(Solution) Importance and impact to your organisation’s stakeholders PDV
Task
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.
Solution
Executive Summary
In this module 1 and 2 assessment, the focus has been on evaluating impact of stakeholders in the identified spend category. By focusing on ROSHN organisation in Saudi Arabia (KSA), a detailed market analysis has been used to support scope of the organisation achieving value for money outcomes in identified spend area. The category of spend selected is sourcing of primary power substation for their different projects in KSA. For the purpose of achieving the intended aim of this report, different analysis tools have been applied as guided by the CIPS Module Notes in evaluating the best practice in stakeholders relationships and value for money outcomes. From the market analysis pursued, appropriate market data has been obtained in ROSHN evaluated with their impact on their business environment operations identified. This is in regard to capacity of the organisation in providing quality home ownership in Saudi Arabia. Part of their operations in the public sector include guaranteeing their customers with appropriate cost management and successful operations.
The obtained findings in this assessment indicate that primary power substation are core for success of their different construction projects. This is achieved through an active coordination with procurement and all the other organisation stakeholders. The findings evidence need for prioritising on main Key Performance Indicators (KPIs) intended to assure the organisation sustainable practice.
There are various barriers and gaps identified in this assessment findings with appropriate recommendations required to be used to manage them. These include;
- Improving their relations with different categories of stakeholders
- Fully implementation of Saudisation policy in sourcing
- Engaging direct suppliers in the market while managing competitiveness
- Initiate a custom-made policy for procurement engaging different suppliers
- Engage Oracle and other organisations to get iSourcing system as benchmarked from other organisations
Table of Contents
1.1 ROSHN Organisation Background. 5
1.2 ROSHN Organisation Structure, Procurement and Supply Team.. 6
1.3 Identified category of spend. 6
2.0 ROSHN Organisation Stakeholders Categories/Importance. 9
3.1 Analysis by application of different Tools. 11
3.1.1 Strengths, Weaknessess, Opportunities and Threats (SWOT) 11
3.2 Market and Trends Analysis. 13
3.3 Competitiveness in ROSHN Market Environment 14
4.0 PROCUREMENT Function Input in Developing Value for Money Outcomes. 15
4.1 Suppliers Preferencing Matrix. 17
5.0 Costs Management for primary power substation spend category. 18
6.0 Conclusions and Recommendation. 21
Figure 1:Summary of Communities under development by ROSHN Organisation. 5
Figure 2:Summary of ROSHN Organisation Structure. 6
Figure 3:Summary of the key considerations as part of spend category identification. 7
Figure 4:Summary of sub-categories of primary power substation category of spend. 8
Figure 5:Categories of Stakeholders 9
Figure 6:Mendelow Matrix for ROSHN Stakeholders. 10
Figure 7:Summary of ROSHN Porter’s 5 Forces Analysis. 13
Figure 8:Summary of ROSHN Competitors. 14
Figure 9:Summary of ROSHN Major suppliers of primary power substation. 15
Figure 10:Summary of 3P’s Triple Bottom-Line Model 16
Figure 11:Suppliers Preferencing Matrix. 17
Figure 12:4C’s and 4P’s Analysis 18
Figure 13:Achieving value for money outcomes by PROCUREMENT Operations. 19
Figure 14:Kraljic Matrix Analysis. 20
Figure 15:Steps of Competitive Tendering Strategy. 21
Table 1:ROSHN Operations SWOT Analysis Summary. 11
Table 2:ROSHN Operations STEEPLED Analysis Summary. 12
Table 3:Summary of overall budget on primary power substation. 15
1.0 Introduction
1.1 ROSHN Organisation Background
ROSHN is currently a leader in Real Estate Development involved in building communities which cover 200 million sqm with an intention of boosting Home Ownership to 70% by year 2030. The organisation is managed by the Public Investment Fund (PIF) and has in the past been involved in construction projects such as NEOM and Red Sea Global (ROSHN, 2023) and more in KSA. The mandate of this organisation is to enable the home ownership for approximately 70% of the Saudi Nationalities aligned with Vision 2030 Goals. In overall, the organisation is actively involved in improvement of quality of life for nationalities in KSA and creation of multiple new jobs. According to Construction Projects (2023) for achieving this, their operations entail construction of quality homes in sustainable communities which cover immense geographical locations. A summary of the communities under ROSHN development are as illustrated in the following;
Figure 1:Summary of Communities under development by ROSHN Organisation
Source: Summarised from Construction Projects (2023)
Owing to the immense construction projects being pursued by ROSHN organisation, procurement of primary power substation represent a significant area of focus. In this regard, this assessment will evaluate the best practice for ROSHN in creating value for money outcomes by procurement in sourcing for the identified category and overall expenditures.
