-67%
Solution
Executive Summary
This assessment has focused on producing a supply chain for a category of spend in Emirates Transport Company (ETC). The importance of evaluating this is informed by the view that supply chain mapping is important to evidence relationship of different stakeholders in the supply chain. Further, successful supply chain mapping is important to ensure ETC harnessing on ethical values, risks identification, contractual management, lowered costs, and distribution of power. The category of spend selected is Tyres which are used in maintenance of the school transportation.
By focusing on the tyres spend category by ETC, is inclusive of several tiers. These tiers put into account of different factors including tyres raw materials sources, manufacturing, assembly, warehouse and goods return if they fail to meet contract terms and conditions. The factors identified to influence strengths and weaknesses of the supply chain include relations with stakeholders, environment scanning and holistic decision making. Time factor is similarly instrumental in making sure that the tyres are offered in a timely and in line with ETC preferences.
In this assessment analysis, various tools have been employed. These are Klarjic Matrix, Porter’s 5 Forces analysis, SWOT and supplier positioning among others. As part of successful evaluation of the disadvantages and disadvantages, the supply chain factors in place include retail, wholesale, suppliers and distributors. This has a collaborative implication on successful practices. Also, in the chain, for the ETC tyres procurement, the procurement and supply department is similarly holistically engaged. This is with a positive implication on ETC performance in the schools vehicles maintenance.
A set of recommendations have been noted relevant for ETC improving their supply chain. They include;
- The supply chain map need to integrate data management to improve stakeholders relations
- Environmental scanning for aiding successful decision making strategy
- Building a strong resilience for unprecedented issues and problems
- Capacity development among the procurement and supply management (PS&M) department for promoting their skills and competencies of managing supply chain
- Solving the issues linked with force majeure interrupting their supply chain by detailing the options in their contracts terms and condition
Table of Contents
1.1 Emirates Transport Company (ETC) Background 4
1.3 Selected Spend Category. 6
2.0 Supply Chain Map and Analysis. 7
2.1 Supply Chain Mapping for Tyers Spend Category 7
3.0 Analysis of the Supply Chain. 11
3.1 Analysis of Stakeholders. 11
3.2 Porter’s Value Chain in terms of Visibility and Supply Chain Ownership 12
3.3 Kraljic Matrix Analysis and Positioning. 13
4.0 Supply Chain Strengths and Weaknesses 15
4.1 Visibility of Supply Chain. 15
4.2 Costs of Supply Chains. 15
5.0 Impact to Business Unit and Entire ETC Practices 16
6.0 Conclusions and Recommendations 17
Figure 1:Procurement Department in Supply Chain Management in ETC. 6
Figure 2:Largest Tyers manufacturers globally. 8
Figure 3:Supply chain of ETC Tyres procurement and sourcing. 9
Figure 4:Stakeholders Analysis. 11
Figure 5:Porter’s Value Chain. 12
Figure 6:Kraljic Matrix Analysis. 14
Figure 7:ETC Maintenance unit and Broder Organisation Impacts 16
1.0 Introduction
In procurement and Supply Chain Management (PS&M) and specifically supply chain management, mapping of supply chain is instrumental. As noted in CIPS (2016) supply chain mapping is basically a process used to document the flow of goods and services in the entire chain. For an organisation to operate a successful supply chain, there is a need to follow a specified process and main stages. The stages start from the manufacturing of raw materials of a product being sourced, production and delivery. According to CIPS (2021) this ensures that a detailed networking amongst the different suppliers is established serving as a link of the organisation and the product or service being procured. This is important to also identify prevalent opportunities with risks management achieved.
