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Solution
Executive Summary
In this integrative business report, category and contract management in Wood Plc organisation has been evaluated. Specifically, the area of focus has been on best practice in improving project management (PM) and cost management (CM) in category management has been considered. Further, in this business report, the different factors to be considered to initiate and implement category management, strategic and conventional sourcing strategy, contract management roles has been put into account. This has been pursued through the application of different tools and techniques which map spend category of various direct and indirect expenditures. In line with the findings, innovativeness in improvement of supply chain in regard to the different categories and category management has been provided.
Also, in this report, contract administration and management has been put into account in line with risks and management approaches as part of the contract. All these factors have been reviewed in context of the category management.
For the purpose of recognising the most appropriate strategy in category and contract management in the Wood Plc case study organisation, quantitative and desk research has been used in obtaining required data. Further, the various tools used in this report include and not limited to Mendelow Matrix, CIPS Category Management Cycle, CIPS Contract Management Cycle, Suppliers Positioning. Further, SWOT analysis and PESTLE analysis have been used.
From findings in this report, Wood Plc is supposed to focus on effective risk management and efficiencies in their category and contract management. With the different stakeholders involved in their operations, Wood Plc could leverage on modern technologies for improvement. Further, through a selection of appropriate PS&M teams and capacity development, improving contract management would be guaranteed. Further, the obtained findings highlight on the necessity for Wood Plc to harness their category management of Information Technology (IT) sourcing category for relevant SLA’s and KPIs integration. In project management and cost management, this would be made in a long-term with holistic auditing pursued. Appropriate analytics could also be adopted for data management and strategies. The relevance of this is to guarantee all stakeholders involvement in increasing awareness.
In line with the identified gaps in conclusions and this report findings, various recommendations can be suggested including;
- Integrate modern technology, L&D opportunities, KPIs and contract management efficiencies
- Increased budgetary allocation in PS&M
- Initiate efficient PS&M control systems
- Priority on collaboration of all stakeholders in procurement
- Engaging institutions internally and externally for competencies and talents management
- Achieve approval of allocated budget for managing risk on various areas identified
Table of Contents
1.1 Key Terms (Project Title) 5
2.1 Wood PLC Organisation background. 7
2.2 Why this Project Matters/Objectives. 8
3.0 Requirements to initiate and prepare introduction of category management process. 10
4.0 Strategic and Conventional Sourcing Processes and role in Category Management 13
4.1 Situation, Target and Proposal (STP) 14
5.0 Tools and Techniques for Mapping Categories of Direct and Indirect Expenditure. 16
5.1 Direct and Indirect Expenditure. 16
5.2 Tools and Techniques Comparisons and Contrasts. 17
5.2.2 Situational Analysis (Kraljic Matrix Analysis) 19
5.2.3 Comparison and Contract of STEEPLE and Kraljic Analysis Tools. 20
6.0 Innovative Measures for Improving Supply Chain. 20
6.1 Dealing with Complexities and Volatilities. 20
6.2 Dynamic Supply Networks. 21
6.3 Disruptive Influence on Supply Chains. 22
6.4 Implementation Strategy of Automation. 22
7.0 Contracts Administration and Contract Management 23
9.0 Conclusions and Recommendations. 27
1.0 Introduction
1.1 Key Terms (Project Title)
In contemporary business environment, investment on contract management and category management is important for success of Procurement and Supply Management (PS&M). While harnessing cost overruns management, effective sourcing is similarly achieved from this. Considering the operations of Wood PLC, part of their corporate strategy is to pursue a holistic acquisition by strengthening overall products offering, accelerating innovation, customer demands achieved rapidly and partnering development (WoodPlc, 2023). In the global energy sector where Wood PLC, operating in a perfect competitive environment, they are mandated in ensuring an organisation gain in profits with their market dominance achieved. In this case, contract management is a significant area of Wood PLC admin in ensuring that modern organisations are in active practices. Today, Wood PLC operates a Global Procurement Contracts Team (PCT) to ensure sourcing contracts are aligned with appropriate standardisation, set guideline and internally based policies. The practice is not pursued in the overall spend category. For instance, project management and cost management are elicited by lack of PCT implementation with category managers playing a critical role in their reviews, pursuing negotiation and documenting. From the process, Wood PLC is engaged in approving the process. Hence, through a successful contract management process, Wood PLC is in a position to leverage on competititive advantage and dominance to their business environment. This is at the same time assuring less delays in the contracts adoption, inappropriate negotiations and reworking, holistic compliant and failure of liability and inefficiency in approvals and workflow evidenced. The various stages of the contract management are as summarised in figure 1;
Figure 1:Wood Plc Contract Management
As evidenced in figure 1 summary, for the various departments in Wood Plc implementing the PCT, they achieves a consistent contract implementation with clearly set standardisation, guideline and internal-based policies. This is for a success in review of contracts and negotiating services for entire commodities by applying contract management, Service Level Agreements and to master the entire agreement. By using the practice, in contract closure stage, auditing being part of their recommendation is used for evaluating all roles, communication strategies and notifying suppliers with requests given.