1.2 ROSHN Organisation Structure, Procurement and Supply Team
In ROSHN organisation, procurement is an independent department operating with a hierarchical structure as summarised in figure 2. This means that the organisation different departments play their roles effectively in a coordinated manner;
Figure 2:Summary of ROSHN Organisation Structure
Source: ROSHN Internal document
Through ensuring that procurement is working in collaboration with the different departments in the organisation, an improvement in value for money outcomes is successfully achieved. The importance of the process is noticeable from ability of engaging suppliers in KSA (Local) and international. Considering the CIPS Module 1 & 2 Notes guide, the terms and conditions in contracts management is important to manage risks and mitigate any challenge limiting implementing contracts.
1.3 Identified category of spend
As part of PROCUREMENT operations, identifying a category of spend is important to achieve appropriate spend areas categories (CIPS, 2023). Also, using category management, likely risks and areas to improve supply of the identified spend area attained as illustrated in the following;
Figure 3:Summary of the key considerations as part of spend category identification
Source: CIPS Module 1 and 2 Notes
Taking into account of ROSHN organisation, spend categories include different operations, systems used and services provision. The primary power substation have been identified as the spend category. For the different sub-categories of primary power substation, they are summarised below;
Figure 4:Summary of sub-categories of primary power substation category of spend
Source: Summarised from ROSHN internal documents
The importance of primary power substation sourcing by ROSHN is multi-dimensional. In ROSHN (2023a), ROSHN organisation is identified as tasked with contributing to provision of highly attractive market-based rates investment opportunities for all their partners. This is at the same time development of modernised and aspirational communities for KSA people. All these core objectives would be achieved by ensuring that the organisation source appropriate primary power substation connected to both renewable and renewable energy.
1.3 Scope of Work
This report will therefore be narrowed down to sourcing of primary power substation from various manufacturers/suppliers in KSA and GCC/international. Hence, the primary power substation is identified as the spend category of focus. This is since their primary power substation are broad and including different deliverables. In this spend category, the importance of stakeholders relationship in their sourcing strategy would be analysed in detail. In market analysis, available primary power substation will be used and also desk research from ROSHN operations. The best practice for achieving value for money outcomes has also been evaluated in this report.
2.0 ROSHN Organisation Stakeholders Categories/Importance
As defined in CIPS (2023a) the “stakeholders are people or organisations which gain/benefits from or are affected by a project, product or a service”. In the procurement process, the stakeholders are categorised to internal, external and connected stakeholders as illustrated in the following;
Figure 5:Categories of Stakeholders
Source: CIPS Module Notes
Therefore, in regard to ROSHN primary power substation sourcing, their stakeholders groups analysis can be done by use of Mendelow Matrix Analysis (Farshid et al., 2022). The importance of the tool as evidenced in CIPS Module 1 and 2 notes as categorising stakeholders informed by their powers and interests;
Figure 6:Mendelow Matrix for ROSHN Stakeholders
Source: Summarised from ROSHN Internal documents
Considering Mendelow Matrix Analysis above, the various stakeholders are core to guarantee assurance of value for money outcomes. A further analysis include;
Keep Satisfied- In ROSHN, with most of their operations being modernised, the board of directors and Saudi Electrical Company (SEC) are core. With high power and interest, they influence how costs savings are achieved in primary power substation sourcing. Any action in the sourcing process must be made aware and involved.
Manage Closely- The development department, project executives department, and finance are actively engaged in ensuring that value for money outcomes is successfully attained. Being the core stakeholders, their relations ensure that value for money outcomes is successfully achieved. This is on how they accrue value for money.
Minimum Effort- The local authorities where the construction projects are undertaken, suppliers/contractors in KSA and customers (end users) play minimal efforts in their operations. Their only interest is to ensure stakeholders relations, engagement of suppliers adhere to set legislations and best practice.
Keep Informed– Considering the organisation legal departments and sales teams they are involved to review the contracts made by different suppliers. The relevance of this is enhancing appropriate relationships with all their suppliers. They need to be informed on any action to evaluate best practice in value for money outcomes.
3.0 Market Analysis
3.1 Analysis by application of different Tools
In category management (see figure 1), market analysis is instrumental. This is for informing best strategy which need to be followed particularly in strategic sourcing.
3.1.1 Strengths, Weaknesses, Opportunities and Threats (SWOT)
The SWOT analysis is essential for evaluating internal and external factors which impact the organisation internal business environment. In line with Nikjow et al. (2021), this include ability to match the procurement objectives, practices and capacity to operate in their internal environment. A summary of SWOT analysis for ROSHN include;
Table 1:ROSHN Operations SWOT Analysis Summary
Source: Summarised from ROSHN Internal documents
To summarise SWOT analysis, it is important for ROSHN procurement to prioritise on various strategies intended for achieving value for money. The identified strengths (table 1) are important to form part of their operations across all departments with noted legislations prioritised. Further, the different threats would need to be managed appropriately. This is with sustainable sourcing process for their primary power substation aligned with economic environment and investment in best primary power substation.
3.1.2 STEEPLED Analysis
This tool is used for assisting in driving the organisation strategy and facilitating their growth (CIPS, 2023b). It is applied as a strategic planning tool in discovering, evaluating, organising and tracking risks. For ROSHN, table 2 illustration entail the STEEPLED analysis;
Table 2:ROSHN Operations STEEPLED Analysis Summary
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