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Solution
Executive Summary
In this assessment, different sourcing approaches have been evaluated. This is through a focus on ADNOC organisation in the Technology category of spend. The rationale of this is that since the emergence of COVID-19 pandemic, ADNOC has been putting efforts to operate in the new normal. One of these strategies is offering remote/flexible working for their onshore and offshore employees. To evaluate the different sourcing approaches, other spend categories such as uniforms, logistics and vehicles has been compared. As part of evaluation, various tools and techniques as guided by CIPS Module notes have been used. These are Kraljic analysis, Stakeholders analysis, SWOT, and PESTLE analysis. Through the application of these tools, various insights and information have been obtained which offer an appropriate guidance of the best practice in sourcing for the identified spend category. The evaluated sourcing approaches include and not limited to the single, sole, dual and multiple sourcing approaches.
Further, by reference on Carter’s 10Cs, supplier appraisal has been generated for ADNOC organisation. In particular, the multiple sourcing is best and appropriate as it inform on achievement of immense competitiveness in sourcing the identified category of spend. Nevertheless, from the evaluation, it has been established the need to transition towards the use of strategic sourcing process to promote their operations both onshore and offshore. This is while assuming leadership of the most successful organisation in United Arabs Emirates (UAE).
From the findings obtained in this research, there are a set of recommendations which can be suggested which are;
- To modernise sourcing strategy by use of technologies in different phases of product lifecycle
- To set policies for procurement department for technology embrace
- To transition to strategic sourcing considering existing different capabilities
- Based on spend category, pursue a unique approach rather than having a clearly identified approach for all their spend categories
Table of Contents
1.1 Abu Dhabi National Oil Company Background. 3
2.0 Selected Category of Spend and Positioning. 3
2.2 Business Hierarchy of Needs. 7
3.0 Stakeholders Analysis and Sourcing Strategy. 8
3.1 Stakeholder Analysis through Mendelow Matrix. 8
3.2 Peter Block Grid Leadership Method. 9
6.0 Conclusions and Recommendations. 16
Figure 1:ADNOC Spend Categories of IT. 5
Figure 2:Areas of IT use in ADNOC Remote/flexible working. 5
Figure 3:Summary of ADNOC Kraljic Matrix Analysis. 7
Figure 4:Sourcing Approaches Link with Maslow Hierarchy of Needs. 8
Figure 5:Stakeholder Analysis by use of Mendelow.. 9
Figure 6:Peter Block Stakeholder Analysis Approaches 11
Figure 8:Cater’s 10C’s Supplier Appraisal Method. 14
Figure 9:Using 3Ps requirements for suppliers. 16
Figure 10:Lean-agile Procurement in Sourcing. 17
1.0 Introduction
1.1 Abu Dhabi National Oil Company Background
Abu Dhabi National Oil Company (ADNOC) is identified as assuming global leadership in energy producer and as such a main driver of growth and diversification of Abu Dhabi economy (ADNOC, 2022). The organisation enjoys a production capacity of approximately 4 million barrels of oil daily and approximately 11.5 billion cubic feet of natural gas daily while operating in the entire hydrocarbon value chain. Since 1972, the organisation has been mandated to promote the UAE’s energy resources for achieving their demand of ever-changing energy market and eventually the country transformation. From the time the organisation was founded, it has consistently been operating for honouring the legacy of UAE’s founding father through an embrace of creative thinking, challenging conception, and strength for achievement of excellence. Hence, to achieve all these aims, the organisation is expected to consistently put in place innovative ways for maximisation of value of resources while leveraging om competitive advantage. One of this include the In-Country Value. Through the embrace of this, the organisation achieve the commitment of sustaining positive implication to all suppliers in Abu Dhabi economy.
2.0 Selected Category of Spend and Positioning
In ADNOC, as illustrated in figure 1, the Information Technology (IT) spend categories is comprised of different sub-categories.
Figure 1:ADNOC Spend Categories of IT
The most popular rationale of ADNOC sourcing of the IT is informed by what ADNOC (2022a) identify as majority of their non-operational employees working remotely. This transition to virtual team-based working is often a significant challenge often and hence need to integrate different technological tools for their success. As summarised in figure 2, in this spend category, the IT plays the role of achieving the identified areas.
