(Solution) CIPS Advanced Level Contract & Category Management in P&S – APGM
- This business report has been used for evaluating the category and contract management in Eco2Solar Company.
- In particular, Eco2Solar operates to improve their project management (PM) and Cost Management (CM) as part of their category management has been evaluated.
- The areas of focus has included an evaluation of requirements for initiating and preparing category management, strategic and conventional sourcing process and role in contract management, tools and techniques for mapping categories of direct and indirect expenditure.
- From the findings obtained, innovative measures for improving the supply chain in light of categories and category management has been recommended.
- Further, in this business report, the contract administration and contract management in case of category management has similarly been evaluated in context of category management this is with assessment of risks and implementation of risk management techniques in contracts being reviewed in context of category management.
- In order to appreciate the best practice in category and contract management in the selected Eco2Solar construction spend area, use of quantitative and desk research has been pursued to obtain relevant data.
- Additionally, different tools have been applied such as Mendelow Stakeholders analysis, CIPS Category Management Cycle, CIPS Contract Management Cycle, Suppliers positioning, PESTLE analysis and SWOT analysis.
- Considering this business report findings, Eco2Solar need to improve their approach for risk management and efficiency and effectiveness of category and contract management.
- From these finding, the stakeholders collaboration in Eco2Solar need to be improved which can be done by embrace of blockchain technologies.
- Also, by identifying their PS&M teams training and capacity development, they would be able to improve on their category management. In the contemporary procurement environment, the training and capacity development has been noted as the best practice to manage gaps in their operations. Also, the findings indicate the need for Eco2Solar to improve their category management of their construction spend by coming up with appropriate SLA’s agreement and KPIs while ensuring they capitalise on innovativeness.
- For the project management and cost management, this being a long-term investment would require an improved auditing. This can entail embrace of analytics to analyse and present contract management data and appropriate management strategy.
- The importance of improved collaboration is ensuring stakeholders active involvement and awareness on core decisions made as this could harness their practice, contribution and suggestions noted.
- By successfully pursuing stakeholder analysis, it is important to maintain stakeholders relations which promote Eco2Solar organisation image and increase their market share.
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Description
Solution
Executive Summary
This business report has been used for evaluating the category and contract management in Eco2Solar Company. In particular, Eco2Solar operates to improve their project management (PM) and Cost Management (CM) as part of their category management has been evaluated. The areas of focus has included an evaluation of requirements for initiating and preparing category management, strategic and conventional sourcing process and role in contract management, tools and techniques for mapping categories of direct and indirect expenditure. From the findings obtained, innovative measures for improving the supply chain in light of categories and category management has been recommended.
Further, in this business report, the contract administration and contract management in case of category management has similarly been evaluated in context of category management this is with assessment of risks and implementation of risk management techniques in contracts being reviewed in context of category management.
In order to appreciate the best practice in category and contract management in the selected Eco2Solar construction spend area, use of quantitative and desk research has been pursued to obtain relevant data. Additionally, different tools have been applied such as Mendelow Stakeholders analysis, CIPS Category Management Cycle, CIPS Contract Management Cycle, Suppliers positioning, PESTLE analysis and SWOT analysis.
Considering this business report findings, Eco2Solar need to improve their approach for risk management and efficiency and effectiveness of category and contract management. From these finding, the stakeholders collaboration in Eco2Solar need to be improved which can be done by embrace of blockchain technologies. Also, by identifying their PS&M teams training and capacity development, they would be able to improve on their category management. In the contemporary procurement environment, the training and capacity development has been noted as the best practice to manage gaps in their operations. Also, the findings indicate the need for Eco2Solar to improve their category management of their construction spend by coming up with appropriate SLA’s agreement and KPIs while ensuring they capitalise on innovativeness. For the project management and cost management, this being a long-term investment would require an improved auditing. This can entail embrace of analytics to analyse and present contract management data and appropriate management strategy. The importance of improved collaboration is ensuring stakeholders active involvement and awareness on core decisions made as this could harness their practice, contribution and suggestions noted. By successfully pursuing stakeholder analysis, it is important to maintain stakeholders relations which promote Eco2Solar organisation image and increase their market share.
All the evidence collated have been sourced from the CIPS Modules notes, different tools for analysis of contract and category management approaches. With Eco2Solar transitioning from the COVID-19 pandemic, a leverage on various opportunities in their energy industry in UK through leveraging on competitive advantage is instrumental.
