-50%
Solution
Brief Market Analysis
Internationally, the overall revenues for Third Party Logistics (3PL) has a forecast of reaching upto US$1.21tn as by year 2024 (Statista, 2024a). This is with an expected annual growth rate (CAGR 2024-2028) of 2.39% hence projected market volume increase for US$1.44tn by the year 2028. In KSA where Saudi Aramco has based their operation, in 2024, the market size is approximately $13.70 billion and expected to grow by 2029 to $18.67bn. With the current resumption of business operations post economic downturn, there has been an increase in the demand for oil and gas products inform on the need for Saudi Aramco to continue investing in 3PL. As evidenced in Ahmad and Zhang (2020), global oil and gas demands are expected to increase with 6% in the years 2022 and 2028 to be 105.7 Million Barrels daily. In sourcing for the 3PL, Saudi Aramco need to ensure that they work on cost savings to balance their income with value used in sourcing. In order to inform on the market analysis and size of the market, different models can be use.
SWOT Analysis
This is a tool which is used to identify strengths, weaknesses, opportunities and threats (CIPS, 2024c). For Saudi Aramco case, their SWOT analysis include;
Source: Summarised from CIPS Module Notes
| Strengths
· Strategic PS&M · Diverse operations in onshore and offshore markets · Leading in the oil and gas industry |
Weaknesses
· 3PL are normally long-term impacting on management of Saudi Aramco operations · Sourcing strategy does not integrate the use of modern technologies · Resources budgeted are not sufficient |
| Opportunities
· Oil and gas products and services demand on the rise affecting their provision · Technology offerings limited |
Threats
· Immense competition in oil and gas sector · Economic slow-down Post COVID-19 · Shifting economic trends |
To summarise the table 3 SWOT analysis trends, it is clear that Saudi Aramco leverage on existing opportunities to come up with strategic PS&M. At 60% dominance in KSA oil and gas sector, this also provides the organisation with an opportunity of improving their operations. Conversely, with 3PL particularly in logistics and warehousing being costly, they are required to be pursued for a long term. This impact directly on the stiff competition in the market as it is oligopolistic. There is a need for budgetary review in 3PL and increase priority in different stakeholders interests.
STEEPLED Analysis
This represent planning methodology for discovering, evaluating, organising and tracking external risks (CIPS, 2023). To understand impact of the suppliers buyers and end-users, STEEPLED Analysis can be carried out.
Table 5:STEEPLED Analysis for Saudi Aramco
Source: Summarised from (CIPS, 2023)
| STEEPLED Analysis factors | Explanation |
| Social | · Increased population informing demand for oil and gas products
|
| Technological | · Increased technology offer immense opportunities for leverage on 3PL
· Technology make it easier reaching out to third-party |
| Economic | · Need for cost-savings informing 3PL sourcing
· Oil and gas products increased demand |
| Environmental | · Saudi Aramco operates sustainably with multiple CSR initiatives |
| Political | · Overall MENA region politics impacting 3PL sourcing and operationalisation
· KSA having relatively stable political relations |
| Legislative | · Different regulators in KSA oil and gas sector influencing logistics |
| Ethical | · Ethics must be practiced in engaging all involved stakeholders holistically |
| Demographic | · Global population increasing hence demand for oil and gas in KSA |
In summary, from the STEEPLED analysis, it is arguable that it is positive for Saudi Aramco and their end-users in sourcing for oil and gas products. There is however challenges with economy, population growth inform need to review the scope of their engagement with stakeholders. This is while initiating relevant strategies for embrace in technology.
Summary of the Position and Placement in the Market
As identified earlier, 3PL in Saudi Aramco is broad and include subcategories such as transportation, warehouse storage and systemwide correction of services with a capacity to handle supply chain management (Reza et al., 2020). Depending on the end-users being engaged, 3PL is further categorised to 3PL service developers, 3PL Customer adapters, and customer developers. For Saudi Aramco 3PL, a summary of the 3PL suppliers include;
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