1.2 Project Scope
As evidenced previously, this report purpose is to evaluate category and contract management in Wood Plc organisation. The different evaluation areas which are intended to be achieved include;
- Effective capacity development for the employees ability to initiate and prepare category management and effective delivery process
- Identifying critical success factors (CSF) in strategic practice contrary to conventional/traditional sourcing strategy and category management roles
- To develop KPI’s being an essential tool and technique to map categories of expenditure (direct/indirect)
- Innovativeness in measures initiated for improving supply chain networks
- Controlling admin and contract management distinction
- Assessing risks and management approaches in different contracts
The relevance of the noted strategy areas is for improving category and contract management for Wood PLC organisation, lower all the days lost and managing extra costs.
Currently, Wood PLC has noted IT spend category which make sure effective contracts management is achieved with clear standards highlighted, appropriate guideline and internal policies initiated. For success in improvement of contract and category management, Wood PLC would leverage on the following achievements;
- Reduced delays in regard to contract turnaround hence delaying in projects with incurred costs managed
- Poor quality in negotiation and evaluation of the terms of suppliers hence inconsistent with Wood PLC legal stipulations and compliance with the appropriateness of procurement data
- Compliance and identification of failure areas owing to poor identification of performance roles
- Inefficiencies in sourcing and getting an approval and to sign the overall workflow
Through a focus on this report, different contract management dynamics, Wood PLC practices and relations with external business sector and suppliers relations would be prioritised. The most appreciate strategy in improving the contract management is evaluating appropriate recommendations offered. The identified areas include adoption of a risk-based contract and category management, tools developed and initiatives for supporting an improved contract management and supply teams. Through this, the most appropriate strategy is holistic contract management attained.
2.0 Background
2.1 Wood PLC Organisation background
Wood PLC having an upward of 35,000 professionals in 60 different countries is ranked as the globally leading consulting and engineering company which operate in the Energy and Materials market. As evidenced in WoodPLC (2022), the organisation is tasked with a role of unlocking solutions to the world’s most critical challenges which is being future ready, now. For the organisation consulting area, it is involved in a global, end-to-end, multi-sector specialist consultancy with a trust-based relationship with their customers. This is for offering the most innovative solutions and provision of excellence core for current management of most complex issues and maximising value in the entire asset life cycle. For the projects, they are involved in delivering digitally enabled capital investments with low carbon solutions. Particularly in their operations in UAE, they are able to offer Upstream/Midstream,/Downstream Oil and Gas support services. This is with their operations inclusive of delivery of an integrated, agile and intelligent solutions for managing their customers assets. This is in more than 20 countries and over 15,000 strong teams delivering solutions for optimising the world’s critical assets.