Considering the findings in this business report, various recommendations could be offered. They are;
- To use blockchain innovation, cloud-based technology, learning and development opportunities leverage, KPIs and digitise contract management strategies for improving stakeholders relations hence optimum efficiencies
- Increase allocated budget in PS&M owing to the emerging needs from the COVID-19 pandemic prevalence
- Come up with efficient PS&M control teams for enhancing integration and harmonisation of purchase strategy in business unit
- Prioritise on creating of collaboration in their procurement with 80% of vendors for securing online teams to attain increased cost savings
- Engage institutions in ensuring skills improvement, competencies and talents acquisition
- Attain approved budget to pursue risk evaluation on the different identified risks
Table of Contents
1.1 Project Title (Key Terms) 4
2.1 Eco2Solar Organisation Background. 6
2.2 Why this Business Report Matters and Objectives. 7
3.0 Requirements for initiating and Preparing Introduction of Category Management Process. 9
4.0 Strategic and Conventional Sourcing Processes and role in Category Management 12
4.1 Situation, Target and Proposal (STP) 14
5.0 Tools and Techniques for Mapping Categories of Direct and Indirect Expenditure. 15
5.1 Direct and Indirect Expenditure. 15
5.2 Tools and Techniques Comparison and Contrasting. 17
5.2.2 Situational Analysis (Kraljic Matrix Analysis) 18
5.2.3 Comparing and Contrasting STEEPLE and Kraljic Analysis Tools. 20
6.0 Innovative Measures for Improving Supply Chain. 20
6.1 Dealing with complexity and volatility. 20
6.2 Dynamic Supply Networks. 21
6.3 Disruptive influences on supply chains. 22
6.4 Implementation of Automation. 22
7.0 Contract Administration and Contract Management 23
9.0 Conclusion and Recommendations. 26
Figure 1:Contract Management Phases in Eco2Solar 6
Figure 2:Eco2Solar Customers 8
Figure 3:Category and Contract Management Change Factors. 9
Figure 4:Change and Culture Acceptance Factors Model 9
Figure 5:4 Rights of Procurement in Eco2Solar 10
Figure 6:CIPS Category Management Cycle. 13
Figure 7:Indirect Expenditure in Eco2Solar 17
Figure 9:Situational Analysis by application of Kraljic Analysis. 20
Figure 10:Different stages of contract administration and contract management 24
Figure 11:Supply Risk and Mitigation Approaches. 25
Table 1:Eco2Solar Organisation PESTLE Analysis. 11
Table 2:Summary of comparison of direct and indirect expenses 18
1.0 Introduction
1.1 Project Title (Key Terms)
Today, contract management and category management is core for improvement of the purchasing and supply management process. This is while managing the entire costs of operations. Considering Eco2Solar organisation, an area in their corporate strategy is pursuing prompt acquisition by strengthened product offering, accelerated innovativeness, achieving client demands in a rapid manner and partnership opportunities expansion (Eco2Solar, 2022).
In UK energy sector where Eco2Solar organisation operates, being a perfect competition, their mandate is to ensure an entity acquire profits while at the same time dominating this sector. In this regard, contract management is a major area for Eco2Solar administration and management as a best practice in modern operations. Currently, Eco2Solar works through Global Procurement Contracts Team (PCT) for ensuring procurement contracts are consistent with set standards, guidelines, and internal policies. This is not implemented in the entire spend categories. For example, in the project management and cost management, owing to inexistence of PCT implemented, category managers play a significant function to review contract, negotiations (Commercial and Legal) and to sign documentations. After this, Eco2Solar legal teams are engaged for approval. Therefore, by operating a holistic contract management, it would lead to Eco2Solar organisation leveraging on the competitive advantage and dominating UK energy sector. This is while guaranteeing minimal contract implementation delays, poor negotiation, and rework, fully compliance and liability failing and inefficient approval and to sign workflow. The contract management phases are as shown in figure 1;
Figure 1:Contract Management Phases in Eco2Solar
In figure 1 summary, in the different departments in Eco2Solar which operates the PCT, they achieve a consistent contracts implementation of appropriate standards, guidelines and internal policies. This is to succeed in reviewing contract and negotiation services for all their commodities through application of contract management, service level agreements and mastering their agreements. Through the adoption of the strategy, in contract closure phase, audit as a recommendation would be appropriate to evaluate entire functions, communication approaches and to notify the suppliers and requests.
