Solution

Executive Summary

This study is a genuine attempt to develop a category plan for a selected category of spending. It analyses the obstacles to put your plan into action and your solutions for overcoming them. Abu Dhabi National Oil Company (ADNOC) or Company has been selected as the organization for this initiative (as referred herein). To achieve this, MRO commodity Gas Turbine has been selected as the category of spend in this report. The analysis is informed by need of evaluating best practice of achieving value, risk management and goods and services supply process.

From the primary and secondary data analysis carried out in this assessment, category plan has been identified as critical for ADNOC success becoming a leader in global energy sector. The study offers insight on category plan and implementation utilizing various analytical tools, including STEEPLES for macro factors and Martin’s 4R for micro factors. The category of spending is then evaluated using a SWOT analysis. Further analysis is carried out for Gas Turbine Filter sourcing. Initially, the market structure and competitive landscape were analysed and explained through Porter’s Five Forces framework. Mendelow’s Matrix is used to identify the stakeholders involved and potential stakeholder conflicts.

The findings from this assessment has identified existence of challenges which limit success of ADNOC category plan implementation. These challenges have been noted as lack of effective decision making, existing traditional procurement strategy and lacking standardised category planning. There are a set of approaches which have been recommended for success in implementing ADNOC category plan implementation.

Based on the findings of this assessment, various recommendations have been provided for ADNOC in their MRO commodity Gas Turbine spend category. These include;

• Initiate a strategic supply chain relationship management to modernise their PS&M approaches
• Implement an in-depth and successful sourcing strategy guided by terms and conditions
• Promoting consistency in their category plan by continuously receiving updates on likely changes
• Implement appropriate decision in category planning for ADNOC for achieving fact-based and information management
• Promote L&D approaches for continuous skills acquisition for success of category plan

Table of Contents

1.0 Introduction. 4

1.1 Organisation Background. 4

1.2 Selected Spend Category. 5

2.0 Category Planning. 7

2.1 Stakeholders Analysis. 8

3.0 Current Situation Analysis. 10

3.1 Internal Analysis. 10

3.1.1 Supply Positioning Evaluation. 11

3.1.2 Suppliers Preferencing. 14

3.2 External Analysis. 15

3.2.1 Micro and Macro Analysis. 15

4.0 Sourcing Approaches. 21

5.0 Category Planning Implementation, Challenges and Solutions. 22

5.1 Establishing the Customer-Based Plan. 22

5.2 Evaluation and Monitoring of Category Planning. 22

5.3 Improvement of Team Strategies in Category Planning. 22

6.0 Conclusion and Recommendations. 23

References. 25

Figure 1: ADNOC Background. 5

Figure 2:ADNOC Organization chart 6

Figure 3:Gas Turbine Inlet Filtration Systems. 7

Figure 4:Steps of Category Planning. 8

Figure 5:Mendelow Stakeholder Matrix. 9

Figure 6:Peter Block’s Stakeholders Category. 10

Figure 7:Chart of raw material demand based on Geographical location. 11

Figure 8:ADNOC Offshore procurement Gas Turbine filter based on Geographical location. 12

Figure 9:Stakeholders Analysis. 13

Figure 10:Pareto Analysis Technique. 15

Figure 11:Suppliers Preferencing Summary. 16

Figure 12:Summary of Porter’s 5 Forces Analysis 17

Figure 13:Industry Lifecycle. 18

Figure 14:Christopher 4R’s. 19

Table 1:Spend Value Table. 7

Table 2:Section of a sourcing tree. 8

Table 3:Suppliers Available for ADNOC Gas Turbine Filter Suppliers. 13

Table 4:STEEPLED Analysis 21

Table 5:SWOT Analysis Summary. 22

1.0 Introduction

1.1 Organisation Background

The company selected is Abu Dhabi National Oil Company (ADNOC) or Company for the purpose of comprehending the fundamental ideas of Advanced Category Management in Procurement & Supply Chain Management (SCM) (as referred to herein). With a daily production capacity of more than 3.5 million barrels of oil and 10.5 billion cubic feet of natural gas, ADNOC is the fifth-largest energy producer in the world.