2.2 Why this Project Matters/Objectives
In order for Wood PLC to harness optimisation of their practices, category and contract management is essential for consideration and improvement. Hence, in this integrative report, it is expected that the outcome of this report would be used to develop appropriate procurement strategy adoption. By focusing on Information Technology (IT) spend category, the best practice in project management and cost management, the best practice is achieved. In order to identify the necessity for change, various change management approaches reviewed in CIPS Models 4 and 5 could be considered. As illustrated in figure 2, the different factors influencing this include environment, market demands, business imperative, organisations and cultural strategies;
Figure 2:Category and Contract Management Change Aspects
Also, through a successfully embracing category and contract management change in Wood PLC, organisation interest is to transition to different cultural acceptance demands. This is supported by Balogun and Hope Model evidencing change strategy increase. Therefore, this strategy contribute to success in adapting and detailed evolution. This provide a good support and to alter practices gradually (see figure 3);
Figure 3:Change and Culture Acceptance Model Analysis
The relevance of change for Wood PLC organisation is guided by the view that they are characterised with a lot of efficiency and on-time decisions making. To achieve the requirements, it is critical identifying critical impact of generating revenue and cost management. This is at the same time making sure the most appropriate strategy from traditional sourcing incurred with costs savings and market dominance optimisation attained. This is also in line with what Obrien and Martin (2019) identify as the 5 Rights Procurement model summarised in figure 4. This influence Wood PLC capacity for improving overall stakeholders engagement with the best suppliers of the IT category being involved. The factors of interest here include compatibility, credibility, reliability and potential requirement for embracing on innovativeness and to grow. This is at the same time appreciating need for an increase in commitment for achieving sustainable relationships.
Figure 4:5 Rights of Procurement
3.0 Requirements to initiate and prepare introduction of category management process
The rationale of introducing category management for Wood PLC organisation is guided by the view that there exist varying items sourced differently on various timelines and different conditions. To recognise the demands for initiating and preparing introduction of category management strategy, the internal and external factors would need to be put into account.
For external factors, Shameen et al. (2018), the category and contract management are guided by necessity for embracing modern technology to ensure relevant change embrace. By using the STEEPLED analysis, it is important successfully evaluating macro-environment factors which lead to direct impact to promote and influence on Wood PLC operations (Georgiadou et al., 2019) as illustrated in table 1;
Table 1:Wood PLC STEEPLED Analysis Summary
Additionally, by applying the internal analysis, it is important to adopt SWOT Analysis (Shameem et al., 2018) prioritising on different strengths and weaknesses (internal factors) and opportunities and threats (external factors) prioritised. These factors are;
Strengths- This entail existence of different standards, support and internal-based policies in Wood PLC contract category and contract management. By investing in areas of iSourcing, Wood PLC organisation implement detailed reports systems, plans, efficiently and effectively.
Weaknesses- Relying on traditional sourcing strategies limit effectiveness of contract and category management. The category managers for different construction spend categories have a role to play in implementing contract management despite lacking detailed appreciation and aware of effectiveness of contract management. In Wood Plc, they do not possess sufficient background information legally to implement contracts management. The various weak areas include;
- Delay in contract implementation with projects delays and business costs incurred
- Reduced level of success in negotiations and reworking of entire supplier terms and conditions
- Compliance with challenges and hindrance of management inclusion in category management
- Ineffective in approval and workflow management
Opportunities- To guarantee a successful modernisation of contract and category management approach, Wood Plc is supposed to harness an integrated PCT system in their practice areas
Threats- Many competing organisation are providing timely consultancy services hence failing in providing on-time and expectations in costs management.
In line with the findings in PESTLE and SWOT analysis, the contract and category management is important to pursue a common-based practice for similar services. This is with the different drivers and suppliers inclusion having positive implication. The category management is essential for initiating different factors for appropriate services sourcing and to accrue on good image evidenced in the procurement spend area. The outcome of this is the organisation capitalising on economies of scale where discount costs and aggregating supply arrangement for managing entire transactions. In line with CIPS (20220, category management style is relevant for Wood Plc identifying, preparing, delivering and improving entire practices as illustrated in figure 5;
Figure 5:Key Considerations in Category Management Cycle
4.0 Strategic and Conventional Sourcing Processes and role in Category Management
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