(Solution) CIPS Project Evaluating the Impact of Generative Artificial Intelligence (AI) on Procurement Activities in Oman LNG

Solution

Executive Summary

• Introduction
  • Project Title (Key Terms)

In the modern highly competitive business environment characterised with immense disruptions, investing in technology is critical for efficiency and management of cost overruns in procurement and supply activities. In Oman LNG organisation, this is important as the organisation is exploring more opportunities onshore and offshore to increase their oil and gas. By exploring new opportunities both onshore and offshore, the organisation has increased the number of suppliers and interested stakeholders in facilitating successful running of their operations. Hence, embracing modern technologies and innovation is essential for Oman LNG successful operations. Despite of Oman LNG investing in iSourcing platform which lists all their suppliers and provide a platform for their interactions, they are yet to invest on Generative Artificial Intelligence (AI) which is part of modern organisation industry 4.0 technology investment.  By investing in Generative AI, it is possible for Oman LNG to capitalise holistically on competitive advantage and the entire market dominance. This is by ensuring they source the appropriate quality, at the required time and place. For the current status of Oman LNG procurement activities, it is as shown in figure 1;

Figure 1: Phases of Procurement Process

As illustrated in figure 1 stages summary, through an embrace of Generative AI, it is possible for Oman LNG to develop categories and manage their spend areas. Also, to achieve transactional procurement and procure-to-pay initiatives, the focus is on material demand and replenishment of requisition approach for their suppliers engagement, elimination of repetition and triggering timely payments after delivery of their sourced goods and services. This represent the initial phase of determining whether they are using insourcing or outsourcing process.

Considering the costs management, embrace of technology such as generative AI in sourcing reduce the overall costs with more than 40% (Supply Chain, 2020). For optimising on operations, the generative AI infrastructure and applications lead to the organisation full transformation to become a service delivery mode. This is specifically in step 2 for commoditisation and suppliers spend analysis.

For the different activities listed in figure 1, embrace of technologies positively contribute to the entire practice being prompt, less costs incurred, smart-based and responding to all clients identified as organisation management partners. For Oman LNG organisation, albeit of their iSourcing technology, they lack a good system for pursuing a holistic spend analysis which can be relevant for aggregating, cleansing, classifying and analysis of PS&M data. In phase 3, scoring and assessing the performance ability of their suppliers, incurred costs, flexible nature and viable is instrumental for their successful operations. Considering these findings, this report is titled “Evaluating the Impact of Generative Artificial Intelligence (AI) on Procurement Activities in Oman LNG”. The outcome of this report findings would assist Oman LNG in successfully obtaining their different spend categories on a timely basis, in their right quality and quantity. The technology would integrate all the procurement activities listed in figure  4 culminating with negotiations and contract management.

By embracing generative AI, this would play the function of an e-gateway to commercial business practices through an inclusion of bidders, interactive scope and response for the tendering provided in Oman LNG. This system could provide an opportunity for securing, simplifying, pre-governing and efficiency in entity tendering management and using web-oriented tools identified.  The Generative AI as part of their eProcurement investment is appropriate for Oman LNG and different stakeholders to manage issues associated with access, delivery time, hardcopies and input and as such contract management costs. Therefore, there is a need for evaluation the scope ion which the technology embrace such as Generative AI is to lead to Oman LNG leveraging on competitive advantage and dominating oil and gas industry locally in Oman, regionally in Middle East and internationally.

• Scope of this Project

As noted in the title of this report, this report explore on the Generative AI in the different organisation procurement activities. The importance of this is for Oman LNG is guided by view that over the years, Oman LNG has been investing in integrating technologies as part of modernisation of their supply chain to ensure they are updated, modern and immense capabilities. Despite of Oman LNG having invested in iSourcing, the organisation has delayed investing in complex systems such as Generative AI as part initiating Industry 4.0 technology. Hence, by successfully implementing the Generative AI, the organisation would achieve in ability to leverage on competitive advantage and market dominance.  By successfully achieving the identified research scope, procurement approach dynamics would be put into account. The contract management in Oman LNG would be aligned with the external business environment players and suppliers analysed in-depth. The most appropriate option include modernising their procurement strategies would be pursued with appropriate recommendations offered. The Generative AI is appropriate in areas of software management, hardware, cloud and professional-based practices. The appropriate option available for Oman LNG include modernising their technology to gain in competition, streamlined operations and efficient contract management with their entire procurement approaches modernised.

• External Environment

In working on this project, the relevance of evaluating external environment in integration of Generative AI in sourcing process in Oman LNG organisation is important. This is in line with CIPS (2017) which identify VUCA (Volatile, Uncertainties, complex and ambiguous) as being critical for investing in future-best practice. The rationale of this is that the generative AI as part of technology inclusion in the process implementation Internationally, available reports evidence that most of contemporary entities have continuously been embracing spend analytics use, eSourcing managing of contracts and eProcurement such as eCatalogs and eInvoicing. Similarly, for the organisations which have managed to invest on digital technologies in their sourcing have been well placed for advancing their organisations strategic agenda. This similarly entail ability to position procurement teams hence increased operation value. The value is noticeable in how an organisation integrate product design, marketing approaches and sales, sustainable business practice, increase in market dominance and profitability.

For the different spend categories for Oman LNG for the purpose of integrating generative AI as part of their operations, external factors could be evaluated in regard to their influence on the need for change. The different factors which can be identified are in line with PESTLE factors of Macro-Environment with a direct impact or influence on change as summarised in table 1;

Table 1: Oman LNG PESTLE Analysis

• Background

2.1 Oman LNG Organisation Background

Please click the icon to access this assessment in full