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Solution
Table of Contents
1.1 Organisation Background. 4
2.0 Category of Spend and Positioning. 4
2.1 Strategic Positioning of Identified Spend Area. 5
2.2.1 Kraljic Matrix Analysis. 5
3.1 Identification of sourcing approaches. 7
3.1.1 Hierarchy of Business Need. 7
3.1. 2 Stakeholders Analysis. 8
3.1.3 Peter Block Grid Leadership. 10
3.2 Analysis of Sourcing Approaches. 11
4.0 Sourcing Appraisal Checklist. 13
4.1 Leasing Construction Materials Suppliers Evaluation. 13
5.0 Conclusion and Recommendations. 15
Figure 1:Kraljic Matrix Analysis Summary. 6
Figure 2:Maslow hierarchy of needs. 8
Figure 3:Mendelow Matrix Analysis. 9
Figure 4:Mendelow Matrix Analysis. 10
Figure 5:Mendelow Matrix Analysis. 14
1.0 Introduction
1.1 Organisation Background
Red Sea Global (RSG) was started in 2018 being a closed joint stock company fully owned by the Public Investment Fund (PIF) of Saudi Arabia (KSA) (Red Sea Global, 2023). The organisation was established for driving the development of Red Sea Project which is a regenerative tourism destination in Saudi Arabia’s West Coast . Also, the organisation is tasked with the responsibility of implementing one of three giga-projects under the leadership of HRH Crown Prince Mohammad bin Salman bin Abdulaziz Al- Saud in year 2017 (Red Sea Global, 2023). Being a cornerstone of Vision 2030, RSG is working in transforming the country, developing enormous economic opportunities for KSA citizens and promoting kingdom rich environment and cultural heritage. The mission of the organisation is being agents of change through partnership with international greatest minds for spearheading new innovations reimagining boundaries of the sector and coming up with better world for individuals and planet.
1.2 Purpose of Assessment
In this assignment, the focus include identifying sourcing approaches, identifying and explaining their application in a category of spend in RSG organisation. Part of this assignment include coming up with a supplier checklist appraisal applied in ensuring successful selection of best suppliers. In line with CIPS guidance notes, different modules including Kraljic Matrix and Business Hierarchy of needs and 10C’s are adopted in evaluation.
2.0 Category of Spend and Positioning
Strategic sourcing is essential for ensuring and advancement of successful practice and organisation development. In contemporary business environment, sourcing approaches are essential for ensuring successful in sourcing of products and services of different suppliers (CIPS, 2023). The different sourcing approaches have optimum gain to the organisation in regard to profitability and dominating their sector.
2.1 Strategic Positioning of Identified Spend Area
In this assessment, leasing of construction equipment has been used. As part of guiding their tourism and environment management area of operation, they are involved in leasing of construction equipment which enhance their operations. Working in RSG, I am tasked with a role of coordination of tourism operations both in local and international areas. This is in Northern and Southern region of Saudi Arabia; Many suppliers are available with market dynamics influencing the organisation operations and procurement level.
A different spend area in RSG which can be considered is the Information Technology (IT). The rationale of this spend category is facilitating KSA luxury tourism and sustainability offering. In Red Sea Global (2023) this is intended to transition past and beyond protection of natural environment and enhancing it targeting future generations. For this category of spend, multiple sourcing is used including IBM, Apple, Microsoft, Dell and Oracle in sourcing IT systems. For achieving an effective suppliers relations, long-term relations, risk management strategies, planning strategies and suppliers locally engaged.
Also, RSG is involved in sourcing logistics and uniforms with an intention of maintaining equipment and operations management. All these spend areas are available from sole sourcing, hence enhancing successful sourcing. They are sourced in demand influencing procurement process in a need by need basis. With the spend area being low-profit impact and supply risks, it is hence easily sourced.
2.2.1 Kraljic Matrix Analysis
Considering the previous section on evaluation of spend areas by RSG organisation, Kraljic Matrix Analysis can be used as illustrated in the following;
Figure 1:Kraljic Matrix Analysis Summary
Source: Xentys (2023)
While focusing on the different quadrants of the model, they can be used in identifying the best sourcing strategy. This is with the best suppliers identified and selected. The best practice include different suppliers security, costs management, purchasing power and adherence to HS&E standards.
Leverage Items- By identifying the multiple supplier involved in the process, they are engaged in negotiating for appropriate quality levels and reducing cost of operations. This is for their IT category of spend in RSG for lowering supply-based risks and managing the buyers power in their relations. Multiple sourcing is the most appropriate for use in this spend area. This is to attain costs management and reduce supply chain risks.
Bottleneck Items- For logistics which are moderately budgeted, different suppliers are available for specific sub-categories of spend. For this spend category, Shah and Yung (2021) highlight the most appropriate strategy to include reduction of entire negative implications of inappropriate positioning. Multiple suppliers are most appropriate to ensure they transition to non-critical category.
Strategic Items- This category include products characterised with strategic value through profitability and supply risks management. This is best sourced by application of single sourcing or suppliers as opposed to sole/dual sourcing. As evidenced in Handley et al. (2022) this is important to mitigate risks by altering suppliers of dynamics for ensuring they are in minimum.
Non-critical items– This quadrant products and services have a large selection and variety. Therefore, multiple sourcing is not appropriate as single sourcing is best applied owing to its technical and commercial requirements (CIPS, 2023a). Therefore, single sourcing is most appropriate for getting the products and services which require these requirements. There is a need for increasing awareness among the PS&M teams to understand the entire technical and commercial demands for identifying appropriate sourcing approach.
3.0 Sourcing Approaches
3.1 Identification of sourcing approaches
Multiple Sourcing- This is a strategy used by PS&M with an intention to engage a large number of supplier to achieve organisation expectations (Namdar et al., 2018). This is relevant for use in open-based supply market with an opportunity of trading and engaging various suppliers in their category of spend.
Single Sourcing- This is evident in a situation where an organisation engages a single supplier for an identified spend area (Bhattacharya et al., 2018). For a category of spend such as those of high technical and demand level. This is to be committed to develop appropriate technology.
Dual Sourcing- This is where two suppliers are involved in supply of the products and services. As evidenced in Zhu (2015) this assists in protecting supply chin players from any disruption through supply chain diversified.
Sole Sourcing- Sole sourcing is almost similar to single sourcing existing with one supplier in place for selection owing to external aspects. Therefore, sole sourcing has the manufacturer or provider of particular product existing in their market area hence directly engaged by RSG case.
3.1.1 Hierarchy of Business Need
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