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Solution
Executive Summary
This report evaluates and contrasts various sourcing strategies within the SWS (Sustainable Water Solution) organisation, focusing on the health and safety (HS&E) category of spend during the COVID-19 pandemic, which necessitated remote working. To assess the different sourcing strategies, tools such as the Kraljic analysis, Mendelow’s stakeholder analysis, the business hierarchy of needs, and the SWOT analysis were employed. Additionally, the Peter Block Grid was used to categorise stakeholders based on their interests and positions related to the sourcing strategies.
In the supplier evaluation for the HS&E category of spend within SWS, Carter’s 10Cs methodology was applied to assess different sourcing strategies. The results indicate that SWS should adopt a strategic sourcing approach to sustain its leadership in the sustainability and water management industry while maximising efficiency. The sourcing strategies include multiple sourcing (engaging with multiple suppliers), single sourcing (working with one supplier), sole sourcing (working with a monopolistic supplier), and dual sourcing (working with two suppliers who might have conflicting demands).
In conclusion, the recommendations for SWS’s sourcing strategies in the HS&E category of spend are as follows:
- Determine the most suitable sourcing strategy based on the characteristics of the spend category.
- Ensure procurement policies are comprehensive and prioritize health and safety standards.
- Simplify the procurement process while considering the interests of all stakeholders.
- Upgrade the current Ariba/SAP system to enhance information flow and support various sourcing methods such as RFQ, RFP, negotiation, and e-auction throughout the product lifecycle
Table of Contents
2.0 Selected Category of Spend and Positioning. 4
3.2 Application of Sourcing Approaches in RCU Context 5
2.1 Kraljic Analysis Method. 7
2.2 The Hierarchy of Business Needs. 9
2.3 Management of Stakeholders. 10
4.0 Sourcing Appraisal Checklist 13
4.1 Information Technology (IT) Spend Supplier Evaluation. 13
5.0 Conclusion and Recommendations. 15
Figure 1:AlUla Areas of Operations. 4
Figure 2:RCU Kraljic Matrix Analysis. 9
Figure 3:RCU Sourcing Approaches and the Maslow Hierarchy of Needs. 11
Figure 4:Mendelow Matrix Stakeholders analysis. 12
Figure 5:Peter Block’s Stakeholder Categories. 13
Figure 6:Applying the 10Cs Technique to Supplier Appraisal 14
- Introduction
In this assessment, Sustainable Water Solution (SWS) has been selected for evaluation. Established in 2003, with the mission to provide innovative and sustainable water solutions, SWS focuses on the design, implementation, and management of water and wastewater treatment systems. Their operations span several key areas, including municipal and industrial water treatment, desalination, wastewater management, and water recycling (SWS, 2024). SWS aims to address water scarcity and environmental challenges through advanced technologies and sustainable practices, ensuring reliable and efficient water management solutions. Committed to excellence, SWS strives to contribute to global water sustainability and enhance the quality of life for communities worldwide.
Figure 1: SWS areas of Operations
In the various fields of operation shown in Figure 1, SWS is dedicated to tackling water scarcity and environmental issues, in line with global sustainability objectives. Emphasizing the organisation’s influence, SWS has undertaken projects valued at over $200 million, demonstrating their dedication to sustainable water management (SWS, 2023). These substantial investments are pivotal for promoting water sustainability and present several opportunities for private sector participation. For these projects to be successful, SWS’s procurement and supply department must ensure the procurement of suitable systems and technologies, thereby achieving optimal value for money. This involves investing in advanced water and wastewater treatment systems to boost efficiency and effectiveness. By securing the appropriate resources, SWS continues to foster environmental sustainability and enhance the quality of life for communities around the world.
2.0 Selected Category of Spend and Positioning
SWS is currently acquiring various health and safety (HS&E) systems to boost efficiency and cut costs in their operations. To ensure these procurements are successful, SWS must choose the most appropriate sourcing approach and conduct thorough supplier evaluations to fulfill their needs. Identifying the most effective sourcing strategy for different spending categories allows SWS to efficiently manage and control their supply and procurement strategies. This can be guided by analysing the organisation’s needs, demand, and supply within the value chain using tools such as the Kraljic analysis and the Business Hierarchy of Needs. Additionally, Mendelow’s Stakeholder Analysis Matrix can help understand the impact of different sourcing approaches on stakeholders within SWS. Using these tools ensures that SWS’s procurement strategies are well-aligned with their operational goals and stakeholder interests.
3.0 Sourcing Approaches
3.1 Multiple Sourcing
The practice of utilising a vast pool of vendors to fulfill an organization’s demands is known as “multiple sourcing” (Jlancaster86, 2023).). This works best in a free market where companies can buy and sell with one another and act as suppliers to other companies.
3.2 Single Sourcing
According to CIPS (2020a), a business is engaging in single sourcing when it contracts with a single provider for a certain expense category. If this happens, more money can be put into technology and infrastructure, and more people will be dedicated to making new technologies.
3.3 Dual Sourcing
In dual sourcing, two or more suppliers work together to supply a single product or service. If you want to be safe from supply disruptions, this strategy can help you diversify your supplier base (Nimble, 2022). The two vendors in a dual-sourcing relationship are legally bound to deliver distinct goods and services. When it comes to the sharing economy, this can be especially helpful because of the potential disruption to suppliers.
