Executive Summary
In this report, sourcing approaches for a spend category in Royal Commission for AlUla (RCU) has been evaluated. The selected spend category in this assessment is the Information Technology (IT) spend category. This is further compared with logistics, staff uniforms and office supplies. For evaluating the identified spend categories, various tools have been selected which are Kraljic Analysis Tool, Mendelow’s Analysis Tool for Stakeholder analysis and the Maslow Hierarchy of needs. Further, by using the SWOT analysis, the internal and external factors of the sourcing have been selected. A further analysis by use of Peter Block Grid’s has been applied to evaluate the interests of stakeholders to source appropriate position. The sourcing approaches identified included single, sole, dual and multiple.
The findings from the supplier appraisal of IT for RCU have been identified through the application of the Carter’s 10Cs tool. The various findings highlight on the need for RCU for actively invest in strategic sourcing strategy to guarantee their domination in the Saudi Arabia (KSA) tourism sector and quality services delivery. The findings in this assessment identify the multiple sourcing as inclusive of many suppliers engaged while single sourcing include a single supplier. This is with the sole-sourcing including a single monopolistic supplier involved in provision of the products/services. For dual sourcing, suppliers operate through demand conflicts.
Finally, from the findings, a set of recommendations have been suggested which are;
- RCU need to establish the best sourcing approach informed by the features of their category of spend
- Coming up with appropriate policies development in their procurement and supply (PS&M) department through an integration of technologies in their practice
- Simplified procurement process and ensure entire stakeholders interests are holistically prioritised
- Put in place appropriate technology in their different product lifecycle such as RFQ, RFP, negotiations of e-Auction. Currently, RCU is leveraging on use of SAP software for improving information flow in their sourcing approaches
Table of Contents
1.1 Organisation Background. 3
2.0 Spend Category and Position. 4
2.1 Kraljic Analysis Technique. 4
2.2 Business Hierarchy of Needs. 6
3.0 Sourcing Approaches Analysis. 9
3.1 Multiple Sourcing Approaches. 9
4.0 Sourcing Appraisal Checklist 12
5.0 Conclusion and Recommendations. 15
Figure 1: IT in RCU Spend Category. 5
Figure 2:Kraljic Analysis forIT. 6
Figure 3:Maslow Hierarchy of Needs in RCU organisation. 7
Figure 4:Mendelow Stakeholder Analysis in RCU.. 8
Figure 5:Peter Block’s Stakeholder Categories. 9
Figure 6:Summary of RCU SWOT Analysis. 10
Figure 7:Cater’s 10Cs Supplier Appraisal 13
1.0 Introduction
1.1 Organisation Background
This report focuses on Royal Commission for AlUla (RCU) organisation sourcing essentials. According to RCU (2022), the organisation has been actively operating since year 2017 in Saudi Arabia (KSA). The organisation is tasked with a responsibility of protecting and developing the old archaeological and anthropological sites which are in operating in AlUla Governorate (North-West KSA) which has been in operation in more than 2,000 years. Also, their active practice are informed by the fact that there are 5 different districts in AlUla Old Town for South of Hegra Historical City in Northern part of the country. The success of the operation is informed by the fact that 5 unique districts, 5 Heritage Sites, 15 Cultural Assets and upward of 5,000 hospitality keys. Considering the RCU, their practice in Hegra is guided by the view that the organisation is ranked in the UNESCO World Heritage Site. It is inclusive of upto 100 well-preserved tombs with facades cut into sandstone outcrops.
Currently, RCU operates an upward of 4,000 suppliers who are registered and certified and readily available in the Ariba/SAP system technology. By working actively through an active partnership with other Original Equipment Manufacturer (OEM), RCU is in a position of integrating technology and harnessing the government saving in resources in this area. This is by providing an appropriate public sector requirements, suppliers list with high-level capability of delivery of all set requirements and standard contract terms. Their operations in the sector of culture, heritage, natural sites, tourism, humanitarian sectors and economic development and protecting and planning for the operations of the RCU’s legacy.
1.2 Scope of Report
In this assessment, this report focus on evaluating four different sourcing approaches and how they are relevant in various spend categories in RCU. For RCU procurement department, it ensure that they guide success in their supply chain management to improve their entire supply relationships and improve their sourcing approach. This is to maximise overall value and assigned functions for procurement of goods and services for ensuring suppliers comply with KSA and organisation procurement policies. This is at the same time guiding implementation of best practice for public sector. At the end, an appropriate supplier appraisal checklist has been developed for the category of spend.
2.0 Spend Category and Position
The identified spend category by RCU is informed by what RCU (2022b) identify as demand for delivery of vital, world-class services in tourism sector albeit unprecedented pressure on resources (human and financial). As illustrated in figure 1, the need for the IT category of spend is to promote;
Figure 1:IT Spend category in RCU
Considering the IT services spend category, identification of the best sourcing approach mean that they are holistically controlling the overall procurement and supply process (CIPS, 2022). For the purpose of identifying the potential risks incurred, the value of the spend category, Kraljic matrix analysis and the Business Hierarchy of Needs has been selected for its application. Further, for noting o the sourcing approaches influencing RCU stakeholder, use of Mendelow Stakeholder Analysis Matrix is evidenced.
