Advanced Category Management in Procurement and Supply Chain Management



You are required to select an example of a category of procurement or a product, service or works bought by your organisation and create a category plan.  This should include an implementation plan which also identifies the challenges in implementing your plan and your strategies for mitigating the challenges.


Table of Contents

Executive Summary. 3

1.0 Introduction. 5

2.0 Background of Organisation and Selected Category of a Product 6

2.1 Introduction to ADNOC. 6

2.2 Selected Category of a Product 6

2.3 Scope of the Report 7

3.0 Category Plan. 7

3.1 Kraljic Portfolio Matrix of the telecom networks for company assets. 8

Supply Positioning. 9

Supplier View of Customer Account 9

Supplier Classification. 9

3.2 Market Structure. 9

3.3 Overall Cost of Ownership Analysis. 11

3.4 Porter’s Five Forces for maintenance of company telecom network Category Plan. 13

3.5 SWOT Analysis in the Context of Business of the Product Procurement 13

3.6 Strategic Sourcing of the telecom networks for company assets Products Category. 14

4.0 Category Plan Implementation, Challenges and Solutions. 15

4.1 Arranging Overall Organisation around the Customer 15

4.2 Building a Functional Level of Trust with Suppliers. 15

4.3 Ability to Measure Success of Category Plan. 16

4.4 Category Role and Definition. 16

5.0 Conclusion and Recommendations. 17

5.1 Conclusion. 17

5.2 Recommendations. 17

References and Bibliography. 19



Executive Summary

In this assessment, ADNOC company has been used as a case study which operate in extraction of crude oil from wells with the selected spend category being service which include support services including the telecom networks for company assets in different geographical areas where they operate in UAE.

The category planning identified for this category of spend has been used as an approach of demonstrating on how it is line with the goals and objectives of ADNOC with knowledge of their key stakeholders. This has been noted to have a direct implication on influencing the sourcing strategies and other contract management initiatives. The already developed category plan is in alignment with the customer business objectives with their strategic practice being on the value maximization, reduction of risks and effective management of the supply of goods and services.

In this analysis, the category scope of the procurement of telecom networks for company assets by ADNOC has been evaluated with the different categories highlighted. This has been done through the use of Kraljic Portfolio matrix, SWOT analysis, Porters 5 Forces and business environment analysis has been adopted to identify supplier positioning.  Further, the key facts and insights on the market competition and the overall cost of ownership analysis has been conducted. Part of this analysis is the implementation plan development, different challenges faced in plan implementation and strategies for mitigation of the challenges.

Considering the identified findings, different recommendations have been offered to improve the category plan for ADNOC in the procurement of the telecom networks for company assets different geographical areas where they operate in UAE. These recommendations include an improved supplier relationship management and improvement, sourcing strategies and a continuous improvement in the overall phases of their category planning.

1.0 Introduction

Category planning can be defined as a process of development of a category plan in line with the client’s expectations, business objectives and strategic strategies used to maximize value, reduction of risks and effective management of the supply of goods and services. According to CIPS (2013) category planning needs to be in alignment with the business objectives and its development with primary customer stakeholders. Further, successful category plans are expected to have a direct influence on sourcing strategies and distinct contract management initiatives. From a broad point of view, O’brien (2019) defined the category management is a supplier process of managing different categories as strategic business units, creating enhanced business results by focusing on efficient delivery of services to customers. As illustrated in figure 1, category management involves planning, sourcing and supplier management.

Figure 1: Planning Fitness in the Category Management

Source: CIPS Materials

In majority of organisations, category planning is normally implemented by sourcing managers for rationalizing their suppliers, buying power aggregation, driving down pricing and eventually improving their supplier performance against their contract. The intention of this is production of an interactive and collaborative business process where all distributors and suppliers are operating as partners to enable creation and management of client-guided category plans. Also, in category planning, the best approach is to align customer business plans, procurement targets and customer stakeholder strategies. Before the category planning, diagnostics are used to develop the category profile and marketing the research and intelligence. After a successful category planning, the category management is implemented.

Using the identified background, this assessment creates a category plan of ADNOC telecom system consisting of two types of telecom networks namely SDH/PHD system running over fiber Optic cable and CCTV system. This would be inclusive of the implementation plan and challenges that would affect the implementation plan and strategies for their mitigation.

2.0 Background of Organisation and Selected Category of a Product

2.1 Introduction to ADNOC

Since its establishment more than 46 years ago since 1971, the company is involved in playing an instrumental role in the Abu Dhabi economic development as one of the leading energy producers globally (ADNOC, 2019). The company produces approximately 1.6 million barrels of oil and 5.6 billion cubic feet of gas daily.  Through an embracement of new and innovative approaches for maximizing the value of their resources, the company leverage from pioneering of the approaches and technologies. The outcome of this is ensuring their positionality in meeting the overall demands of an ever-changing energy market and continues to have a positive implication on the Abu Dhabi economy influencing on the future generations. The company procurement division is categorized in the Corporate Services function of Company matrix structure and playing the role of tendering and procurement of services and goods essential for a business.

2.2 Selected Category of a Product

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