1.1 Emirates Transport Company (ETC) Background
Emirates Transport Company (ETC) is identified as a government organisation which has been established under the Federal Law No. (17) in Year 1981 previously known as Emirates General Transport and Services Corporation. As evidenced in Emirates Transport (2021), they are mandated to organise, manage and supervise transport and maintenance services and linked to business. This is for the benefit of Federal and Local government bodies and the companies in the private sector. Over the years, ETC has significantly diversified their operations in the past 38-years of operations. By focusing on their clients, both establishments and individuals, an array of services which entail and not limited to transportation, vehicle leasing and auto maintenance are pursued. The organisation majorly operates in provision of the school transport sector where they currently engage more than 30,000 employees as at 2019. This is with 40,000 diverse vehicles from different education institutions being handled inclusive of 41 working sites.
1.2 ETC PS&M Operations
The PS&M department in ETC is core for the success of the organisation as a Support Services Division. As evidenced in Emirates Transport (2021), it is used in policy development, procedural activities, regulations and programs for meeting entire needs of the organisation. This is for achieving strategic objectives and maximizing value for money in completing integrity and responsibilities. The PS&M department and all their staff ensure they are adhering to best practice in purchase and supply processes, pursuing an open, fairness in competitiveness for all people to maintain an ethical fair conduct in their entire purchase transactions. For success in the organisation operations, they ensure that they initiate a supplier-related database for constantly updating it in annual basis (Emirates Transport, 2021). The rationale of this is ensuring that their suppliers register themselves in the portal with real-time information being used. This is in invoicing, consolidation and globalized view of activities, capacity of altering any information, supporting and help system and track of any response or questions.
For ETC, their procurement department is centralised as identified in CIPS (2021a) as hierarchical as illustrated in figure 1. This is with three tiers which ensure success in their operations. The centralised department is used in serving the entire organisation.
Figure 1:Procurement Department in Supply Chain Management in ETC
As illustrated in figure 1; procurement department is inclusive of three distinct areas all headed by a P&C director. They are technical employees, senior managers and the sourcing unit senior manager which also include capacity development. The different are core in establishing flawless procurement and supply chain strategy (Wiengarten et al.,2019). This is in alignment with various aims and objectives including Green supply chain for harnessing sustainability in supply chain and practices.
1.3 Selected Spend Category
In this assessment, tyres spend category has been selected. The rationale of this is informed by the author positioning as ensuring that all the schools/institutions vehicles which need maintenance have tyres ready for their use. This is in the 42 sites where the organisation has active garages mandated with the role of maintaining the vehicles. In their practice in the transport sector in UAE, ETC is actively involved in ensuring that durability of the sourced tyres and their sustainable use by their different organisation is achieved. This is while ensuring they maintain the UAE government requirements of cost intensiveness and quality requirements of the tyres. For instance, after the COVID-19 pandemic which had lead to grounding of the schools and other institutions vehicles, tyres have been majorly work-out leading to issues with quality and standardisation. Owing to the resumption of schools and other business activities, the demand for tyres has surged and all the vehicles are demanding to be fitted with new tyres. Also, as part of the identified spend category, ETC engages in a practice known as retreading. For instance, Emirates Transport (2020) report note that in 2020, the organisation renewed approximately 4,208 tyres of different sizes from the start of the year. Hence, owing to the criticality of this spend category, having an appropriate supply chain is essential.
2.0 Supply Chain Map and Analysis
In line with the CIPS guidance notes, there are a set of factors prioritised in supply chain mapping. They are risks management, visibility and structuring an appropriate supply map (CIPS Notes, 2021). The different risks management in a supply chain is initiated by ensuring all suppliers understanding in different tiers. The rationale of this is for sustainability of brand and name. Harnessing sustainability entail sufficient information being sourced on the suppliers and to categorise them in line with their accessibility. The requirement is developing suppliers database and highlighting the most fitting suppliers under all levels. The map development ensures achievement of a more standard approach with suppliers information managed (CIPS, 2019).
