sourcing approaches and generating an explanation of their use in the ADNOC organisation. The organisation procurement department has a mandate to guide supply chain management to improve the supply relations and to improve sourcing strategy. This is to maximise organisation value and assigned roles in procurement of goods and services for ensuring suppliers comply with organisation policies. This is at the same time leading to an implementation of organisation most appropriate approach and a best practice for local community through obtaining in-kingdom total value added (IKTVA). In tandem with the identified sourcing approaches, a single category has been used in the supplier’s appraisal checklist.

2.0 Selected Category of Spend and Positioning

For ADNOC, considering the chemicals spend category, a summary of providers is as illustrated in figure 1;

Figure 1: Categories of Chemicals services

Hence, the noted chemicals products category of spend, use of the best sourcing approach in different spend categories evidence the presence of a high-level control of the overall  supply and procurement strategies (CIPS, 2019). The various needs, demands guide the process and supporting supply process in the organisation overall value chain. By reference on Kraljic analysis and business hierarchy of needs, with sourcing approaches influencing ADNOC stakeholders interests the Mendelow Stakeholders Analysis Matrix applied.

2.1 Kraljic Analysis Matrix Technique

The…………..

Please click the icon to access this project in full