3.4 Sole Sourcing
When there is just one supplier available owing to external causes, it is referred to as sole sourcing, which is comparable to single sourcing as evidenced by ISU.edu (2023). Therefore, in a case of sole sourcing, there is just one supplier or manufacturer of the good or service in question. This follows the supply and procurement teams’ thorough examination and assessment.
3.2 Application of Sourcing Approaches in SWS Context
Multiple Sourcing
Multiple sourcing is a strategy often employed in the health and safety (HS&E) category of spend, as seen in SWS, which engages multiple suppliers for critical safety equipment and systems. For instance, SWS may collaborate with suppliers such as 3M, Honeywell, DuPont, and MSA Safety to procure essential HS&E systems. The selection of these suppliers is based on criteria including cost, quality, supplier reputation, and a history of successful engagements.
The rationale for adopting multiple sourcing in the HS&E context includes:
- Geographical Considerations: The location where the HS&E systems are to be delivered plays a crucial role. It’s vital to ensure that the supplier can handle delivery logistics effectively.
- Demand Distribution: Spreading demand across various suppliers helps achieve optimal costs and identify the most suitable vendor. Suppliers are made aware of SWS’s budget, quality requirements, and delivery timelines, which aids in cost optimization and ensures high-quality service.
Multiple sourcing offers numerous benefits to SWS, such as providing a broad selection of options. If one supplier fails to deliver as expected, another can step in, minimizing supply chain disruptions. This approach also fosters competition among suppliers, leading to innovation and flexible delivery schedules (CIPS, 2014). However, multiple sourcing has its challenges. Maintaining accurate records and matching the buyer’s needs across various suppliers can be cumbersome, especially without an e-catalog system for electronic product display. Despite these challenges, multiple sourcing is vital in HS&E procurement due to the technical and operational quality requirements of safety systems.
SWS’s HS&E department ensures high safety standards by leveraging supplier portals and market exchanges to identify suitable suppliers. These platforms allow buyers and sellers to share information about requirements and offerings effectively. Some potential suppliers for SWS could include 3M, Honeywell, DuPont, MSA Safety, and Ansell.
By using multiple sourcing, SWS can maintain a high level of operational safety and efficiency. This approach not only ensures a steady supply of critical HS&E systems but also promotes competitive pricing and innovation among suppliers. Overall, the multiple sourcing strategy aligns with SWS’s commitment to sustainability and excellence in water and environmental management, ensuring that the organisation remains at the forefront of delivering safe and reliable water solutions.
Single Sourcing
SWS employs single sourcing as a strategic approach to reduce costs, expedite feedback from relevant stakeholders, embrace sustainable practices, and streamline the procurement process. However, the decision to opt for single sourcing is meticulously weighed against various factors such as contractual terms, unit prices, delivery capabilities, and the quality of HS&E systems. Single sourcing offers several advantages, including mitigating the risk associated with fluctuating supplier trends and nurturing long-term, trusting relationships between buyers and suppliers.
Furthermore, single sourcing can yield cost efficiencies and minimize the time spent on procurement tasks. Nonetheless, a significant drawback is the vulnerability inherent in relying heavily on a sole supplier which may lead to disruptions if the supplier fails to meet its obligations. Within SWS, single sourcing proves most beneficial when procuring critical equipment such as safety gear, where it facilitates the development of enduring partnerships with suppliers. Conversely, the use of multiple suppliers may limit customization options and necessitate additional efforts to align with the organization’s specific needs.
Single sourcing is particularly advantageous for SWS in procuring essential health and safety equipment, fostering enduring relationships with suppliers, and ensuring product and service tailored to meet specific requirements. This approach adds value and effectively balances procurement needs with product quality and cost considerations. By leveraging single sourcing, SWS can solidify its supply chain relationships, ensure consistency in product quality, and streamline procurement processes. This strategic approach aligns with SWS’s commitment to sustainability and excellence in providing water solutions, safeguarding both operational efficiency and safety standards.
Dual Sourcing
With dual sourcing, SWS may reap the benefits of reduced supplier risk, more competition and innovation leading to cost reductions, and the ability to expand as an organisation. Better control over expenses and quality is also made possible by it. Time limits and possible coordination problems with service and product quality are two obstacles that dual sourcing implementation may bring.
Improved sourcing methods and a focus on collaborative procurement approaches that are specific to SWS’s demands are essential for a successful adoption of dual sourcing. This method works wonders for items that are considered bottlenecks since they provide a greater danger of overordering and lower profitability overall. For health and safety equipment procurement, SWS can look into dual sourcing with a group of current competitors to reduce costs and strengthen the supply chain.
Sole Sourcing
For example, SWS may resort to sole sourcing for specific machinery crucial for its water treatment facilities, where only one supplier can offer equipment meeting the unique technical specifications and operational requirements.
One benefit of sole sourcing is its simplification of the procurement process by dealing with a single vendor. However, it also poses drawbacks. Limited competition may impact supplier interactions’ quality, reliability, and sustainability. Moreover, dependence on a sole supplier could lead to delays and potentially subpar offerings if they fail to deliver.
In SWS, sole sourcing is common in instances requiring traditional documentation for procurement, such as the utilisation of blockchain technology to streamline ordering processes and tendering.
2.1 Kraljic Analysis Method
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