2.1 Supply Chain Mapping for Tyers Spend Category
For the tyres procurement, their amount is dependent on the number of vehicles maintained and handled at any specific time. Currently, in their 41 maintainance sites, they handles upto 1000 at any particular time. Hence, they ensure the number of tyres procured is upward of 10,000. There are three tiers which define ETC sourcing of tyres is comprised of three phases. For first phase, the tyres to be raw materials are identified as ETC requires specified materials for their used tyres. Also, owing to the different manufacturers of the tyres (Good year $12.32 billion, Michelin $24.82 billion, Bridgestone $27.49 billion and continental $12.32 billion) Statista (2021) as illustrated in figure 3;
Figure 2:Largest Tyers manufacturers globally
Source: Summarised from Statista (2021)
Further, as illustrated in figure 3 supply chain, it is important identifying the Original Equipment Manufacturers (OEM) in terms of sourced products and services. The rationale of this is as identified in Larsen et al. (2018) to entail making sure they are leveraging on low commercial relations for managing and prioritising on-time procurement approach.
For ETC practice, through an implementation of a tiered supply chain, there is a possibility of an organisation creating a long-term involvement by the different suppliers. Since ETC engages the OEM indirectly, the suppliers are engaged to harness the direct supply chain implementation.
Figure 3:Supply chain of ETC Tyres procurement and sourcing
As illustrated in figure 3 supply chain, owing to ETC operations, their nationwide locations provide their clients with multiple options to harness services delivery. From their head of Corporation’s head office in Dubai (Umm Ramool area), they all prioritise on achieving happiness to all their clients and supporting both economic and social development in the UAE. Hence, in sourcing tyres, to guarantee success they follow a matrix procurement and supply chain replicated to all their Dubai offices. The various roles are;
Customers (End-Users)– The schools and other government institutions whose vehicles are services in ETC have their individual technical requirements. In tier 1, entire specifications are noted and identified hence easing tires fitting.
PS&M– Representing the most appropriate strategy, this department is placed well and include tendering strategies, agreeing, support of contract implementation, coordinating and capacity development of the employees currently lacking.
Accountants/Budget Approval teams– In ETC, accounts department is a complete department which ensure they promote call-off orders by their UAE government institutions.
Health Safety Environment– The OEMs are instrumental since they determine the safety nature of the tires and also by embrace of Green procurement requirements, ETC is successful in its practices specifically in today COVID-19 pandemic.
UAE Government and ISO certified– ETC primarily servicing and maintaining the government instituitiosn vehicles means that they must be adhering to the Legal Tyre Tread Depth policy (Pitstoparabia.com, 2022) which require all vehicles tires to embrace the Emirates Standardisation and Metrology Authority (Esma).
Hence, for the figure 3 supply chain, the various tiers can be categorised into the following;
1st tier- Services Provision- In sourcing for tires, there are services which need to be involved such as fitting, warranty or even after-sale services. As such, they engage providers of the tyres who have their operating offices in UAE.
2nd Tier- Suppliers offering varying categories- Often, in sourcing for tyres particularly for their not so busy subsidiaries/workshops, they engage suppliers with an intention of cost-savings and less time being spent in the process of sourcing.
3rd Tier- OEM, tyres distributors and suppliers agents– For ETC tyres fitting, for the larger vehicles particular buses, they engage distributes directly or the OEMs for consistent standards evaluation.
For the first tier, the need to engage suppliers directly inform its structuring. As evidenced in Zhang, et al. (2018), the success interaction contribute to stability and success in managing inefficiency in the transport sector due to suppliers competition. Also, by embracing strategic sourcing strategy, ETC has managed to ensure that sustainable relationships with all their suppliers is harnessed for their common good.
Further , for the tier of supply chain which include the suppliers, ETC (buyer) and producers, it becomes easier integrating technology as part of the PS&M implementation. The outcome of this is their supply chain being holistic to manage any gap in between suppliers and expectations of the institutions or schools whose vehicles are maintained. Since the active workshops where ETC implements the maintainance services are increasing, they are initiating partnerships and joint ventures as part of their operations to harness success of implementing the second-tier supply chain. This success is guided by ETC engaging a detailed supply chain development as part of their PS&M roles.
3.0 Analysis of the Supply Chain
Please click the icon to access this assessment in full
