(Solution) CIPS PDV Saudi Aramco Current Approaches to Managing Prices and Costs
New User Gifts
First Order Deal get Ksh 200 Off.
Original price was: £ 20.00.£ 10.00Current price is: £ 10.00.
Payment Methods:
Description
Solution
In Saudi Aramco current approach in management of prices and costs include use of their budget for getting the 3PL from their different suppliers in Saudi Arabia (KSA) and internationally. By ensuring they critically evaluate the budget allocation and costs of different suppliers in line with quality, it becomes possible to manage the prices and costs.
Also, the strategy adopted by Saudi Aramco include pursuing detailed negotiations by the PS&M. The negotiations targets the best suppliers in KSA of 3PL and other spend categories important for the organisation. In all their contracts, they pursue annual-based contracts to achieve value for money outcomes successfully. After COVID-19 pandemic, Saudi Aramco has been in a position of managing their costs successfully and reduced lead time (Sjödin et al., 2020). The strengths of adoption of the strategy in Saudi Aramco include;
Defining best value for money outcomes– As evidenced in the analysis, Saudi Aramco achieves a maximum balance between costs (40%), increased quality of 3PL and increased performance (60%). Owing to the complexity of 3PL, despite of the cost factor being critical, other factors including how reliable it is, innovativeness and lifecycle costs are equally instrumental. All these are captured in the Saudi Aramco strategy.
Collaborative supplier relationships– As identified in the explanation of Saudi Aramco strategy, it is anchored on collaboration with different identified stakeholders. The scope of their collaboration is intended to achieve best value for money outcomes. There is nevertheless a need for an improved stakeholders collaboration for fostering collaboration, innovativeness and continuous-based improvement. This is while embracing technologies in improved performance and address of performance demands.
For the cons, they include;
Lack of strategic operations– It is evident that the organisation is not effective in terms of effectiveness of procurement strategies for achievement best value for money in contracts management. According to Venkataraman and Pinto (2023), the strategic operations is informed by need to adopt performance-based contract models with payments aligned with measurable outcomes and performance metrics.
Ineffective total cost of ownership analysis– The total cost of ownership is identified as ineffective in regard to evaluation of entire lifecycle costs linked to procurement and ownership of assets or services in their overall lifespan (Burnham et al., 2021). There is a need to improve the TCO in order to make sure that they come up with quality decisions optimising value for money outcomes.
please click the following icon to access this assessment in full
Related Papers
(Solution) CIPS Developing Contracts in Procurement and Supply RCU PDC
- This report has focused on evaluating Royal Commission for AlUla (RCU) contract terms and conditions.
- The area of focus in the contract entail its relevance in assisting the management of issues associated with quality, risk of time extension, risk of costs increase and unethical practices impacting the stakeholders.
- Other than this, the performance measures and management in the organisation operations has been put into account.
- For achieving this, RCU operating in the KSA tourism and culture sector has put into account.
- The contract selected is used in most of the services which are sourced by the organisation from different suppliers. This is to define the level of risk and power that each has in the contract implementation.
- Despite of existence of areas of improvement, clauses lacking detail and lack of sufficient protection, the contract terms and conditions are relevant for RCU operations.
- For all the parties and stakeholders involved in a contract implementation, there is a clear risk allocation and management. This is with the performance being measured and monitored based on their interests.
- There is a need for investing in modernised approaches intended to protect the organisation from the battle of the forms.