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Solution
Table of Contents
1.1 Organisation Background. 3
2.2 Procurement / commercial function. 4
2.2.1 Overview of Vendor Management and Commercial 5
2.2.3 Procurement Cycle: Responsibilities of Commercial/Procurement Function & VMT. 7
3.1 Sourcing Approaches (Advantages & Disadvantages) and Application to ROSHN’s Category of Spend. 9
3.2 Category Analysis Applied to Sourcing Approach. 10
3.2.2 Supplier Preferencing – How the Supplier Sees ROSHN. 11
3.2.3 Strategic Sourcing – Complexity, Stakeholder Engagement, and Impact on ROSHN. 12
3.3 Supplier Appraisal Checklist 15
Figure 1:ROSH areas of operations 4
Figure 3:Supplier Registration details 8
Figure 4:Procurement and Supply Cycle. 9
Figure 8:Stages of Procurement Process 14
Figure 9:Supplier Evaluation Criteria. 17
Figure 10:Carter’s 10C’s model 18
1.0 Introduction
1.1 Organisation Background
Roshn the leading real estate development company firm is working towards achieving the goal set of Saudi Arabia vision 2030. It focuses on generating employment for Saudi citizens and building innovative and sustainable communities in jobs throughout Saudi Arabia. ROSHN’s primary activities span various areas such as: home building and selling, property purchase, complete value chain provision in residential real estate, land aquisation and coordination (see figure 1). With direct control over each stage, from the acquisition of the land and design to the actual construction of homes and their distribution, ROSHN hopes to meet the nation’s housing requirements. The company aims at achieving 70% of homes by 2030 to provide affordable but quality house for the Saudi families (Alqahtany,2020). This corresponds with Vision 2030’s objectives to increase homeownership ratios and improve the urban framework within the kingdom of Saudi Arabia. Using the integrated approach to space development, ROSHN is gearing up to become a leader in the Arabian region’s real estate sector that will drive the sustainable development of communities.
Figure 1:ROSH areas of operations
Source: ROSHN Organisation Background
One of the largest spending areas at ROSHN is the construction of infrastructures for residential communities. This involves expenditure on aspects such as provision of utilities, road networks, and such infrastructure as enhances the development of adequate livable neighborhoods. Through focusing on infrastructure alone, ROSHN seeks to develop sustainable communities that are in line with the country’s vision of Saudi Arabia 2030 (WebAdmin, 2024). With these developments, not only does housing is promoted, but also quality of life is improved, and economic factors are given a boost and jobs for citizens of a given country are provided.
2.2 Procurement / commercial function
At ROSHN, the Procurement and Commercial department is responsible for supplier sourcing and relationship management to secure high quality and reasonable prices for major projects. These functions include the ASL, Framework Agreements and compliance that are crucial for enhancing procurement for ROSHN strategic plans.
2.2.1 Overview of Vendor Management and Commercial
The Vendor Management Team (VMT) is responsible for market research, supplier evaluation and management of current suppliers (CIPS, 2022). VMT also sustains the ASL, where all suppliers tested by extensive risk investigations are registered, and Framework Agreements are developed for long-term cooperation with crucial suppliers. These agreements ensure that supply is uniform and cost effective, as required in ROSHN’s numerous housing complexes.
Vendor Management: Market Research with Porter’s Five Forces and PESTLE Analysis
To understand market conditions and supplier dynamics, VMT employs Porter’s Five Forces and PESTLE Analysis.
Porter’s Five Forces – This tool helps VMT analyze market factors that impact supplier selection and negotiation strategies:
Source:Ideson (2024).
- Competitive Rivalry: Determines the intensity of competition in suppliers’ segments like construction materials, to ensure that ROSHN deals with competitive and innovative suppliers.
- Supplier Power: Analyses the bargaining power of suppliers in certain sensitive sectors such as construction material and thus enabling VMT to eliminate extreme supplier power.
- Buyer Power: Large-volume purchasing is another advantage for ROSHN because, through negotiations, it can ensure VMT offers it value for its money.
- Threat of Substitutes: Explores potential substitute materials for use by ROSHN for the purpose of reducing the extent of reliance on any particular material source.
- Threat of New Entrants: VMT also ways keep track of new entrants in order to identify possible low cost or differentiation competitors.
PESTLE Analysis – This framework is used to evaluate external factors that influence ROSHN’s procurement decisions: see functions in Table 1.
Source: CIPS Module Notes
2.2.2 Compliance
Supplier compliance specifically in ROSHN’s procurement function is the key for passing the various regulatory requirements in regard to suppliers. The Pre-Qualification Questionnaire (PQQ) activity is one of the key preliminary compliance exercises through which ROSHN can assess suppliers before they can appear on the Approved Supplier List (ASL). This process involves evaluating the suppliers in terms of their performance capabilities such as financial strength, experience, quality and safety compliance (Executive Compass, 2024).
The other approach to compliance is Supplier Registration which is a formal process undertaken to include approved suppliers in ROSHN supplier list. This form of registration asks for various documents concerning the business practices, certification and legal status of the supplier (see figure 3). Lastly, to conform to the Law and regulation of the Kingdom of Saudi Arabia, ROSHN check that all the suppliers for the projects are compliant with the laws and regulation of the country.
Figure 3:Supplier Registration details
Source: Google, 2024.
2.2.3 Procurement Cycle: Responsibilities of Commercial/Procurement Function & VMT
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