(Solution) New CIPS PDV Managing Prices and Costs Approaches
In this report, the focus is on evaluating role of procurement supply and management (PS&M) function to achieve value for money outcomes. Part of this report also entail evaluating approaches of management of costs for the catering services.
The organisation of focus is Qatar Railways Company (QRC) in sourcing for catering services. The data used to generate the findings in this report has been sourced by use of internal documents in QRC, available research from reputable sources and suppliers analysis.
Further, various theories and models have been used from CIPS Module notes and guidance (STEEPLED, Mendelow, Kraljic and Suppliers Preferencing and more ) to generate appropriate findings.
It is evident that QRC works with many stakeholders for success in their PS&M and specifically sourcing for catering services. Further, with QRC operating in a competitive oligopolistic market environment, achieving value for money outcomes in their PS&M operations is essential.
The major findings is that the organisation uses a strategic approach in achieving value for money outcomes.
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Description
Solution
For QRC prices and costs management, their strategy entail budgeting to get catering services from various suppliers in Qatar and international. Through a critical evaluation of budgetary allocation and costs of various suppliers depending on their quality offered, managing prices and costs is successful.
Further, QRC pursue in-depth negotiation by PS&M to get value for money outcomes. There is however a need to engage experts at this level to ensure they fully align categories of spend with value for money outcomes. For all QRC spend categories, their contracts run for one year which lead to success in value for money. In current economic downturn, there has been a significant change on lead time in supply chain.
The advantages of the approach are;
Definition of value for money results– Findings from QRC operations note that they attains optimum costs balance (30%), increase in quality and performance (70%). Due to catering services demand and technical nature, albeit of cost aspect is core, reliability, innovation and lifecycle costs. These are prioritised by QRC PS&M department.
Collaboration in Suppliers Relations– Considering QRC approach, it is based on active collaboration with various stakeholders. This is attained through achievement of value for money outcomes successfully. This need improvement however to be sustainable and long-term. This is with technologies being used for meeting entire requirements.
The disadvantages include;
Lacking strategic practices– It is clear from findings QRC is ineffective in regard to success of their PS&M strategies to achieve best value for money in their contract management (McNamara & Sepasgozar, 2020). This is guided by necessity for adopting performance oriented contracts models in pay in alignment with results measured and clear performance goals.
Ineffectiveness in total cost of ownership– The overall cost of ownership is noted to be ineffective in terms of evaluating lifecycle costs. This is while aligning them with assets/services in entire lifespan (Rocks et al., 2020). It is important improving the QRC operations for the sake of developing appropriate quality decisions to optimise on value for money outcomes.
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