Question:
This assessment tests the learning outcomes and module content of:
Module 5: Negotiation in procurement and supply
Task
Select a category of spend from your organisation. Develop and discuss a strategy using the knowledge gained
from this programme which could form the basis of a formal commercial negotiation. Your assignment should
include an explanation of the key facts, data and approaches that you will use in the negotiation.
Solution:
Executive Summary
This report has focused on coming up with a document to create a sourcing plan for their future requirements. In regard to the sourcing policy, this report has informed to the fact the procurement and supply in an organization management must take into account of different areas of expenditure and plausible techniques to be integrated into the area of expenditure and informing on the best practice in the field of expenditure in terms of added value. Also, the inclusions need to be integrated into contracts formed in the future and measures that could be adopted to select the most efficient supplier have been demonstrated in-depth. Lastly, the distinct elements of the purchase and supply that might be demanded in the negotiation process are taken into account.
For a
successful attainment of the study objectives, SADARA company has been adopted as the most idea case study company. The rationale for selecting this company is
attributed to the fact that it is a Skytrax 5-star certified with an
ideal location geographically and a good practice scope in the area of oil and
gas. Taking into account of the study findings,
it has been established that the SADARA
company has a strategic procurement system incorporating all the stakeholders
in the company. However, in the area of
Valve spend, it has been recommended that
the company need to establish a holistic approach to their procurement process.
Also, the best negotiation process has been identified
as being the collaborative (win/win) plan
as it is inclusive of all the involved stakeholders in a negotiation process.
Additionally, it has been recommended
that there is a need for the company to effectively
appreciate the interests of all their suppliers in context of their
professional and legal dimensions. Nevertheless, apart from the adoption of the
collaborative approach, they can strategically incorporate other approaches such as compromising, distributive,
pragmatic and principled styles of negotiation.
Table of Contents
1.1 Introduction of Area of Spend in SADARA Company. 4
Maintenance, Repair and Operations (MRO): 4
2.0 Valve Stakeholders Analysis. 6
2.1 Functions of Procurement and Supply. 7
2.2 Roles of Procurement Service Management in SADARA Valves Area of Spend. 8
2.3 Potential Improvements in the Area of Spend. 8
3.0 Valves Product Market Analysis. 9
4.0 Products Importance To The Company. 11
5.0 Procurement Value Outcomes. 12
5.1 Supplier Preference Matrix Model: 13
6.1 Valve Category Supplier Appraisal 15
6.1.3 Environment Health and Safety. 16
7.0 Aspects Of Purchase/Supply That May Demand Negotiation. 17
7.2 Sourcing Essentials in Procurement and Supply. 18
7.3 Tendering Appraisal and Collaborative Negotiations. 19
8.0 Conclusion And Recommendations. 19
1.0 Introduction
This is a report analysis of the process through which the procurement function enhances product management right from its procurement, storage, and use respectively. For practical application purposes, this study focuses on SADARA Company. Sadara represents an exceptional alliance between two global pioneers in their corresponding industries Saudi Aramco and The Dow Chemical Company. Sadara Company is committed to contributing to the economic diversification and downstream development of Saudi Arabia. In the Jubail Industrial City of Saudi Arabia, the world’s largest manufacturing plants ever built in a single phase, SADARA, with 26 integrated world-scale, will produce more than three million tons of products every year(SADARA, 2017).
The petrochemical industry relies on the effective management of its supply chain system to enhance efficient operations such as avoiding operations breakdown and increasing operational costs unnecessarily. This informs on the relevancy of the existing commercial negotiation in the company. This is a process that includes goals communication by all involved stakeholders targeting in attaining a standard agreement and dealing with the issues and future conflicts management. This report will argue that a sourcing plan is fundamental as it ensures leveraging on the targeted spend in diverse locations with selected suppliers. This guarantee the establishment of knowledge and value in the customer-suppliers interface and relationship. To attain on the report focus, the creation and evaluation of the strategies sourced from this program will be instrumental in demonstrating on the best practice to inform on the formal commercial negotiation. The styles include collaborative, distributive, pragmatic and principled techniques of negotiation.
On its part, SADARA Company has a dedicated procurement function with critical divisions to address specific concerns as listed below:
Raw Materials (RM): The Raw Materials and Packaging Section is responsible for procuring the raw materials, chemicals, and packaging supplies required to make and package the finished products Sadara produces in its plants.
Maintenance, Repair, and Operations (MRO): The MRO (Maintenance, Repair and Operations) & Capital Section is responsible for procuring the equipment, materials and services required to keep Sadara’s manufacturing plants operational.
Service Contracting (SC): The Contract & Admin Services Section is responsible for procuring corporate-wide services that are leveraged across the company to support its business operations.
Center of Excellence (CoE): Key role in the development of the Procurement Operating Model as well as ensuring a continuous improvement agenda. The center formulates procurement strategy that is aligned with the proponent and overall Sadara strategy.
For this assignment, the
effectiveness of MRO procurement of valves products in SADARA Company will be examined. The valves are used to control the
flow of petrochemical products in the refining and production process. In this
case, through installing the right quality of valves
and in the proper manner ensures that the
petrochemical products flow in the desired direction, there are no excess
inflows, and that there are no unwanted fluids backflows in the process. The report is clustered
into sub-categories including a stakeholder’s analysis, product relevance to
the company, a market analysis, a procurement value generation analysis, price
management, and the cost savings processes applied respectively.
2.0 Valve Stakeholders Analysis
In the identification of the products’ stakeholders, the analysis describes stakeholders based on Beske, Land and Seuring (2014) definition. In this case, the authors described a product stakeholder as an individual or group of persons interested, having control over, or affected by a given product or service. This analysis categorizes stakeholders into the internal and external stakeholders respectively (Zhu, Sarkis & Lai, 2013). The product Internal stakeholders are those within SADARA Company. They include the …………………………………………………………………………………………………………………………Please contact our team to receive this assessment in full based on your organisation background, selected area of spend and overall level of expectation
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