Request to enhance my assignment and remove plagiarism

i would like to Request to enhance my assignment and remove plagiarism as the assessor have identified areas of plagiarism in my assignment and i want them to be removed.

attached: my assignment, assessor feedback and comment, assignment question, guidance to write correct assignment, points to be included in the assignment.

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Corporate Award Practitioner Level – Integrated Assignment

(1) The roles of procurement and supply in managing this area of expenditure underlining

the inputs that may be made by its stakeholders

Role of Procurement

• terms that relate to procurement and supply
• roles and benefits of procurement
• How effective procurement impacts on profitability or creating savings and

efficiencies
• Internal and external priorities;

• Price/Cost
• Quality
• Time
• Quantity
• Place

• internal and external stakeholder’s inputs
• conflicts of interest
• objectives of a procurement
• tiers of the organisation’s supply chain
• triple bottom line benefits of sustainability (economy, environment, social

development)

Procedures in Procurement
• The documentation typically used in procurement and supply:

• Requisitions
• Orders
• Delivery Notes
• Invoices
• Other documents

• documented policies and procedures
• The responsibilities for procurement
• Regulations relating to competition
• Levels of delegated authority
• Responsibilities for the stages of the sourcing process
• Invoice clearance and payment

• ethical codes
• corporate governance
• financial budgets
• achieving compliance with processes and the achievement of outcomes that bring

added value

(2) Techniques that can be applied to the area of expenditure to improve added value

The impact of the External Environment on Procurement and Supply
• How markets can be defined in terms of size, scope and stages of development
• levels of industry competition such as perfect competition, imperfect competition,

oligopoly, duopoly and monopolies
• How demand and supply factors impart on organisations in the supply chain
• impact of market change can have on organisations
• PEST (political, economic, social and technological) criteria and the Five Forces model

impacts on an organisation, its suppliers and customers to enable an improved
understanding of the organisation’s supply chain

• How macro-economic factors such as interest rates, inflation, exchange rates and
the level of economic activity (GDP/GNP) impacts on organisations

Effective Purchasing
• sources of added value that can be achieved through effective procurement and

supply including:
• Competitive pricing
• Reduced total costs of ownership
• Improved quality
• Delivery performance and time to market
• Reduced stockholding, quantities of resources matching demand innovation
• Sustainability

• portfolio matrices to assess categories of expenditures and perceptions of the
organisation by suppliers

• business cases to justify expenditures on supplies, services or projects including:
• Costs
• Benefits
• Options
• Alignment with organisational needs
• Timescales

• main types of pricing arrangements in commercial agreements including:
• Pricing schedules
• Fixed pricing arrangements
• Cost plus and cost reimbursable pricing arrangements
• Indexation and price adjustment formulae
• Incentivised gain share pricing
• Payment terms

• The operation of financial budgets for the control of procurements
• Published reports and indices on markets
• The comparison of quoted prices to historical data
• The link between costs, prices, margins and mark ups
• Negotiating improved prices
• Estimating whole life costs
• Defining quality and the costs of non-conformance
• Assessing the quality of delivered products or services

(3) Inclusions that should be made in contracts formed in the future

Developing Contracts
• The main types of contracts and agreements including:

• The use of spot purchases
• Term contracts
• Framework agreements (or blanket orders/panel agreements)

o Call offs
• documentation that is used to create commercial agreements for the supply of goods,

services or works and how to complete these including:
• The specification
• Key performance indicators (KPIs)
• Contract terms
• Pricing schedule
• Other schedules (for health and safety, use of sub-contractors, non-
disclosure/confidentiality agreements

• sources of express terms that can be used to regulate contracts made for the supply of
goods or services including:
• The use of standard or specialised terms of purchase
• Model form contracts
• Bespoke contracts

• legal issues that relate to the creation of commercial agreements with customers or
suppliers relating to offers, counter offers, acceptance and other issues

• Core clauses that comprise commercial agreements with customers or suppliers
including:

o Indemnities and liabilities
o Sub-contracting and assignment
o Insurances
o Guarantees
o Liquidated damages
o Payment
o Delivery and completion

• provisions of legislation that relate to contracts for the supply of goods and services
including:

o Quality
o Delivery
o Payment
o Passing of property
o Compensation

Developing Specifications
• different types of specification typically used in the procurement of goods or services

such as drawings, samples, branded, technical, conformance, output or outcome based
specifications

• Sources of information that can be used to create specifications such as standards,
internet, suppliers and directories

• use of social and environmental criteria in specifications
• typical sections of a specification such as scope, definitions, descriptions of

requirements, testing and acceptance, change control mechanisms, remedies
• risks that can result from inadequate specifications particularly through under or over

specifying needs
• use of standardisation, value analysis and value engineering programmes to regulate

specifications
• use of contractual KPIs that link to technical and commercial requirements in contracts

