Executive Summary
Supply management is needed in modern corporate trading. It involves purchasing supplies and raw materials for business operations. It is closely related to procurement. The latter entails sourcing materials from external agents. Strategic procurement is vital for an organization’s success. The reason behind this is that companies can acquire needed products in the right amounts avoiding surpluses. In this paper, the author has analyzed procurement and supply and the aspect of seismic surveys.
Opportunities for Procurement and Supply
Supply management refers to the procedures of modern corporate trading. The methods entail purchasing supplies for internal utilization and raw materials for use in manufacturing. The process also involves acquisition of merchandise for inventory. The goods are later sold in the distribution and retail chain. Most businesses refer to the buying of services as contraction.
According to Cowell, supply management is a systematic process comprising more elements than traditional buying. It majors with management materials and service inputs, suppliers, and sustaining input purchase procedures. Procurement is slightly different from supply management. It refers to the purchase of materials and other inputs from peripheral sources. Before making acquisition decisions, firms consider a wide range of factors. They include delivery and handling, price variations, and benefits.
According to Booth, procurement entails making purchasing choices on the basis of scarcity. The factors taken into consideration include the availability of data and the importance of applying economic evaluation procedures. Sound procurement strategies have numerous advantages. They aid firms to monitor their progress.
Opportunities to Create Saving and Efficiencies
Savings and efficiencies are vital for a company’s growth. To create savings ADCO can apply the following five rights of procurement. They include:
- Right price: Determining the right price for products is always a challenging task for most businesses. However, it is the duty of firms to ensure they procure materials at the right price. According to Lieberman and Hall, (2012) costs of merchandise dictate the value finances invested in acquisition of materials. Markets keep on changing. Due to this, firms should look for right prices by benchmarking and bargaining with suppliers. In the case of ADCO, the company should focus on working with a wide network of firms worldwide.
- Right quality: Quality refers to the suitability of a product or service offered by an organization. ADCO focuses on providing quality work by finalizing terms and conditions within reasonable time. To maintain and increase quality service provision, ADCO aims at adopting the concept of frame agreement for recurring services.
- Right quantity: Right quantity refers to the purchase of needed products with minimum cost. For an organization’s operations to run effectively, it is vital for it to maintain a regular flow of resources. ADCO should work to ensure surplus purchases are avoided. The reason behind this is that excess products result in overstocking. In addition, capital is blocked and inventory costs increase.
- Right time: The time taken to purchase products is very important for an organization. In the Oil and Gas industry, production is a continuous process. Due to this, the reorder level for each product is determined by the principle of the right time. To create savings, ADCO focuses on revisiting contracts and the procurement sequence. Through this, the company will shorten the duration of various processes in KPI. A delay in supply of materials hinders the production process.
- Right place: Right place refers to the location of manufacturers or warehouses. According to Handfield, Primo and Paulo (2015) the right place for material acquisition is affected by various factors. They include transportation and material handling costs. In ADCO, minimizing costs and determining the right place for products acquisition is the primary focus.
Besides the five rights of procurement, ADCO can create efficiencies in other ways. They include maintaining close ties with business administrators who major in business needs and requirements. In addition, the company can focus on managing supplier performance and risks.
Summary
Sound procurement and supply channels are vital for an organization. The reason behind this is that the chains play pivotal roles in the success of companies. Reefke, Ahmed and Sundaram point out that procurement and supply determine profitability. In addition, the five rights help organizations to determine how they can work to generate savings and efficiencies.
Profile of Function
Profiles of function are used to ensure a corporation focuses on attaining its set goals. They define the desired future scale and what the company aims to achieve over a certain period of time. Due to their purpose, profiles should comprise various characteristics. They are required to present the current state of the firm and its purpose.
In addition, sound profiles should offer guidance and inspiration to employees. In ADCO, the primary focus is maintaining the highest business and ethical standards. In addition, the company’s profile of function advocates for commitment and core values and working to meet shareholders’ expectations.
Improving ADCO’s Profile of Performance
ADCO since its founding has been guided by sound function profiles. However, the company needs to improve its profile of function to enhance continuity in achieving goals. The Oil Company does this in various ways. They include developing long-term plans for procurement of work and services. Engage employees at different levels of the organization in the process of developing strategic goals. The move can be done by having meetings and sharing ideas on the way forward. In addition, more resources should be allocated to the workers. The initiative will enhance motivation leading to productivity.
