(Solution) CIPS Module 6- Project, Programme and Change Management in Procurement and Supply Chain
For this project, the purpose was to access the overarching process and approach to SRM within Oxy organisation and coming up with appropriate implementation plan. The relevance of this project was informed by the fact that with the organisation having a large scale of operations with multiple end users, SRM is a significant issue. Also, the organisation operating in both local and international operations with multiple suppliers and spend areas to be coordinated. The outcome of this would be to promote and improve SRM for aligning with Oxy organisation strategic objectifies, supply chain function being strategic integral partner as opposed to just transactional player. Owing to the importance of SRM improvement, the different outcomes would entail;
- Enhanced Suppliers Performance- With an upward of 50,000 orders annually with 40% valued more than 5 million Omanis and 50% 20 Million Omanis, failure to timely settle invoices, demand for high quality materials and minimising effects would be considered.
- Cost savings- With improved SRM, it is possible for Oxy to negotiate appropriate terms, lower procurement costs (5 Rights not currently achieved) hence working below targets and lead times delivery reduced and achieving economies of scale.
- Increased efficiency- improved and streamlined SRM improve operational efficiency, reducing wastes in administration process for SRM (25% of entire suppliers pay delayed)
- Risk mitigation- this include identification of risks linked with suppliers such as dissatisfaction, financial instability and geopolitical challenges
The data used in informing the set project findings was obtained from the application of both quantitative and qualitative data by using questionnaires and interviews. Also, literature review has been sourced for affirming the relevance of the findings on best strategy in improving SRM in Oxy organisation context. This is supported by different CIPS module notes. The key findings include despite of Oxy Organisation having a stable SRM, there is still a need for improving. The findings evidence this to be an attribute of the broad scope of the organisation operation in different industries and markets locally (in Oman) and internationally. The findings also identify existence of gaps in SRM evidenced by reduced collaboration amongst the different stakeholders with relevant solutions recommended for improvement. Part of this report has included a developed SRM approach which is applicable in Line Pipe Category. In line with the obtained research findings, various recommendations have been generated for improvement. These include;
- Oxy organisation PS&M is supposed to come up with appropriate systems and techniques for improvement of SRM
- Oxy organisation need to make sure they use various automations including AI and robotics for improving collaboration and SRM efficiency.
- Facilitate policies management for improving their operations in onshore and offshore operations with an improved SRM
- Short courses on SRM need to be provided starting with PS&M leadership to achieve 50% increase in awareness of SRM improvements areas.
- Stakeholders relations improved by leveraging on available technologies of communication and interaction.
- Ensure there is 70% increase in budget on SRM improvements
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Description
Solution
Selected Title:
Accessing the Overarching Process and Approach to SRM within Oxy Organisation and Making Recommendation for Improvement within Implementation Plan
Table of Contents
1.2 Project Scope/Rationale. 6
1.3 External Environment Analysis. 7
2.1 Oxy Organisation Background. 8
2.2 Why this Project Matters/Objectives. 10
2.3 Oxy Organisation and Line Pipe Category Spend. 12
3.1 Background of Oxy Organisation Improvement of SRM.. 15
3.2 Improvement of SRM operations in Oxy Organisation. 18
3.2.2 Kraljic Matrix Analysis. 20
4.2.1 Stakeholders Analysis and Management 26
4.2.2 SRM Improvement in Oxy Organisation PS&M.. 28
4.2.3 Costs Management and Forecast in demand for improved SRM in Oxy organisation. 30
4.2.4 Development of SRM Approach in Oxy Organisation. 32
5.0 Analysis, Interpretations and Conclusions. 34
5.2 Costs Management and Forecast in demand for improved SRM in Oxy organisation. 37
5.3 Automation/ Technology Investments in SRM Improvement for Oxy Organisation PS&M.. 39
5.4 Development of SRM Approach in Oxy Organisation. 41
6.0 Conclusion and Recommendations. 47
Figure 1:SRM impact on Oxy Procurement Cycle.. 6