2.1 Kraljic Analysis Technique
The Kraljic Matrix technique is relevant for establishing risks which are faced in selecting an appropriate sourcing approach from suppliers in a supply chain. As evidenced in CIPS (2022a) the selection of best sourcing approach would lead to establishment of the relationships and ensuring supply risks are mitigated in an organisation (see figure 2);
Figure 2:Kraljic Analysis for IT spend
In summary, in context of RCU, Kraljic analysis entail;
Leverage- Considering the suppliers here, they are defined by existence of many supports representing an increased cost implication and supply risks reduced. For IT sourcing, RCU would focus on prioritising on holistic negotiations with cost savings increased use in procurement. For this spend category, particularly during COVID-19 pandemic, increased quality of services delivery to the KSA public is relevant and lowering all supply risks.
Strategic Items- For the payment services sourcing, this is defined with immense risk of suppliers. As a result, a single supplier could be involved contrary to sole or dual sourcing. The rationale of this is that single supplier is involved contrary to sole or dual sourcing. An immense confidentiality for suppliers relations management for RCU is relevant in locked-in sole or dual sourcing. The importance of this is significantly reducing all supply risks (Dyili et al., 2018).
Bottleneck Items- This entail the document management category. It leads to less profits incurred by RCU despite of their immense risk in the supply chain. In line with Kang et al. (2018) guidance, the most appropriate sourcing strategy would ensure reduction of negative implications due to inappropriate position.
Non-critical items- This is inclusive of the products and services available in plenty hence multiple suppliers engaged. Further, in RCU, in the identified spend categories, single and sole sourcing is the most popular. For solving the likely complex issues in standardisation, iSourcing by integrating RFQs (Electronic Requests for Quotation) and entire specifications would be shared (https://www.cips.org/intelligence-hub/sourcing).
2.2 Business Hierarchy of Needs
Considering the selected IT spend category in RCU, to identify its positioning, Hierarchy of Needs Model is relevant (CIPS, 2012). IT are defined with intense competitiveness and immense costs required in implementing their sourcing approach selection (see figure 3);
Figure 3:Maslow Hierarchy of Needs in RCU organisation
For preferred sourcing approach in RCU, it is important ensuring they attain the various figure 3 needs and harness their prioritisation. For example, in the IT spend category, they would need to prioritise on level of quality, contributions to business sustainability, minimising entire risks by RCU as a priority. Considering the Kraljic Analysis, IT would be more appropriate if sole supplier is engaged and a single supplier for their payment services. As evidenced in McEvoy and Ferri (2020) the high purchase power is important for exploitation since they input costs management and long-term contract implications by the various engaged suppliers.
2.3 Stakeholders Analysis
In order to identify the impact the various sourcing approaches have to the involved stakeholders, Mendelow Stakeholder Analysis Matrix can be used (CIPS, 2022b). The analysis is as illustrated in figure 4;
Figure 4:Mendelow Stakeholder Analysis in RCU
In figure 4 summary, the best practice in their sourcing approaches are;
High-Interest; High-Power- For the IT system being sourced by RCU for their operations, in their various operations, they would make sure they opt for the most appropriate approach. To management, misunderstanding prevalence impact change or alteration of their practice.
Low-Interest; High-Power- The legal team, finance and KSA Government, they are significantly engaged in selecting suppliers. Hence, they ought to achieve satisfaction with sourcing approach.
High-Interest; Low-Power- The stakeholders interest are inclusive of information of best approach used in sourcing. Considering RCU PS&M, the board of management, efforts need to be exerted for convincing them. This is while ensuring they guide organisation in selecting the best sourcing approach.
Low-Interest; Low Power– Considering the IT teams, marketing and competitors, they only need to be kept informed. The rationale of this is that their interest is the organisation to select the most appropriate sourcing approach.
In line with the various stakeholders noted, Peter Block Grid Leadership (Center Leadership Center, 2022) is applicable in arranging the different stakeholders based on their positioning as illustrated in figure 5;
Figure 5:Peter Block’s Stakeholder Categories
Bedfellows (High Agreement & Low Trust levels)- This is characterised by a lot of issues to identify the best sourcing approach as the interest is to operate for a long-term basis. Communication is prioritised for coming up with most appropriate sourcing strategy.
Allies (High Agreement & High Trust)- The category is defined by facilitation of maximum support and vision sharing to attain their given roles. This is best achieved through an engagement of multiple sourcing approach.
Opponents (Low Agreement & High Trust)- This stakeholders group demand constantly being updated and sourcing feedback, honest-based answers and most appropriate sourcing approach adopted.
Adversaries (Low Agreement & Low Trust)- In most cases, this group operate through an opposition of process of change which demand RCU to make challenging decision regarding sourcing. Prioritisation is on individual interests.
2.4 SWOT Analysis
For selecting the best sourcing approach, various strengths and weaknesses which are internal and external opportunities and threats would be considered (CIPS, 2022c). For RCU, the SWOT analysis entail;
Figure 6:Summary of RCU SWOT Analysis
In summary, as illustrated in figure 6, RCU is best positioned in leveraging on sourcing approach and to harness the services provision to KSA public sector organisations. This is the case particularly the multiple suppliers in the market and different stakeholders interested. Also, the risk and cost overruns inform the rationale of selection of most appropriate sourcing strategy. This is with the opportunities and threats representing areas of improvement by opting for the best sourcing approach. This is by offering a guide on need to embrace modern innovation, manage COVID-19 pandemic prevalence and lacking business-anchored procurement approach.
3.0 Sourcing Approaches Analysis
3.1 Multiple Sourcing Approaches
This approach is identified in Namdar et al. (2018)…………..
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