1.2 Project Scope
As noted earlier, the aim of this report is evaluating category and contract management in Eco2Solar organisation. The areas of evaluation would be intended to achieve the following;
- As part of examining the requirements for initiating and preparing introduction of category management, training needs/opportunities and appropriate delivery approach
- Identify the critical success factors (CSF) for strategic as opposed to conventional sourcing process and role in category management
- Developing KPI’s as part of the tools and techniques for mapping categories of direct and indirect expenditure
- Innovative measures for improving supply chain
- Contract administration and contract management differences
- Assessment of risks and implementation of risk management techniques in contracts
The importance of the identified areas of this strategy is to improve the category and contract management of Eco2Solar organisation, reduce entire delays and manage extra incurred costs.
Today, Eco2Solar organisation has identified construction spend category which do not prioritise on PCT, noted as a practical strategy to ensure consistent contracts within set standards, guideline and internal policies developed. By successfully improving contract management, Eco2Solar would achieve the following;
- Reduced delays with contract turnaround leading to delayed projects, more costs incurred
- Poor quality in their negotiations and re-evaluation of suppliers terms hence inconsistent with Eco2Solar legal requirements and comply with corporate legal and procurement information
- Comply and note failure due to poorly identified performance obligations
- Inefficient sourcing for approval and signing their workflow
By focusing on the noted research areas, various dynamics of contract management, Eco2Solar operations and relationship with external business environment practitioners and suppliers relationships put into account. The best practice in contract management improvement would hence be evaluated with appropriate recommendations provided. These areas entail risk-oriented contract and category management, tools set and process to support an improvement in contract management and supply teams. By doing this the best practice for success in the organisation contract management would be achieved.
2.0 Background
2.1 Eco2Solar Organisation Background
The organisation of focus in this report is Eco2Solar which is the leading installer of solar PV and Green Technologies for the UK’s housebuilding sector. It has been in active operations since 2007 and has been intended to address the climate change issues. This is with CO2 emissions reduction and fuel shortage through a facilitation of the solar energy use. Eco2Solar has over the years been providing solar energy solutions for newly constructed homes and commercial installations. Their main customers are as illustrated in figure 2;
For the organisation success, their main target sectors include health centers (40%), operations in schools (50%), care homes (30%) and large apartment installation (20%). Owing to its commercial success, their profits range upto £10 million which has informed by its latest investment on Worcestershire County Council and the Sanctuary Housing occupying 50% of their spend category (Eco2Solar, 2022). Through their global commercial strategy, the organisation has been in a position of attaining their entire objectives. Based on this background information, it is important evaluating the most
2.2 Why this Business Report Matters and Objectives
For Eco2Solar to optimise their operations, category and contract management would need to be put into account and improved. Therefore, this business report is intended to ensure that a good strategy is established for successful procurement process implementation. Through the focus of construction services as a spend area and how project management and cost management is harnessed, these objectives would be achieved. For the sake of evidencing the need for change process, a set of change management as recommended in CIPS Module 4 and 5 would be a priority. In figure 3, the identified aspects entail environmental, market requirements, business imperatives, organisation and culture.
Figure 3:Category and Contract Management Change Factors
Further, to embrace category and contract management changes in Eco2Solar, the organisation is interested in transitioning to various cultural acceptance demands. This is in line with Balogun and Hope Model which note on the change process increase. Hence, this process can lead to successful adaptation and in-depth evolution. This offers an appropriate guidance on altering their operations in a gradual manner (see figure 4);
Figure 4:Change and Culture Acceptance Factors Model
The importance of change in Eco2Solar organisation is guided by the fact that Eco2Solar organisation background is defined with an immense efficiencies and timely decision making. For achieving this, it is important to note on critical influence of revenues generation and managing costs. This is while ensuring the best practice of use of traditional procurement strategies incurred by costs savings and optimisation of their entire operations. This is also supported by Methven O’Brien and Martin-Ortega (2019) findings from 5 Rights Procurement Model (see figure 5) as influencing Eco2Solar organisation need for harnessing all stakeholders engagement with most appropriate suppliers of their constructions spend category. This is informed by the suppliers compatibility level, credibility, reliability and likely need to embrace in innovation and development for growth purposes. This is while ensuring there is a guarantee of increased commitment to attain consistent and development of sustainable relations.