Figure 2:Areas of IT use in ADNOC Remote/flexible working
Hence, considering the identified personalised approach of sourcing which need to be adopted, the best practice can be achieved by directly controlling the sourcing process. As evidenced in De Silva and Rossi (2018) the importance of this is to pursue the appropriate sourcing approaches with a direct control to the PS&M strategy.
Hence, in regard to ADNO organisation best sourcing approach, spend categories which are different can be used to control the supply and procurement (Bienhaus & Haddud, 2018). This is guided by their distinct needs, the demand and supply chain complexities. To evaluate the relevant of the category of spend, a set of tools are applicable.
2.1 Kraljic Matrix Analysis
The importance of the tool is to note on the various risks incurred in the process of sourcing materials from various suppliers as a core area of their supply chain. According to findings in Patrucco et al. (2018), the relevance of this is to guide classifying the different suppliers of the various products and services in supply chain weakness, support development process while ensuring supply disruption is managed (see figure 3);
Figure 3:Summary of ADNOC Kraljic Matrix Analysis
For figure 2 summary, considering ADNOC operations, the most appropriate sourcing strategy would include;
Leverage- Considering this spend category, it is defined with a lot of competition in sourcing process. The multiple suppliers are in place to benefit of ADNOC and their end users. This inform grouping IT in this area. For ADNOC, the mandate is to ensure they take full control of the entire practice. Costs overruns are appropriately controlled with limited costs used tom implement this process. After the prevalence of the pandemic, Assaad and El-adaway (2021) argue that entities have been facing a challenge to make the exposure of their staff, implementation process and ensuring hierarchical control to manage the exposure is done.
Critical Items- For ADNOC onshore and offshore operations, as a tradition, they use equipment and other machineries. In this regard, they are grouped in this category as they are defined with immense risks to users/operators and suppliers. Therefore, single suppliers re engaged contrary to sole or dual sourcing. For ADNOC PS&M, they ensure they improve suppliers relationships holistically. Specifically, this is relevant in locked-in sole and dual sourcing (Alcalde & Dahm, 2019).
Bottleneck Items- For ADNOC logistics and vehicles spend, since it is facilitative of their operations, it is defined by limited profitability. This is despite of their supply chain characterised by a lot of risks. Hence, the most appropriate sourcing would need to ensure that negative issues contributed to inappropriate positioning are managed. According to Chowdhury et al. (2020) the importance of this is to note the suppliers engaged in the PS&M practices of the entity.
Non-Critical Items– As evidenced in Kusumastuti (2021) this category is inclusive of multiple suppliers who are involved and provide the products of demand with alternatives offered. For ADNOC practice, in their identified spend category, the best practice include use of single sourcing. This is while appropriately using the technologies to facilitate iSourcing approach with e-tendering and RFQs sourced online.
2.2 Business Hierarchy of Needs
As part of identifying the best sourcing approach, it is relevant to adopt business hierarchy of needs (Namdar et al., 2018). This is by prioritising on aspects of the business needs, wants which are appropriate. For ADNOC IT spend category, by ensuring sufficient supply is in place, this contribute to increased demand. This is while appropriately managing supply process risks as illustrated in figure 3;
Figure 4:Sourcing Approaches Link with Maslow Hierarchy of Needs
For ADNOC sourcing strategy, they ensure attainment of business needs prioritising on reflecting on Maslow Hierarchy Needs. In the hierarchy, the priority is to promote the suppliers and management influencing risks and improving quality. Associating the business hierarchy and the Kraljic analysis, it is worth noting ADNOC technology (IT sourcing) is most appropriate when multiple suppliers are involved. As evidenced in Taherdoost and Brard (2019) a detailed focus on sourcing ensure buying power is leveraged with costs lowered and set sustainable contracts amongst the engaged suppliers. To source flexible working IT, ADNOC would have to engage local support contrary to involvement of international providers in line with ICV policy. This can be the practice in different subsidiaries with appropriate quality offered for the organisation.
3.0 Stakeholders Analysis and Sourcing Strategy
3.1 Stakeholder Analysis through Mendelow Matrix
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