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.
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(New) CIPD Level 7 7C001- Work and Working Lives in a Changing Business Environment
(Solution) CIPS Advanced Practitioner Corporate Award (APDP)
- 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. |