(Solution) CIPS Advanced Practitioner Corporate Award (APCM)

Executive Summary

Category planning is defined as a core strategy used in contemporary entities to guide an alignment of an organisation procurement and supply management (PS&M) strategy and organisation goals. This is for ensuring that the sourcing process elicit positive implication along the bottom-line by promoting how the customers satisfaction is attained. This is in turn for assisting organisations to leverage on competitive advantage and achieving market dominance. In this report, by focusing on Emirates Transport Company (ETC), leasing vehicles  spend category has been selected for evaluation in this assessment. This has been achieved by focusing on different tools including CIPS Model for category management, Porter’s 5 Forces analysis, 4T’s model, Kraljic matrix and Porter’s 5 forces analysis. Further, through cost analysis evaluation, the best practice for category plan development has been identified as a best practice for maximising value, lowering risks in the process and recommendations for mitigating these challenges. The different challenges have been emerging from lack of harmonisation of entire decisions being factual and data-centric for harnessing the spend category appropriate structuring and implementation process.

As a result of the obtained findings in the current report, the different recommendations which have been obtained for improving ETC part of category plan development in this spend category include;

  • Modernisatin of their PS&M practices, integrate the use of RFQ, RFP and iSourcing to be introduced to all the categories of spend
  • Embrace strategic sourcing informed by different stakeholders needs, demand for competitiveness and dominating the UAE transport sector
  • To gather sufficient information for their category plan to ensure they are ready for managing any uncertainties including the COVID-19 pandemic
  • To pursue a holistic benchmark, cost-benefit analysis to identify the best practice of integrating all the components of category plan for success in their operations
  • They need to facilitate PS&M department in enrolling into activities to improve their skills scope and new knowledge gathering on the category management and best practice in its management

Table of Contents

1.0 Introduction. 3

1.1 Background of Emirates Transport Company (ETC) 3

1.2 Selected Category of Spend. 3

2.0 Category Planning. 3

2.1 Kraljic Portfolio Matrix. 6

2.2 Positioning of Suppliers. 7

2.2.1 Suppliers Preferencing. 8

3.0 Market Structure Analysis. 8

3.1 Total Cost of Ownership- Cost Analysis and Cost Savings. 9

4.0 Sourcing Approaches. 10

4.1 Porter’s 5 Forces Analysis 10

4.2 SWOT Analysis. 11

5.0 Implementation of Category Plan (Challenges & Recommendations) 12

5.1 Customer-centered organisation arrangement 12

5.2 Formulation of functional supplier trust-based relations. 13

5.3 Evaluating and monitoring the category plan success. 13

5.4 Definition of Categories, Improvement and Enhancement. 14

6.0 Conclusion and Recommendations. 14

References. 16

Figure 1:CIPS Model Category. 5

Figure 2:Mendelow Matrix Stakeholder Analysis 6

Figure 3:Agile-Martin Christopher 4R’s 13

1.0 Introduction

1.1 Background of Emirates Transport Company (ETC)

The Emirates Transport is a state organisation founded under the Federal Law, number 17. The company aims at organising, managing, and supervising the transport services and associated businesses. This is for the benefit of the local and federal government bodies and the private sector. In the 38 years, Emirates Transport has developed its brand through investment and diversification in services. Presently, the firm offers the customers, including the individuals and companies with an array of services, including vehicle leasing, automotive maintenance, and transport.

The company has an iSupplier Portal where (Isp) where the procurement and supply management and the department are operated to achieve their strategic objectives. This platform provides all the suppliers of the company with a standard web browser for direct management of all related transactions with the company. The use of Isp has significantly contributed to an increase of both small-scale and large-scale suppliers, which allows the company to have a variety of options, thus high-quality products and services.

