PDV CIPS Assessment Driving Value through Procurement and Supply Managing Expenditure with Suppliers


This assessment tests the learning outcomes and module content of:

Module: Driving Value through Procurement and Supply Module: Managing Expenditures with Suppliers


Identify a product, service or category of spend and outline its importance and impact to your organisation’s stakeholders. Prepare a brief market analysis and demonstrate how your procurement function will produce value for money outcomes. Your final submission should also review the current approaches to managing prices and costs for the product, service or category you have identified, as well as highlighting the impact of markets to secure cost savings for your organisation.


Table of Contents     

Executive Summary. 3

1.0 Introduction. 4

1.1 Introduction to Dammam National Oil Company (SAUDI ARAMCO) 4

1.2 Procurement Division of SAUDI ARAMCO. 4

1.3 Scope of the Report 4

2.0 Stakeholder Analysis for SAUDI ARAMCO.. 5

3.0 The Relevance of the Area of Spend to Stakeholders. 6

4.0 The Impact on Procurement from SAUDI ARAMCO Perspective. 6

5.0 Research and Market Analysis 7

5.1 Data Analysis- History of Spend. 7

6.0 Market Analysis 9

6.1 Market Analysis 9

6.2 Market Position. 10

6.3 Variables used in IT Equipment Procurement in SAUDI ARAMCO Market 10

6.4 Marketing Mix. 11

6.5 Level of Industry Competition. 11

7.0 Current Approaches 12

8.0 Best Practices. 13

9.0 Techniques for Analyzing the IT Equipment Market 13

9.1 PESTEL. 13

9.2 Kraljic Analysis 14

9.3 SWOT Analysis. 14

9.4 Porters Five Forces 15

10.0 Conclusion. 15

11.0 Recommendations 16

References 17

Appendices 18

Appendix 1: SAUDI ARAMCO Procurement Workflow.. 18

Appendix 2: SAUDI ARAMCO Group Supplier Temporary Registration Request Workflow.. 19

Appendix 3: SAUDI ARAMCO Organisational Structure. 21

Appendix 4: SAUDI ARAMCO Procurement division Organisation Chart 22


Executive Summary

This report represents an evaluation of the SAUDI ARAMCO procurement of IT hardware equipment in KSA as a category of spend. My positionality informs the rationale for selecting the area of spend in the procurement division through active involvement in contracts, purchasing, commercial directory department, strategic sourcing, in-country value, and group procurement operations. Hence, individual position in the organisation offers the author with sufficient knowledge of the company contracting by the organisation. In the process of evaluating the procurement strategies in the identified area of spend, this report equally provides an evaluation of the relevant of SAUDI ARAMCO stakeholders in tandem with procurement and supply. This also includes an evaluation of how they influence price management and value addition. In the research, the market analysis in a quantitative and qualitative approach was used in offering appropriate data on SAUDI ARAMCO approach in sourcing the most appropriate IT hardware. As part of the process, data analysis, category analysis, market mix, market positioning and the level of the industry have also been analysed. To analyse the IT hardware procurement, tools such as PESTLE analysis, Kraljic analysis, SWOT analysis, Porter analysis and Ansoff elements are utilized. The techniques are used in highlighting the relevance of study and outcome.  This study concludes that the IT and hardware procurement in Dammam, KSA for SAUDI ARAMCO company is still in its growth phase and as such fewer companies engaged in the procurement. In recommendations, this study has suggested SAUDI ARAMCO Company set relevant procedures for implementation of the procurement procedures, improving the relationship between the management and stakeholders, practical approach in organisation resources management and development and an effective policy-making process.



1.0 Introduction

1.1 Introduction to Dammam National Oil Company (SAUDI ARAMCO)

The SAUDI ARAMCO is a world leading energy producer established in 1971 and headquartered in Dammam. Its operations are anchored in the overall hydrocarbon value chain through a network of fully-integrated businesses with diverse interests ranging from exploration, production, storage, refining and distribution of a wide range of petrochemical products. The company objectives are creating improved efficiencies through benchmark performance, integrating a balanced scorecard approach in the entire group and aligning with their key performance indicators. The company vision is working collaboratively in harnessing energy resources in services for the nation. Similarly, their mission is operating through partnership, innovation and a relentless focus on high performance and efficiency in maximising value for energy resources.