ADCO’s profile of performance can also be improved by updating technologies and strategies used. Such a move will result in more efficient development and production. For decades, the company has been growing into a complex business. To guarantee continued effective running of the corporation, ADCO should ensure it develops technical competence and sound leadership.
Summary
Profiles of function are important to all organizations. Their primary function is to make an organization’s strategies and direction be known. According to Hightower (2009) the report should be developed in a way that inspires employees. When a profile of function plays a motivational role, workers tend to remember the strategies and goals set in place.
ADCO Collaboration with Stakeholders
Stakeholders are individuals, groups, or organizations that are affected by the outcome of a project. Hilyard (2012) states that investor engagement is the involvement of stakeholders as partakers in an organization’s decision-making process. The third-party groups are involved in different stages of procurement. Failure to engage key stakeholders early is a common point of failure in the procurement process.
It is important for ADCO to identify and map its stakeholders. The figure below shows a conventional mapping of these parties:
How to Increase Early Engagement of ADCO’s Stakeholders
To increase the early engagement of investors, an organization needs to first develop a comprehensive understanding of who are the key stakeholders. In addition, it is important to determine what they care about and how they relate to the company’s plans. Once a firm identifies the main stakeholders, it can involve them in pre-bid meetings held at the early stages of the procurement process.
In addition, the company should ensure it communicates and updates Investors on the latest procedures undertaken. To ensure effective and quick communication, the organization can use automated channels. Figure 2 is a representation of stakeholders’ engagement by use of Mandelow’s Matrix Model.
High power high interest represents the key stakeholders such as executives in the organization. Due to this, their needs are of primary concern and must be met. High power, less interested category comprises players such as investors. The lower power, high-interest group is composed of finance, suppliers, and legal teams. In every organization, the parties are required to have sufficient and up-to-date information regarding the company’s operations. On its part, low power less interested does not possess much data. The parties include employees in the helpdesk or reception.
Summary
Investors’ engagement is vital for the success of a company. In addition, it facilitates business transformation. Despite the benefits, a majority of organizations spend valuable time gathering data and developing strategies that are never implemented. The reason behind this is that they lack stakeholders’ support. To avoid this, firms should devise ways of engaging investors early in the procurement process.
Organizational Policies and Procedures
Policies and procedures can be conceptualized variously. They involve regulations put in place by an entity to achieve its long-term objectives. To this end, the regulations have a purpose. They inform primary choices and undertakings carried out within the confines set by the entity. For all employees to be familiar with the policies and procedures, they are published in booklets and availed in other different forms.
Need for Policies and Procedures
In all organizations, buyers involved in the acquisition process are required to be familiar with the company’s policies and procedures. The reason behind this is that the rules dictate the corporation’s conduct of sourcing and purchasing activities. To facilitate effective procurement and supply, ADCO tends to be guided by rules from various sources. They include Abu Dhabi Chamber of Commerce, handbooks, and ADNOC guidelines.
Policies and procedures also ensure efficient, ethical, and accountable purchasing activities within a business. In addition, clear and sound guidelines facilitate the efficient implementation of supply chain undertakings. In ADCO, the rules are updated on an annual basis in accordance with the changes made.
The figure below shows ADCO’s policies which govern employees’ operations and conduct.
Summary
Each company has its own set of policies and procedures. According to Butter (2007) the rules and guidelines dictate the day to day procurement and supply activities of an organization. In addition, the principles have various benefits to a company. They include enhancing financial stewardship, reducing business risk, increasing employee productivity, and supplier relations.
References
Butter, D, Procurement, Amsterdam, Tinbergen Institute , 2007.
Booth, C, Strategic procurement organising suppliers and supply chains for competitive advantage, London, Kogan Page, 2010.
Cowell, FA, microeconomics: principles and analysis, Oxford, Oxford UP, 2006.
Handfield, RB, M Primo & M Paulo, ‘The role of effective relationship management in successful large oil and gas projects: insights from procurement executives’, Journal of Strategic Contracting and Negotiation, vol. 1, no. 1, 2015, pp. 15-41.
Hightower, R, Internal controls policies and procedures, Hoboken, N.J, Wiley, 2009.
Hilyard, J, The oil & gas industry a nontechnical guide, Tulsa, Okla, PennWell, 2012.
Reefke, H, MD Ahmed & D Sundaram, ‘Sustainable supply chain management decision making and support: the SSCM maturity model and system,’ Global Business Review, vol. 15, no. 4, 2014, pp. 1-12.