Figure 1: ADNOC Background

As we work to fulfill the increasing need for energy around the world, ADNOC’s integrated 2030 Strategy aims to improve the way we maximize value from every barrel. ADNOC has also made a commitment to reduce the intensity of greenhouse gas emissions (GHG) by 25% by 2030.

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 2;

Figure 2:ADNOC Organization chart

1.2 Selected Spend Category

For a gas turbine to run efficiently, it must include a turbine inlet air filtration system (with turbine filters). The gas turbine is shielded from dangerous airborne particles by the filtering system, which can cause problems including erosion, fouling, and corrosion. If these problems are not resolved, the gas turbine’s operational life will be shortened and its performance will suffer. This could result in a stoppage of production and cost ADNOC offshore millions of dollars.

Figure 3:Gas Turbine Inlet Filtration Systems

ADNOC Offshore has experienced consistent demand for turbine filter systems over the past few years. Since management chose to boost production in line with vision 2030, there has been an exponential rise in energy consumption due to the increased exploration and production activities within the ADNOC group, particularly ADNOC Offshore. New turbines are being installed to meet the energy demand, while maintenance on the ones already in use has grown as a result of their continued performance.

Table 1:Spend Value Table

The above table lists an approximate spend over the years.

The most used media for gas turbine air inlet filters are cellulose, microfibers, and nanofibers. Production costs of cellulose nanofibers at different carboxylic content (laboratory level). The price of energy was 0.08 €/kW·h, price of NaClO was 0.38 €/kg, prices. Maximizer market research (Global-cellulose fiber market. (2022).

Table 2:Section of a sourcing tree

2.0 Category Planning

Category planning is identified in CIPS (2022) as a strategy adopted to plan for resources to focus on specific organisation spend areas. This is important for development and implementation of strategic approaches for delivery of long-term value addition. As evidenced in CIPS (2022), the importance of category planning is to ensure success in identifying key value categories, increased category sales volume and reduced organisation spend. In CIPS guidelines Notes, the phases pursued to implement category planning are illustrated in figure 5;

Figure 4:Steps of Category Planning

In figure 5 steps summary, through their consideration in this report, category planning would be initiated for ADNOC in their gas turbine spend category. In this report, the focus will be on implementation plan and noting on challenges to implement the plan and strategies for mitigating these challenges.

2.1 Stakeholders Analysis

Stakeholders are any individual or organization that has an interest in or can be affected by a project, product, service or venture. Any activity, an organization undertakes, whether strategic, operational or tactical, the activity can only be successful with the input, commitment and support of its key stakeholders. Identifying stakeholders, then engaging, gaining and maintaining their support and commitment is a continuous process. (CIPS.Org 2020). For the chosen category “Gas Turbine Filter”, stakeholders analyses is done by applying Mendelow’s matrix as below;

Figure 5:Mendelow Stakeholder Matrix

For the category planning effectiveness, the stakeholders identified in figure 6 need to be considered informed by their interest and influence;

Low-influence; Low-Interest- The administration, board of directors have minimal interest and power on the success of the category planning. Nevertheless, they ought to be engaged in the process implementation.

High-Influence; Low-Interest- Considering the finance, legal and UAE Admin, they must be satisfied with the category plan. This is for identifying budget allocated and streamlining the terms and conditions regulations.

High-Influence; High-Interest- For the gas turbine filters spend category, the users of IT systems in ADNOC, onshore and offshore facilities play a critical role. Hence, they ought to be successfully managed closely.

Low-Influence; High-Interest– There is a need of keeping informed the departments in ADNOC considering their influence on category planning with immense interest. Therefore, they must be informed as they are involved to offer a direction to organisation and strategic objectives.

Further, through stakeholders analysis, it is possible to evaluate stakeholders analysis by application of Peter Block Grid Leadership Center (CIPS Notes, 2021) as shown in figure 6;

Figure 6:Peter Block’s Stakeholders Category

Considering Bedfellows Stakeholder Category, interaction prioritise on multiple sourcing approach used. Further, for allies, optimum support can be offered with a chance of sharing vision guided by their development. The opponents harness updating, feedbacks sourced, honest oriented practice with adversaries offering a guide for managing challenging decisions for the sourcing strategy adopted.

3.0 Current Situation Analysis

3.1 Internal Analysis

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