(Solution) CIPS New Developing Value Through Procurement & Supply; Managing Expenditures with Suppliers (PDV)

In these modules “Developing value through procurement and supply and managing expenditures with suppliers”, a report is developed focusing on procurement supply and management (PS&M) function to achieve value for money outcomes.

The organisation of focus is Qatar Railways Company (QRC) in sourcing for catering services. Part of this report also entail evaluating approaches of management of costs for the 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.

The main findings in this report evidence 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. The approach has its advantages and disadvantages with areas of improvement identified in the recommendations. From the identified findings of analysis, a set of gaps have been identified which can be managed by identified recommendations;

  • Pursue detailed analysis of stakeholders positioning to ensure overall interests are prioritised
  • For catering services, engage different potential suppliers to avoid monopolistic demand and supply hindering competitiveness
  • Engage PS&M experts and specialists to acquire knowledge on improving value for money outcomes
  • Reviewing budgetary allocation in catering services sourcing and include modernisation of their sourcing

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Description

Solution

Table of Contents

1.0 Introduction. 3

1.1 Qatar Railways Company Background. 5

1.2 Rationale of Report 5

2.0 Spend Category and Stakeholders Analysis. 6

2.1 Catering Services Category. 6

2.2 Analysis of Importance. 7

2.3 Spend Area Impact. 9

2.4 Stakeholders Analysis. 11

3.0 Market Analysis; Procurement Role in Value for Money Outcomes. 13

3.1 Brief Market Analysis. 13

3.1.1 SWOT Analysis. 13

3.1.2 STEEPLED Analysis. 14

3.1.3 Position and Market Placement Summary. 15

4.0 Procurement Function in Qatar Rail Company (QRC) Achieving Value for Money Outcomes. 18

5.0 Managing Prices and Costs Approaches. 20

6.0 Conclusion and Recommendations. 21

6.1 Conclusions. 21

6.2 Recommendations. 21

References. 23

Bibliography. 24

 

Figure 1:Summary of QRC Projects in Qatar. 5

Figure 2:QRC PS&M Operation Areas. 6

Figure 3:Kraljic Matrix Analysis. 8

Figure 4:Summary of the Stakeholders Groups. 11

Figure 5:QRC Mendelow Matrix Analysis. 12

Figure 6:Summary of Catering Services Preferred Suppliers by QRC.. 16

Figure 7:Porter’s 5 Forces Analysis. 17

Figure 8:4Ps application to achieve 4Cs for purpose of value for money outcomes. 19

Figure 9:Procurement Cycle and PS&M Function.. 19

Table 1:Summary of sub-categories of catering services sourced. 7

Table 2:Kraljic Matrix Analysis. 8

Table 3:Catering Services in QRC Risk Register. 9

Table 4:SWOT Analysis Summary. 13

Table 5:Summary of STEEPLED analysis for QRC organisation.. 14

Table 6:Value for Money Outcomes in QRC Procurement function.. 18

 

1.0 Introduction

1.1 Qatar Railways Company Background

Qatar Rail Company (QRC) is an organisation established in 2011 for supporting and coordinating growth in Qatar Rail Industry (QRC, 2024). The ownership of the company is by Qatar Railways Development Company (QRDC) working as a joint venture with Qatari Diar Real Estate Investment Company. Over the years, the company has been involved in development of the $35bn Qatar Integrated Rail Program.  A summary of the projects executed by the company are as illustrated in the following;

Figure 1:Summary of QRC Projects in Qatar

Source: Summarised from MEED (2013)

The outcome of the identified projects have been assisting in achievement of Qatar National Vision of having an integrated railway system which is affordable, reliable and convenient. This is while at the same time assisting in building and supporting Qatar economic growth and prosperity (QRC, 2024).

1.2 Rationale of Report

In the implementation of the projects, QRC engages different suppliers of food in their broad catering services category. This report will analyse impact and importance of this to their stakeholders. By conducting a brief market analysis, best practice to achieve value-for-money is identified. Catering services and other spend areas are managed by Procurement and Supply Management (PS&M) with major operations  guided by i-Sourcing which is an access only for registered corporate suppliers in taking part in different procurement activities (RFQs/RFPs) (QRC, 2024). The PS&M is involved in management of the operations in the different areas illustrated in the following;

Figure 2:QRC PS&M Operation Areas

Source: QRC (2024a)

QRC PS&M operates a budget of approximately of approximately QAR200Mln annually in different procurement categories. This is by collaborating with other departments in the organisation to source required products and services for assurance of their success in the Qatar transport industry. The collaboration enhances managing of costs and achieving value for money outcomes.

2.0 Spend Category and Stakeholders Analysis

2.1 Catering Services Category

With QRC operating in different areas in Qatar Railway Infrastructure, sourcing for catering services for their staff and also customers (travellers) is essential. In the railway sector, the catering and vending services are operated departmentally or by agency of contractors selected by railway administration (Bougette et al., 2021). In Qatar Railway sector, catering services comprise a broad market. In overall, the catering services market is valued at $1109.32 million in 2023 with anticipation of robust growth in forecast period with a CAGR of 8.82% through 2029 (TechSci Research, 2024). This is prominent and a leader in hospitality and catering sector in Qatar. For QRC, a summary of the sourced catering services categories is as illustrated in the following;

Table 1:Summary of sub-categories of catering services sourced

Source: QRC Internal Documents

Catering Services in QRC Explanation Budget allocated (QAR Millions)
Preparing meals for workers With different workers in QRC; Full-term contracts, temporary, expatriates, and locals, access to meals is important 20
Accommodation dining QRC have options for travellers and employees to be accommodated in different locations 80
Travellers meals In transit, travellers particularly in the speed train in Doha linking cities (Larumbe, 2021) 100
Preparation and consolidation of all menus of different travellers categories Different categories of workers of varying cultures, travellers of different requirements including health must be accommodated 110

  2.2 Analysis of Importance

To identify and shoe the catering services in QRC importance, it is essential to adopt Kraljic Matrix. According to CIPS (2024) this is a tool which is used in procurement and supply chain management to identify and minimise supply chain risks. This is by having categories which are informed by profit impact and supply risk;

Figure 3:Kraljic Matrix Analysis

Source: CIPS (2024)

Leverage Items- This category is made of many buyers/suppliers in place allowing for competition amongst vendors therefore reducing overall risks. Catering services are in this group since many companies in Qatar offer these services. The different services are provided by the suppliers as illustrated in the following;

Table 2:Kraljic Matrix Analysis

Source: Summarised from QRC internal document

 

 

 

 

 

 

 

 

 

 

 

Therefore, in line with table 2 analysis, QRC hold a lot of power to identify the most appropriate supplier of their catering services sub-categories.

Strategic Items- This is a category made up of high risk due to dependence on lower number of supplies with immense profitability. For Saudi Aramco, catering services cannot be strategic owing to sensitivity and relevant to success of QRC. By leveraging on i-Sourcing, PS&M in QRC they achieves balanced procurement and suppliers performance oriented relations.

Bottleneck Items- This has products of less value which have immense risks leading to hiking of costs from limited alternatives in place. For QRC, there are small supplies such as office materials and stationary which are used for employees functions in different railway substations.

Routine Items– With this category not including critical supplies, i-Sourcing and systems-based contract management is pursued. QRC adopts this for their logistics and employees uniforms. Catering services do not belong to this category.

2.3 Spend Area Impact

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