1.2 Procurement Division of SAUDI ARAMCO

SAUDI ARAMCO is committed to develop and maintain a competitive and sustainable supply chain for all their partners and the service providers. The company operations are effective and characterized by online and real-time supplier registration system for all potential suppliers, consistent tracking of prequalification statuses online, and tender invitation of all potential suppliers. It is a requirement for all the suppliers to complete a one-time registration on the SAUDI ARAMCO commercial directory for doing business with any of the SAUDI ARAMCO group companies. These strategies offer an ideal opportunity for the SAUDI ARAMCO Company for collaborative, web-based tools for procurement department and suppliers in implementing tendering and bidding activities online. However, all the procurement strategies are implemented with strict adherence to the roles and activities, pricing, risks and timelines set by the organisation.

1.3 Scope of the Report

The scope of this report has been narrowed from a broad perspective of modernisation of operations in SAUDI ARAMCO to procurement of hardware and IT equipment from the different suppliers in the KSA. In this case, the IT hardware and equipment represent the category of spend. From this angle, this study delves deeper into the evaluation of the impact of SAUDI ARAMCO stakeholders in line with the procurement and supply area. This has been attained through a focus on the provided course content techniques and process that are relevant to the procurement and supply in different areas of spend. Part of the analysis would also be inclusive of an evaluation of strategies set in place by SAUDI ARAMCO for prince management and value addition. This would be inclusive of an analysis of the proximity of the suppliers, level of modernization required, customers to be served and best practice to harness value for money.

2.0 Stakeholder Analysis for SAUDI ARAMCO

As noted by Manetti (2011) study, the stakeholders represent the groups with a direct influence or get influence from organisation actions, objectives and set policies. From a general point of view, the stakeholders in any particular organisation include the creditors, directors, employees, government, owners, suppliers, unions and communities. As such, the stakeholders vary and are dependent on the company and their industry of operation. Nevertheless, they can be categorised into the internal stakeholders, connected stakeholder, and external/ secondary stakeholders (CIPS Model 1, 2008). Taking into account the SAUDI ARAMCO operations, the internal stakeholders include the partners involved in the onshore and offshore processing, management, all employees. The external stakeholders include the community, regulatory bodies, non-governmental bodies and global energy companies such as Shell, Total, BP, JODCO and Exxon-Mobil companies. Their subsidiaries include ADCO, ADMA-OPCO, ZADCO, Al Yasat, Al Dhafra and NDC. Lastly, the connected stakeholders include the government, suppliers, competitors and the shareholders. Some of the stakeholders in this level include purchasing department manager, contracts department manager, strategic sourcing management and commercial directory department managers.


Figure 1: SAUDI ARAMCO Stakeholders

3.0 The Relevance of the Area of Spend to Stakeholders

SAUDI ARAMCO always signs a contract through the procurement division in order to source different IT equipment’s and products. The IT procurement covers engineering, procurement, construction and commissioning of the offshore facilities.  The procured IT equipment guides the management of SAUDI ARAMCO in the exploration process, drilling and maintenance of wells as it is essential for the maintenance of wells, as it is essential in the extraction of crude oil from reservoirs. This is also in line with construction, operations and maintenance of all the involved production facilities, conversion, processing, measurement, storage, transfer and delivery of crude oil from the production wells to delivery points and exporting the crude oil.

4.0 The Impact on Procurement from SAUDI ARAMCO Perspective

In SAUDI ARAMCO, there is a fully fledged Information Technology Division that is tasked in delivering the highest quality of technology, IT infrastructure, tools and services in the overall company and as such guiding it in achieving strategic business goals.  According to Cennamo et al. (2012), to coordinate all their stakeholders, the company has invested in a command center for all its businesses.  This is a representative of the significant opportunity of the company in leveraging with real-time monitoring technology and an advanced data analytics. Hence, an increased spend in the IT equipment; hardware is instrumental in ensuring that the organisation aggregates accurate, real-time information from all their operations and businesses across the comprehensive oil and gas value chain.  The outcome of this would be an enhanced operation, driving efficiencies and unlocking the overall value as it is being integrated across their overall value chain.

Additionally, as noted by SAUDI ARAMCO (2018), increased investment in IT hardware would have a positive implication on enabling SAUDI ARAMCO in becoming more agile, efficient and responsive. This is on the verge of its process of unlocking production capacity, maximization of the downstream value and adaptation to shifting market dynamics while reliably meeting changing customer demands. This is a process in progress as SAUDI ARAMCO engages in sourcing for fresh and innovative approaches for maximizing the value of their resources, pioneering their approaches and technologies that would ensure the company is best positioned in meeting the overall demands of an ever-changing energy market and a positive impact on the Dammam economy for future generations.

5.0 Research and Market Analysis

5.1 Data Analysis- History of Spend

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