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Solution
Selected Title:
Accessing the Overarching Process and Approach to SRM within Oxy Organisation and Making Recommendation for Improvement within Implementation Plan
Table of Contents
1.2 Project Scope/Rationale. 6
1.3 External Environment Analysis. 7
2.1 Oxy Organisation Background. 8
2.2 Why this Project Matters/Objectives. 10
2.3 Oxy Organisation and Line Pipe Category Spend. 12
3.1 Background of Oxy Organisation Improvement of SRM.. 15
3.2 Improvement of SRM operations in Oxy Organisation. 18
3.2.2 Kraljic Matrix Analysis. 20
4.2.1 Stakeholders Analysis and Management 26
4.2.2 SRM Improvement in Oxy Organisation PS&M.. 28
4.2.3 Costs Management and Forecast in demand for improved SRM in Oxy organisation. 30
4.2.4 Development of SRM Approach in Oxy Organisation. 32
5.0 Analysis, Interpretations and Conclusions. 34
5.2 Costs Management and Forecast in demand for improved SRM in Oxy organisation. 37
5.3 Automation/ Technology Investments in SRM Improvement for Oxy Organisation PS&M.. 39
5.4 Development of SRM Approach in Oxy Organisation. 41
6.0 Conclusion and Recommendations. 47
Figure 1:SRM impact on Oxy Procurement Cycle.. 6
Figure 3:Summary of Oxy Organisation Business Portfolio.. 10
Figure 4:Summary of Oxy Organisation Business Portfolio.. 11
Figure 5:Change Management and Categories. 12
Figure 6:Oxy Oman Balogun and Hope model Components. 13
Figure 7:Oxy Organisation 5 Rights of Procurement Model 14
Figure 8:Example of Matrix Structure used. 15
Figure 9:Category Management and Components. 16
Figure 10:SRM improvement areas and stages. 17
Figure 11:Product Lifecycle Analysis. 18
Figure 12:BCG Matrix Analysis Summary. 21
Figure 13:Kraljic Matrix Analysis. 23
Figure 14:Classification of the different Risks. 24
Figure 15:Saunders’ Research Onion. 27
Figure 16:Challenges of successful SRM Improvement. 30
Figure 17:Requirements of improvements of SRM in Oxy Organisation.. 31
Figure 18:Demand for an efficient and optimised PS&M in Oxy SRM… 32
Figure 19:SRM Improvements through costs management and improvements. 33
Figure 20:Barriers of success in SRM… 34
Figure 21:Possible technologies for improving SRM in Oxy Organisation. 35
Figure 22:Successful Stakeholders Mapping. 37
Figure 23:Mendelow Matrix Analysis. 38
Figure 24:3P’s of Supply chain management sustainability. 42
Figure 25:Porter’s 5 Forces Analysis. 43
Figure 26:John Kotter’s 8 Phases of Change. 44
Figure 27:John Kotter’s 8 Phases of Change. 45
Figure 28:Different team roles in line with Belbin Model. 47
Figure 29:WBS adopted in the current project. 48
Table 1:Product Lifecycle Analysis. 20
Table 2:Summary of the contents of risk register. 25
Table 3:Summary of Stakeholders. 29
Table 4:STEEPLE Analysis for Oxy Organisation.. 40
Table 5:A summary of the Project Gantt Chart. 47
1.0 Introduction
1.1 Project Title
Supplier relationship management (SRM) is defined as the process followed in the management and maintenance of the relationship between a buyer and a supplier (CIPS, 2024). It is form of relationship existing is dependent on the criticality of goods and services sourced and supplied into the organisation. Over the years, Lasrado et al. (2023) note that the SRM has gained immense popularity among academicians and procurement professionals. The popularity is owing to the ability of effective SRM enhancing uptake of technology in procurement, efficiency in procurement and ease of access to the cycle of procurement. By quantifying the influence of SRM, Lasrado et al. (2023) noted that 80% of organisations with appropriate SRM gain from lowered costs in their supply chain, freed cashflow and improved performance through effective decision making (financially). For the success of SRM, different procurement and supply management (PS&M) are increasingly relying on automation and embrace of modern technologies. This mange the need for having a strategic supply chain function as opposed to being transactional player. These findings are affirmed by Faruquee et al. (2021) noting that these strategies have direct impact on developing strong and resilient supply chain networks. This demonstrate that the supply chains in the organisation is. In a position of managing shocks such as delaying in supply chain implementation and costs fluctuations.