Figure 5:4 Rights of Procurement in Eco2Solar
3.0 Requirements for initiating and Preparing Introduction of Category Management Process
The need to introduce category management process in Eco2Solar……
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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 Organisation| Factors 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. |
Since the COVID-19 pandemic, ADNOC has struggled. Flechsig et al. (2022) say delayed service delivery and internal process automation reduce efficiency. Thus, integrating internal procedures, evaluating vendors, and monitoring the sourcing process with iSourcing will benefit ADNOC. A successful and efficient supply chain would result—in situational leadership to handle all everyday situations. Mulyana et al. (2022) define this as improving cost reduction, client satisfaction, and complex and critical processes. The ADNOC organization's automation and flexibility would improve. This involves learning, teamwork, and smart buying. Those fighting against iSourcing face massive supply chain challenges. Yevu et al. (2021) projected network security, system reliability, and persistent unauthorised access difficulties for ADNOC. This would hurt ADNOC's reputation with stakeholders, make persuading clients hard, and alienate supply chain actors. Transformational leaders may remedy this by creating enduring, positive change in their followers and moulding ADNOC PS&M followers into leaders.
2.2 Strengths, Weaknesses, Opportunities, and Threats (SWOT) of the Change Management
Additionally, it is crucial to comprehend the Strengths, Weaknesses , Opportunities, and Threats associated with the present strategy and the new category strategy for the change implementation to succeed. To do this, CIPS (2022) recognizes SWOT analysis as influential in capturing various decisions taken and would aid in guiding and educating category management. Table 3 illustrates the SWOT Analysis; Table 2:SWOT Analysis In conclusion, as shown in Table 1, while the existing strategy has strengths such as giving opportunities for comparison, transferring risks, and extensive evaluation, it is time-consuming and expensive. Using iSourcing makes it feasible to provide chances for risk transfer, pricing comparisons between suppliers, and finding the best items. Furthermore, it ignores sustainability-related aspects essential to contemporary procurement strategies (Hazaea et al., 2022). To equip staff members with the necessary abilities to use the new system, ADNOC must pursue security measures and ongoing capacity development. To handle the interference, a leader must promote the consultative approach in the sourcing process. To continuously acquire new skills and information, relevant L&D plans have been granted.2.3 Process of the Change Management
Please click the icon to access this assessment in full(Solution) CIPS New Global Strategic Supply Chain Project
- The purpose of this project is to evaluate supply chain automation by leveraging Industry 4.0 technologies. The identified technologies include Artificial Intelligence (AI) and Machine Learning (ML) noted as critical for streamlining operations and obtaining value-for-money outcomes. This has been pursued by focusing on Wood Plc.
- To conclude, the generated findings of this report evidence WPC is today adopting the application of iSourcing in their procurement and supply management (PS&M).
- In the current project, through an evaluation of options for automation of the organization PS&M, the findings evidence the existence of different limitations hindering the success of their system. The issues of cost overruns, lack of collaboration, and inefficient supply chain as the organization is expanding its current operations have been noted to include limitations of their current sourcing.
- Success in the automation of their supply chain has been identified to lead to the following outcomes;
- Organisation achievement owing to automation of their supply chain, increased confidence and capability, talent management, and employee competency
- Improved stakeholders relations (a later section of stakeholders analysis) easing the change process. Through the iSourcing improvement, WPC would be in a position of harnessing technical and commercial evaluation processes.
- Increased and robust systems and policies which mitigate overall gaps in sourcing system transformation
- Today, only lower than 10% of the entire WPC resources are used to prioritize automation and IT integration successfully. Automation would improve the use of resources in their operations
- Involve their IT and finance departments to ensure within a period of 6 months they
- WPC needs to consider embracing sustainable practices as part of investing in their Industry 4.0 technologies
- Through the adoption of automation, better communication systems backed by AI and ML would be introduced to achieve 70% increased communication effectiveness.
- It is important to increase this through increasing collaboration and alignment of all their interests holistically
- Partnering with institutions for the provision of capacity development opportunities for the PS&M teams and other organizations for the success of the automation process
- Expanding their sourcing of Industry 4.0 technologies. This is to involve highly reputable global companies hence efficient operations and integration of AI
- Source of support from the government to ensure that they are facilitated in terms of policies and appropriate regulations to guide the automation process.