Figure 3:Summary of Oxy Organisation Business Portfolio.. 10
Figure 4:Summary of Oxy Organisation Business Portfolio.. 11
Figure 5:Change Management and Categories. 12
Figure 6:Oxy Oman Balogun and Hope model Components. 13
Figure 7:Oxy Organisation 5 Rights of Procurement Model 14
Figure 8:Example of Matrix Structure used. 15
Figure 9:Category Management and Components. 16
Figure 10:SRM improvement areas and stages. 17
Figure 11:Product Lifecycle Analysis. 18
Figure 12:BCG Matrix Analysis Summary. 21
Figure 13:Kraljic Matrix Analysis. 23
Figure 14:Classification of the different Risks. 24
Figure 15:Saunders’ Research Onion. 27
Figure 16:Challenges of successful SRM Improvement. 30
Figure 17:Requirements of improvements of SRM in Oxy Organisation.. 31
Figure 18:Demand for an efficient and optimised PS&M in Oxy SRM… 32
Figure 19:SRM Improvements through costs management and improvements. 33
Figure 20:Barriers of success in SRM… 34
Figure 21:Possible technologies for improving SRM in Oxy Organisation. 35
Figure 22:Successful Stakeholders Mapping. 37
Figure 23:Mendelow Matrix Analysis. 38
Figure 24:3P’s of Supply chain management sustainability. 42
Figure 25:Porter’s 5 Forces Analysis. 43
Figure 26:John Kotter’s 8 Phases of Change. 44
Figure 27:John Kotter’s 8 Phases of Change. 45
Figure 28:Different team roles in line with Belbin Model. 47
Figure 29:WBS adopted in the current project. 48
Table 1:Product Lifecycle Analysis. 20
Table 2:Summary of the contents of risk register. 25
Table 3:Summary of Stakeholders. 29
Table 4:STEEPLE Analysis for Oxy Organisation.. 40
Table 5:A summary of the Project Gantt Chart. 47
1.0 Introduction
1.1 Project Title
Supplier relationship management (SRM) is defined as the process followed in the management and maintenance of the relationship between a buyer and a supplier (CIPS, 2024). It is form of relationship existing is dependent on the criticality of goods and services sourced and supplied into the organisation. Over the years, Lasrado et al. (2023) note that the SRM has gained immense popularity among academicians and procurement professionals. The popularity is owing to the ability of effective SRM enhancing uptake of technology in procurement, efficiency in procurement and ease of access to the cycle of procurement. By quantifying the influence of SRM, Lasrado et al. (2023) noted that 80% of organisations with appropriate SRM gain from lowered costs in their supply chain, freed cashflow and improved performance through effective decision making (financially). For the success of SRM, different procurement and supply management (PS&M) are increasingly relying on automation and embrace of modern technologies. This mange the need for having a strategic supply chain function as opposed to being transactional player. These findings are affirmed by Faruquee et al. (2021) noting that these strategies have direct impact on developing strong and resilient supply chain networks. This demonstrate that the supply chains in the organisation is. In a position of managing shocks such as delaying in supply chain implementation and costs fluctuations.
Albeit of the efforts Oxy has put in the verge of enhancing their SRM, there prevail issues affecting success as part of their supply chain network/cycle. These issues include and not limited to successful management of global suppliers from various cultures and geographical orientation, streamlined catalogues, system integration challenging hence errors and ineffective involvement of all their stakeholders as part of their SRM. The outcomes of this has been ability to maximise value of the negotiations pursued. The operations of Oxy which influence the appropriateness of the SRM is informed by the CIPS Modules guidance on the process flow (see illustration in the following);
Figure 1:SRM impact on Oxy Procurement Cycle
Source: Summarised from CIPS Module Notes
Additionally, considering figure 1 phases of procurement cycle, Oxy priority is demand of different materials and replenishment of requisition approach. This target suppliers delivery, repetitive tasks eliminated from the cycle by automating their operations and real-time signalling in delivery. As a best strategy in SRM improvement, Veile et al. (2021) note that through embrace of Industry 4.0, it becomes possible to reduce costs of operations with upto 15%. To optimise suppliers relationships, efficient SRM would lead to leverage on a strategic practice as opposed to being transactional. This is in areas of spend analysis, spend areas categorisation and proposals developed.