Albeit of the efforts Oxy has put in the verge of enhancing their SRM, there prevail issues affecting success as part of their supply chain network/cycle. These issues include and not limited to successful management of global suppliers from various cultures and geographical orientation, streamlined catalogues, system integration challenging hence errors and ineffective involvement of all their stakeholders as part of their SRM. The outcomes of this has been ability to maximise value of the negotiations pursued. The operations of Oxy which influence the appropriateness of the SRM is informed by the CIPS Modules guidance on the process flow (see illustration in the following);
Figure 1:SRM impact on Oxy Procurement Cycle
Source: Summarised from CIPS Module Notes
Additionally, considering figure 1 phases of procurement cycle, Oxy priority is demand of different materials and replenishment of requisition approach. This target suppliers delivery, repetitive tasks eliminated from the cycle by automating their operations and real-time signalling in delivery. As a best strategy in SRM improvement, Veile et al. (2021) note that through embrace of Industry 4.0, it becomes possible to reduce costs of operations with upto 15%. To optimise suppliers relationships, efficient SRM would lead to leverage on a strategic practice as opposed to being transactional. This is in areas of spend analysis, spend areas categorisation and proposals developed.
Through success of SRM in Oxy organisation, the gains would include;
- Enhanced Suppliers Performance- With an upward of 50,000 orders annually with 40% valued more than 5 million Omanis and 50% 20 Million Omanis, failure to timely settle invoices, demand for high quality materials and minimising effects would be considered.
- Cost savings- With improved SRM, it is possible for Oxy to negotiate appropriate terms, lower procurement costs (5 Rights not currently achieved) hence working below targets and lead times delivery reduced and achieving economies of scale.
- Increased efficiency- improved and streamlined SRM improve operational efficiency, reducing wastes in administration process for SRM (25% of entire suppliers pay delayed)
- Risk mitigation- this include identification of risks linked with suppliers such as dissatisfaction, financial instability and geopolitical challenges
With the identified areas of improvement/success, Oxy organisation is working on different strategies for improving their SRM. The rationale of this is that streamlining and integrating the entire SRM would manage the entire intricacies of supply chain with disruptions reduced in their operations. In overall, efficiency optimisation, errors reduction and enhancing seamless and responsive PS&M in their procurement cycle.
1.2 Project Scope/Rationale
In the Oman economy, Oxy organisation operate as largest oil producer having an upward of 6 million gross acres (higher than 24,000 gross square kilometre). This is while contributing to 10% of the entire Oman $114 Billion as at 2022 (Oxy, 2024). To manage this broad scope of operations, the organisation work in collaboration with different partners for delivery of customised supply chain networks for their clients which include value addition and facilities for suitable achievement of their set goals. The current strategy of the organisation include embrace of advanced technologies, in-depth geological knowledge accrued by experience leading to immense field discoveries and approach to exploration. Considering this broad scope of their operations both onshore and offshore, efficient SRM is core for the organisation success. Further, for a successful transitioning towards people centric operations, Planet and Profit, improvement of SRM is essential. For instance, through automation of their relations, improved costs management, efficiencies, suppliers performance and risk management would be achieved optimising organisation benefits.
Hence, in line with the identified scope of Oxy operations, in this project, the focus is on evaluating the SRM within Oxy and recommend best practice in improvement. The areas of focus would be how improvement of their SRM would enhance controlling and improving international suppliers spend, streamlined catalogues of their immense spend areas, management of scarce resources and to modernise their manual operations with errors reduced. Also, as part of this report, an evaluation of the best strategy in enhancing supply process approval and savings for value maximisation in negotiation plan would be established.
1.3 External Environment Analysis
The need to conduct an external environment scanning is identifying issues which impact PS&M and initiatives put in place in the organisation (Graham, 2020). Considering Oxy organisation for example, having more than 30,000 contracts, external environment is core as improving SRM would influence stakeholders. The priority would be to identify best practice in success in VUCA World (Volatility, uncertainty, complexity and ambiguity). Hence, insights from external analysis mean leveraging on technology for easier coordination of operations. This is while identifying scope of support by different stakeholders (category management, coaches, suppliers relationship specialist and technology experts).
The most appropriate strategy in Oxy improvement of their SRM is prioritising on spend analytics, e-Sourcing strategies, categories management and streamlining their entire PS&M. The Oxy current strategic agenda is ensuring Oman is competitive in the entire Middle East in terms of the oil and gas products produced and scope of scale of operations. The SRM improvement would similarly need to embrace the 8 Wastes of Lean Model which guide necessity for eliminating wastes in such relations. These are summarised in the following;
Source: Hartanti e al. (2021)
Through an improved SRM, the different wastes from defects, transportation, inventory, motion and non-utilised talents would be successfully managed. The outcome of this would include reducing the waiting times hence holistic clients satisfaction. The best strategy entail embracing project management strategies with the entire phases success to source essential products and services.
2.0 Background
2.1 Oxy Organisation Background
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