Description
Solution
Pricing Strategy of the Supplier
Knowledge of the suppliers’ pricing structure helps the organization to plan for the costs in advance and even look for better deals. The analysis here is carried out with respect to supplier cost structure, supplier market position and developments in prices.
Supply Market Analysis
Supply market analysis evaluates the supplier market in terms of key strengths, weaknesses, opportunities and threats. It looked at the general trends, competitors, availability of suppliers and complied with the regulatory measures. In the case of ROSHN, this might imply ascertaining if other suppliers provide similar products or if there are supply chain adverse effects related to certain suppliers.
Porter’s Five Forces
Figure 4: Porter’s Model
Source:
Porter’s Five Forces is a tactical tool used to draw patterns of competitive forces in the market. Its five elements are as shown in figure 4 as highlighted by (Planium Pro (2021):
Threat of New Entrants: The threat posed by new entrants that make the market competitive to existing players and this may lead to adjustments in the prices to fit the market trends.
Bargaining Power of Suppliers: The power suppliers have to control price, terms and conditions, and availability of a product or a service.
Bargaining Power of Buyers: The bargaining power that the organisation has that it can negotiate with the suppliers for better terms.
Threat of Substitutes: There being other similar product that could do the same job and could be used by the customers instead.
Competitive Rivalry: How intense competition is within existing suppliers that affect pricing and overall quality of services supplied.
PESTLED Analysis
The PESTLED model helps analyse external factors affecting the negotiation environment as evidenced by CIPS (2024). Elements include:
Source: CIPS (2024)
Factor | Description |
Political | Regulations and policies that could impact sourcing. |
Economic | Economic conditions influencing supplier pricing. |
Social | Societal expectations for ethical sourcing and sustainability. |
Technological | Advancements affecting production and supply chains. |
Legal | Compliance requirements that suppliers must meet. |
Environmental | The supplier’s sustainability practices. |
Demographic | Workforce diversity and inclusive practices. |
Kraljic Matrix
The Kraljic Matrix categorizes products or services based on supply risk and profit impact as shown in figure 5:
Source: CIPS Module Notes
Strategic: High impact, high risk—requires a long-term partnership with a reliable supplier.
Leverage: High impact, low risk—where the organisation can exert more control.
Bottleneck: Low impact, high risk—requires strategies to mitigate supply risk.
Non-Critical: Low impact, low risk—where price is the main consideration.
For ROSHN, sourcing a supplier for sustainable materials may fall into the Strategic quadrant, necessitating careful selection and a strong relationship.
Supplier Preferencing
Figure 4:Supplier Referencing Matrix
This model determines the extent to which suppliers’ perceptions of their clients are positive, according to value and interaction. Classification of the groups are: Core which has high value and is highly engaged, Development which is highly engaged but low value, Exploitable is highly valuable and less engaged and Nuisance is low value and less engaged (Marshaine and Marshaine, 2024). As for ROSHN, it simply may indicate what exact position within this value chain the company occupies and what corresponding strategy should be chosen for negotiations.
SWOT Analysis
SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats): It is useful when the organisation casts a look on its internal environment in terms of strength and weaknesses and the external environment in terms of opportunities and threats to enable it devise a good negotiation strategy (see table 2).
Source:
SWOT Analysis | Description |
Strengths | Internal resources or capabilities that can be leveraged in negotiation, e.g., strong brand reputation, skilled team. |
Weaknesses | Internal limitations that may impact negotiation, e.g., limited budget, lack of specific expertise. |
Opportunities | External factors that could be advantageous, e.g., market growth, potential partnerships. |
Threats | External challenges that could impact outcomes, e.g., strong competitors, economic |
Supplier Analysis
For the collected data, it was gathered through the methods of website analysis, chairperson statement analysis, and Key Account Management (KAM) to get an in-depth understanding of the supplier’s objectives and strategies to follow for ROSHN.
Therefore, the Preparation stage involves three principal tasks: gathering internal data, market analysis, and supplier understanding is key to offering negotiator tactical advantages. Strategists such as Mendelow’s Matrix, Porter’s Five Forces, PESTLED, Kraljic Matrix, Supplier Preferencing and SWOT analysis assist ROSHN to ensure it set goals and objectives in the right perspective with the right projection of challenges as well as strategize the best defensive orantageous position during negotiation. In this manner, ROSHN guarantees that through proper preparation, it will be able to negotiate the kind of terms it wants into the contracts more or less and establish long term suppliers.
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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 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. |