Through success of SRM in Oxy organisation, the gains would include;
- Enhanced Suppliers Performance- With an upward of 50,000 orders annually with 40% valued more than 5 million Omanis and 50% 20 Million Omanis, failure to timely settle invoices, demand for high quality materials and minimising effects would be considered.
- Cost savings- With improved SRM, it is possible for Oxy to negotiate appropriate terms, lower procurement costs (5 Rights not currently achieved) hence working below targets and lead times delivery reduced and achieving economies of scale.
- Increased efficiency- improved and streamlined SRM improve operational efficiency, reducing wastes in administration process for SRM (25% of entire suppliers pay delayed)
- Risk mitigation- this include identification of risks linked with suppliers such as dissatisfaction, financial instability and geopolitical challenges
With the identified areas of improvement/success, Oxy organisation is working on different strategies for improving their SRM. The rationale of this is that streamlining and integrating the entire SRM would manage the entire intricacies of supply chain with disruptions reduced in their operations. In overall, efficiency optimisation, errors reduction and enhancing seamless and responsive PS&M in their procurement cycle.
1.2 Project Scope/Rationale
In the Oman economy, Oxy organisation operate as largest oil producer having an upward of 6 million gross acres (higher than 24,000 gross square kilometre). This is while contributing to 10% of the entire Oman $114 Billion as at 2022 (Oxy, 2024). To manage this broad scope of operations, the organisation work in collaboration with different partners for delivery of customised supply chain networks for their clients which include value addition and facilities for suitable achievement of their set goals. The current strategy of the organisation include embrace of advanced technologies, in-depth geological knowledge accrued by experience leading to immense field discoveries and approach to exploration. Considering this broad scope of their operations both onshore and offshore, efficient SRM is core for the organisation success. Further, for a successful transitioning towards people centric operations, Planet and Profit, improvement of SRM is essential. For instance, through automation of their relations, improved costs management, efficiencies, suppliers performance and risk management would be achieved optimising organisation benefits.
Hence, in line with the identified scope of Oxy operations, in this project, the focus is on evaluating the SRM within Oxy and recommend best practice in improvement. The areas of focus would be how improvement of their SRM would enhance controlling and improving international suppliers spend, streamlined catalogues of their immense spend areas, management of scarce resources and to modernise their manual operations with errors reduced. Also, as part of this report, an evaluation of the best strategy in enhancing supply process approval and savings for value maximisation in negotiation plan would be established.
1.3 External Environment Analysis
The need to conduct an external environment scanning is identifying issues which impact PS&M and initiatives put in place in the organisation (Graham, 2020). Considering Oxy organisation for example, having more than 30,000 contracts, external environment is core as improving SRM would influence stakeholders. The priority would be to identify best practice in success in VUCA World (Volatility, uncertainty, complexity and ambiguity). Hence, insights from external analysis mean leveraging on technology for easier coordination of operations. This is while identifying scope of support by different stakeholders (category management, coaches, suppliers relationship specialist and technology experts).
The most appropriate strategy in Oxy improvement of their SRM is prioritising on spend analytics, e-Sourcing strategies, categories management and streamlining their entire PS&M. The Oxy current strategic agenda is ensuring Oman is competitive in the entire Middle East in terms of the oil and gas products produced and scope of scale of operations. The SRM improvement would similarly need to embrace the 8 Wastes of Lean Model which guide necessity for eliminating wastes in such relations. These are summarised in the following;
Source: Hartanti e al. (2021)
Through an improved SRM, the different wastes from defects, transportation, inventory, motion and non-utilised talents would be successfully managed. The outcome of this would include reducing the waiting times hence holistic clients satisfaction. The best strategy entail embracing project management strategies with the entire phases success to source essential products and services.
2.0 Background
2.1 Oxy Organisation Background
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- In ADNOC, the procurement process includes a detailed process that is defined by the transitioning of sourced products and services to the organisation.
- The identified spend categories are strategic, leverage, bottleneck, and non-critical items. Also, the products have been categorised into those with high-profit implications, risks incurred, and reliable.
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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. |