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(Solution) CIPS Module 3 Sourcing Essentials (PSE)

In this report, the area of focus is on ROSHN’s procurement and vendor management strategies in alignment with Saudi Arabia’s Vision 2030. ROSHN, a leading real estate development company, is committed to building sustainable communities and increasing homeownership within the Kingdom. The company manages its entire development pipeline, from land acquisition to home construction and distribution, ensuring control over quality and costs. One of ROSHN’s key objectives is to achieve 70% homeownership by 2030, while promoting employment and economic growth in Saudi Arabia. The Procurement and Commercial functions at ROSHN play a critical role in achieving these goals. The Vendor Management Team (VMT) employs various strategic tools, such as Porter’s Five Forces and PESTLE Analysis, to evaluate suppliers and market conditions. These tools help ROSHN in negotiating better terms, securing reliable suppliers, and maintaining project timelines. Furthermore, ROSHN’s procurement cycle is structured to ensure compliance, cost efficiency, and project quality through a Pre-Qualification Questionnaire (PQQ) and supplier registration processes. ROSHN’s sourcing strategies, including sole, single, dual, and multiple sourcing, allow the company to manage supply risks while maintaining competitive pricing and consistent quality. The company also utilizes the Kraljic Matrix to categorize suppliers based on their strategic importance and supply risks, ensuring that critical infrastructure needs are met.

The conclusions generated lead to development of the following recommendations;

  • Streamline the PQQ process to reduce onboarding time and ensure suppliers meet compliance and quality standards more efficiently.
  • Cultivate long-term relationships with key suppliers for critical infrastructure projects to ensure timely and high-quality delivery.
  • Use data analytics to enhance supplier evaluation, improving decision-making accuracy and reducing supply chain risks.
  • Increase the use of eSourcing tools to boost competition among suppliers, potentially reducing procurement costs.
  • Regularly run mini-competitions to ensure competitive pricing and maintain high service quality.

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Description

Solution

Table of Contents

1.0 Introduction. 3

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

3.0 MAIN BODY. 9

3.1 Sourcing Approaches (Advantages & Disadvantages) and Application to ROSHN’s Category of Spend. 9

3.1.1 Sole Sourcing. 9

3.1.2 Single Sourcing. 9

3.1.3 Dual Sourcing. 10

3.1.4 Multiple Sourcing. 10

3.2 Category Analysis Applied to Sourcing Approach. 10

3.2.1 Kraljic Matrix. 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

4.0 Conclusion. 19

5.0 Recommendations. 19

References. 21

 

Figure 1:ROSH areas of operations 4

Figure 2:Poter’s Five Model 6

Figure 3:Supplier Registration details 8

Figure 4:Procurement and Supply Cycle. 9

Figure 5:Vendor Management 10

Figure 6:Kraljic Matrix 12

Figure 7:ITT process 13

Figure 8:Stages of Procurement Process 14

Figure 9:Supplier Evaluation Criteria. 17

Figure 10:Carter’s 10C’s model 18

Table 1:PESTLE Analysis 7

Table 2:Weighted Checklist 17

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:

Figure 2:Poter’s Five Model

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.

Table 1:PESTLE Analysis

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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