CIPS Corporate Award Programme – ADNOC Onshore Cohort 3 Practitioner PSE Sourcing Essentials Assessment

Identifying a total of four sourcing approaches, identifying and explaining how they can be applied in a specific category of spend within an organisation operations

From the selected categories and developing a supplier appraisal check list

Table of Contents
1.0 Introduction 4
2.0 Selection of Category of Spend and Positioning 4
2.1 Kraljic Portfolio Analysis 5
2.2 IT Area of Spend Strategic Positioning 5
2.3 Business Hierachy of Needs 8
3.0 Sourcing Approaches 8
3.1 Multiple Sourcing 9
3.2 Single Sourcing 9
3.3 Dual Sourcing 9
3.4 Sole Sourcing 10
5.0 Supplier Appraisal Checklist 10
5.1 IT Category of Spend Supplier Appraisal 10
6.0 Conclusion and Recommendations 11
References 14
Appendices 16
Appendix 1: Amount of Spend in IT Category in ADNOC 16
Appendix 2: Tender Assessment Process in the Company 16
a. Evaluation Criteria and Process (add/delete as appropriate to the requirement) 16
Appendix 3: Business Hierarchy of Needs 18

Executive Summary
In this assessment, the sourcing approaches have been identified with a subsequent explanation on their application in the IT category of spend within Abu Dhabi National Oil Company (ADNOC) which is currently involved in the modernization of their activities and operations. A detailed evaluation of the different areas of spends by ADNOC in Abu Dhabi including IT, fuel, staff uniforms and logistics. The sourcing approaches include single, sole, dual and multiple sourcing. From the findings of this assessment, sourcing strategies are instrumental in creating a successful relationship with contractors. In this case, relevant sourcing decisions are made improving an organisation position in their market and profitability. This is since lack of a solid, detailed and cohesive sourcing approach would compromise organisation competitiveness. Multiple sourcing involves more than one supplier with single-sourcing being inclusive of a single supplier. Sole sourcing is a phenomenon where a company engages a monopolistic supplier with dual sourcing being inclusive of conflicting needs involving distinct suppliers to solve challenges incurred in other approaches. For ADNOC, there is a commercial directory procedure already set in place inclusive of a pre-award, after-award and post-award with the contractor’s criteria being on best practice. A checklist inclusive of 4Cs has been generated for the identified sourcing approach in the organisation. The recommendations include;
• Automation of supply and negotiation process by the use of existing modern technologies and increasing efficiency
• To harness engagement levels with all stakeholders as there currently exists a missing link due to the involved bureaucracies in the organisation
• Establishing essential requirements in the procurement and supply policy to create clear appraisal criteria in price and quality
• To improve the tendering and information sharing in supplier appraisal highlighting on all the qualifications to be met to be a successful supplier based on the sourcing approach criteria

1.0 Introduction
ADNOC is ranked as one of the globally largest energy companies in terms of their reserves and production levels. It is comprised of a total of 16 subsidiary companies in their upstream, midstream and downstream stages of their production developing both the onshore and offshore gas fields. Their scope of operation which includes exportation of natural gas, production of supplies for local electricity and water utilities and other domestic industries contribute to their engagement of multiple stakeholders. To collaboratively include all their stakeholders, ADNOC has set in place a detailed sourcing and procurement strategy guiding the management of relationships and improving the clarity to attain work requirements and their set objectives. One of such initiative has been the introduction of the In-Country Value (ICV) program which is intended to improve local supplier selection, development of UAE nationals, and localization of critical functionalities in the oil and gas industry (ADNOC, 2019). Also, the involved companies in the procurement are supposed to holistically embrace high-level standards in health, safety and environmental protection. This is in line with Puschmann and Alt (2005) report that notes that a successful supply and procurement must be characterized by operations that are friendly to health requirement of their people, safe environment and free from political disruptions.
From this background information, it is possible to evaluate the different sourcing approaches and the best approach that fits in the ADNOC operations in the IT products area of spend. Also, a supplier appraisal checklist for IT area of the spend through a strategic reference of their Portfolio inclusive of the Kraljic analysis, Business Hierarchy of Needs and 10 Model used as reference tools on the best practice.
2.0 Selection of Category of Spend and Positioning
According to CIPS (2019), procurement plays an instrumental role in strategic sourcing approach influencing relationships with all stakeholders hence determining the level of success and growth. From this point of view, sourcing approach relevance in an organisation since different products and services are sourced from different qualifying sources. This in-turn dictates on the level of satisfaction of the customers and position of an organisation in their market of operation. The development of different sourcing approaches is influenced by the increased interest in research evaluating on the buyer-supplier relationship and its influence on different stakeholders (Narasimhan et al., 2009; Yu et al., 2009). For ADNOC, identification of the most relevant sourcing strategy would be inclusive of creating suggestions for distinct spending categories in a structured manner and on the basis of necessity, demand and supply in the value chain. In order to evaluate the spend categories, the Kraljic analysis and business hierarchy of needs can be evaluated.
2.1 Kraljic Portfolio Analysis
Kralijic Portfolio Analysis tool is used as a guidance tool for purchasing process with the focus being on the security of suppliers, prevention from incurring unplanned costs, to leverage on the purchasing power of their organisation and adherence to health, safety and environmental standards (Montgomery et al., 2018). Hence, to identify the most appropriate sourcing approach based on available procurement strategies, this tool can be adopted. The contents of Kraljic analysis tool is as shown in figure 1;…………….Please click the paypal icon below to receive this assessment in full for only $20