Solution

1.0 Introduction

1.1 ROSHN Organisation

In this assignment , ROSHN organisation has been selected for evaluation. The organisation under the Public Investment Fund (PIF) is mandated with a responsibility of development of immense quality residences in Saudi Arabia (KSA) real estate sector (ROSHN, 2024). Today, with over 60% dominance in residential construction in KSA, ROSHN ranks as a leader in KSA real estate industry today. In KSA, there is a government policy which intend to ensure that the country achieves 70% of entire home ownership in the entire country. For all the population groups in KSA, they have houses based on their budgetary allocation and needs. This is attained by priority being on supporting various sectors and partnerships for increasing job opportunities available and economic growth. The vision and mission of ROSHN is summarised in the following;

Figure 1:ROSHN Vision, Mission and Objectives

Source: Summarised from PIF (2024)

From the summarised figure 1, ROSHN success in their operations is successfully based on progressive vision, mission and core objectives. To achieve this, they have a substantial budget in their Procurement and Supply Management (PS&M) amounting to SAR200 Million (PIF, 2024). The budget is used in managing the relations of various consultants, contract management, manufacturing teams and PS&M players. In all the identified spend/expenditure areas, ROSHN operates different sourcing approaches.

1.1 Procurement/ Commercial Function

ROSHN operates a fully independent PS&M department mandated with the responsibility of generating an approved supplier list framework agreements. The components of the agreement is as illustrated in the following;

Figure 2:Approval Supplier List Framework Agreements

Source: CIPS Module Notes

Also, it is a responsibility of the PS&M to generate the Pre-Qualification Questionnaire (PQQ) which is used in identifying the most appropriate supplier for different contracts implementation. This is through the application of procurement supply cycle (CIPS, 2024) comprised of different phases from specifications, tendering and eventually assets management relevant for all the PS&M professionals.  Based on the outcomes, the commercial team plays the mandate of analysing and breaking down of the costs in managing tendering, suppliers relation for ensuring vendors are working in the system. These stages are illustrated in the following;

Figure 2:Procurement Cycle Diagram

Source: (CIPS, 2024)

2.0 Analysis of Sourcing Approaches

2.1 Multiple Sourcing

This can be defined as a strategy involved in an organisation prioritising on sourcing of goods and service from wide range of vendors (CIPS, 2023). Multiple suppliers are engaged for one or same products/services. Considering Design Building spend category, multiple sourcing is used.  In line with Commercial Team, the amount of spend in this category is SAR350 Million with the budget being annually. The sub-categories of the spend informing need for multiple sourcing is illustrated in the following;

Table 1:Design Building Sub-Categories

Source: Summarised from ROSHN internal documents

To summarise table 1 content, it is clear that the different spend categories in design building is categorised into different areas. In the identified areas, multiple suppliers can be engaged with budgets being varying. The importance of involving the multiple suppliers is for gaining value for money outcomes and achieve standard specifications (Yoon et al., 2020). Apart from the ISO 9001 certification, design building must equally meet the requirements of the municipalities in KSA mandated in designing, spearheading construction process, demolitions and assets alterations. An example of a recent project by ROSHN is the construction of 450,000 square meters project in Southwest Riyad. In design building, the involvement of the multiple sourcing was informed by the following factors;

Table 2:Multiple suppliers in a ROSHN Project

Source: ROSHN Internal documents

In the ROSHN stadium construction project, the multiple suppliers would be the most appropriate in Design Building category.  Part of the supplier list framework agreements by the vendor management teams in ROSHN, it detail on evaluation criteria used, life costing, cost-benefit analysis, risks analysis and managing contracts (CIPS, 2023a). The different suppliers are therefore identified. There is nevertheless a need for providing PS&M with opportunities for capacity development for understanding their roles in multiple sourcing. This is since early in 2021, ROSHN was fined by Federal Government of KSA for cancelling a contract after PS&M wrongfully identified the quality expectation as being below standards set.

The advantage of multiple sourcing include existence of multiple suppliers hence a broad choice. For instance, in 2019, ROSHN was engaged in construction of King Salman Park (Saudi Vision 2030, 2024). The outcome of this was engaging different suppliers mandated with ensuring availability of cultural events area (20%), artistic and recreational activities (15%) and relaxing environment (65%). As a result, many suppliers were involved hence increased quality of the project final results as set. Also, the organisation was able to leverage on competitive advantage, hence getting good offer.

The disadvantages include lacking good technologies hence failing in managing documentation and information for multiple sourcing. This can be improved in ROSHN by increasingly investing in technologies for sourcing process. Also, multiple sourcing is time intensive to identify all the suppliers and narrow down to some. In ROSHN, past projects including Sports Boulevard, Green Riyadh and Riyadh Art averaged at 60days in entire process of identifying the multiple suppliers.

The available opportunity for engaging multiple sourcing is informed by need to diversify existing suppliers both locally and internationally (Sim & Kim, 2021). This is the case in ROSHN having based their operations in North and SouthEast of KSA, they are in a position of attracting highly qualified suppliers in the region and beyond hence successful operations.

2.2 Single Sourcing

This is defined as a strategy where a specific supplier is opted for by the buyer even when there exist other potential suppliers (CIPS, 2024a). For example, in ROSHN, in a project such as Qiddiya Entertainment City, a local organisation which is El-Seif Engineering Contracting was sourced for the completion of the project, The rationale of selection of the local firm include the following;

Figure 3:Rationale for Single Sourcing in ROSHN Excavators sourcing

Source: Summarised from ROSHN Internal documents

From figure 4 explanation, by embrace on single sourcing, less costs end up being incurred in the PS&M strategy. This is with timelines being met as set in the contract specifications (28%). These represent the main advantages of using single sourcing strategy. The disadvantages include failure of single sourcing contribute to company failure.  For instance, as a result of the USA and Russian conflicts, constrained relations with Russia lead to challenges with ROSHN recent project (Irina,  2022). This is since they could not access the El-Seif Engineering Contracting on a timely basis.

For appropriateness of this method, it is best used when highly technical, machinery and instruments are being sourced for facilitating the organisation operations. This is by working on strategic sourcing strategy (CIPS, 2024b). This is applicable in oligopolistic markets with limited number of suppliers. The KSA market despite being competitive is oligopolistic as most sectors comprise a smaller number of organisations dominating other players.

2.3 Sole Sourcing

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