1.2 Selected Category of Spend

The spending category was selected in this study as leasing vehicles. In the MENA region where ETC is based, the procurement of leasing cars accumulates up to upwards of $200 million annually (ETC, 2022). In this case, the learners are considered as a procurement officer to inform on this selection which is determined by access of ETC corporation subsidiary. The ETC requires high-quality leasing vehicles to retain its competitiveness in the UAE market and particularly the transport industry.  The government, for instance, enjoy high safety and comfort standards, which are factored in the leased vehicles. There are also Limousine car leasing services. This entails the exquisite vehicles provide to individuals, companies, and institutions. The rental services extend to motorcycle, buses, and the mass transportation services. Therefore, supplier selection and procurement are instrumental based on the sensitivity of the company’s activities.  FCW (2020), provides a good example of a company’s procurement with Joint Enterprise Defence Infrastructure. This deal was criticized for lacking a clear categories plan and therefore was in favour of AWS.

2.0 Category Planning

According to CIPS (2013), category planning incorporates the plans developments consistent with the business objectives of the customers. The strategic approach ensures effective management of goods and services supply, reduces risks, and maximizes their value. The study based its category planning on CIPS models as provided in figure 1.

Figure 1:CIPS Model Category

Source: CIPS 2013

According to CIPS (2020), through successful category management, the companies are able to increase bottom line profitability and the overall cross-stakeholders benefit by enhancing the strong and good relationship with their suppliers. In this regard, it is crucial to conduct stakeholder analysis using Mendelow internal stakeholder mapping as in figure 2.

Figure 2:Mendelow Matrix Stakeholder Analysis

Source: CIPS resources

The creation of a category plan involves different stakeholders who place a different roles in the development based on their interests and influence such as;

High interest, High influence: The stakeholders with high interest and influence include advisors, end-users, and experts working in collaboration with the company. These stakeholders are also the key players.

Low interest, Low influence: ETC customers, L&D team and competitors have low interest and influence and their demands are essential in process development guidance.

High-interest, Low influence: This category of stakeholders includes ETC administration and management.  According to CIPS, these stakeholders must be kept informed as they give the company a direction consistency to their strategic objectives.

High influence, Low-interest: The stakeholders in this category include the legal team, finance department, and UAE Transport sector regulators. They determine the budgetary allocation and enforce adherence to government regulation and legislation.

2.1 Kraljic Portfolio Matrix

Kraljic portfolio matrix is also applicable to ETC category plan identification and the fitting approach. A portfolio analysis tool is a crucial item in the determination of value addition, supplier relationship, procurement objectives, used techniques/tools, and contract strategy. The application of this matrix ensures that the supply-changing vulnerability is consistence with the buying power maximization. 

 Kraljic portfolio matrix categorizes the spend category as leverage items. According to Caniels and Gelderman (2005), there are many leasing vehicles suppliers in the UAE and therefore there exists high supplier completion in the market and low supply risk. ETC is therefore to enhance high-level incentives for negotiation in regards to cost-saving results. ETC need to establish strategic partnership with different suppliers, which is different to the existing procurement approach.

Table 1:Kraljic Analysis temperate tool

High-Cost Impact, Low-Risk ImpactHigh-Cost Impact, High-Risk Impact
Leverage Suppliers Low-cost moving utility and suppliers’ services, and Competition (leasing vehicles)Strategic Suppliers ETC main products, and suppliers
Low-Cost Impact, Low-Risk ImpactLow-Cost Impact, High-Risk Impact
Routine Suppliers Variety available such as stationery suppliersBottleneck Suppliers Low valued items Limited options Monopoly in software

2.2 Positioning of Suppliers

Leasing vehicles in the Kraljic portfolio matrix are considered the leverage items of the quadrant. Therefore, Leasing vehicles suppliers can be considered to have high relevance in the lower supply chain in guiding the company’s profitability. Leasing vehicles procurement on the other hand is considered to have high-level expenditures, high-level suppliers, and multiple alternatives available. Therefore, a category plan should enhance the purchasing power of the customers by generation and standardization or key purchase requirements. ETC Leasing vehicles subcategories, costs and suppliers can be illustrated as;

Table 2: Leasing vehicles suppliers and Costs………….
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