Contract Management
• sources of added value in procurement and supply such as the movement of:
• Prices or total costs
• Timescales
• Quality
• Innovation
• Sustainability or other sources of added value
• main types of risks in the performance of contracts such as internal, market, economic,

legal, ethical sourcing and performance based risks
• Responsibilities for contract management
• Demand management for contracts
• Performance management and ensuring compliance to agreed standards
• Payment responsibilities in contract management
• Creating targets for assessing the performance of suppliers based on the SMART

(specific, measurable, achievable, relevant and timely) targets for performance
• Supplier improvement plans in contract management

(4) Measures that can be taken to select effective suppliers

The impact of the External Environment on Procurement and Supply
• Reviewing and clarifying requirements from internal customers and stakeholders
• The impact of organisational procedures on the sourcing process including:

• The responsibilities for procurement
• Regulations relating to competition
• Levels of delegated authority
• Responsibilities for the stages of the sourcing process
• Invoice clearance and payment

• Developing sourcing options such as single, dual, multiple sourcing arrangements
• The development of invitations to tender comprising of specifications, applicable key

performance indicators, contract terms, pricing schedule and other schedules
• Analysis and planning involved in a sourcing process
• The distinction between the selection in the pre-contract stage and award used in the

post-contract award stages of a sourcing process
• The evaluation of supplier’s quotations or tenders
• How to use Purchase to Pay (P2P) systems used in procurement and supply such as E-

requisitioning, E-catalogues and E-invoicing
• How to use E-tendering software in procurement and supply
• The use of E-auctions in the sourcing process

Supplier Appraisal
• The use of pre-qualification criteria or processes for supplier appraisal in the sourcing

process
• Sources of information on suppliers such as:

• Financial reports
• Credit rating agencies
• Other appropriate publications and sources

• The assessment of financial statements to evaluate the financial, commercial and
technical capabilities of potential suppliers in the sourcing process

• The use of ratio analysis to evaluate potential suppliers
• The use of scoring in the supplier appraisal process

(5) Any aspects of purchase/supply that may require negotiation

• Negotiation in relation to the sourcing process dealing with conflict with stakeholders

and suppliers

• The types of approaches that can be pursued in commercial negotiations such as:

• Collaborative (win/win)
• Distributive (win/lose)
• Pragmatic
• Principled styles of negotiation

• The stages of a commercial negotiation including the planning and preparation, opening,

testing, proposing, bargaining and agreeing

• The use of data and information in commercial negotiations

• The sources of power in commercial negotiations

• Creating the right environment for a commercial negotiation including the choice of

location, its surroundings and timings

• Behavioural aspects of negotiation including effective listening, the use of persuasion

methods, the use of tactics and influence

Corporate Award Programme

Candidate Assignment Guidance

Version 7.0 July 2016

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Contents

1. Overview

…………………………………………………………………………………………………………………………………..3

2. Submission requirements – important

………………………………………………………………………………………….3

3. Planning and conducting your research

………………………………………………………………………………………..4

4. Structuring your assignment submission

………………………………………………………………………………………4

5. Assignment front sheet

………………………………………………………………………………………………………………5

6. Contents Page ……………………………………………………………………………………………………………………………5

7. Executive Summary ……………………………………………………………………………………………………………………5

8. Assignment – main body

…………………………………………………………………………………………………………….6

9. Conclusions and recommendations

……………………………………………………………………………………………..7

10. Referencing

……………………………………………………………………………………………………………………………7

11. Reference list

…………………………………………………………………………………………………………………………8

12. Bibliography

…………………………………………………………………………………………………………………………..9

13. Appendices

……………………………………………………………………………………………………………………………9

14. Word Count

……………………………………………………………………………………………………………………….. 10

15. Policies

………………………………………………………………………………………………………………………………. 11

a. Plagiarism

……………………………………………………………………………………………………………………………… 11

b. Reasonable adjustment and special consideration

……………………………………………………………………… 11

c. Extensions beyond submission deadlines

………………………………………………………………………………….. 12

d. Assessment reviews and appeals

……………………………………………………………………………………………… 12

16. Grading

……………………………………………………………………………………………………………………………… 12

17. Marking and results

…………………………………………………………………………………………………………….. 12

18. And finally

………………………………………………………………………………………………………………………….. 13

Appendix 1: Assignment Assessment Criteria

……………………………………………………………………………………. 14

Appendix 2: Command Words

…………………………………………………………………………………………………………. 15

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1. Overview
The assignment brief is set by CIPS and all assignments are validated to ensure a standard approach. The
purpose of each assignment is to enable you to demonstrate your ability to research, analyse and problem
solve in different situations. You will be expected to approach your assignment work from a procurement and
supply context, addressing the brief directly and undertaking the tasks required. The assignment will relate
directly to the specified module content and is marked using the assessment criteria provided as an appendix
to this guide.

Read carefully the assignment title and guidance for candidates. The assignment will identify which modules it
is designed to assess. Use the relevant content from the stated modules as the basis of your assignment. It
will help you structure your planning and research. Ensure you plan your assignment to meet all of its
requirements.

2. Submission requirements – important
2.1 Include the assignment front sheet
2.2 The maximum number of documents you can submit for an assessment is one
2.3 All of your work must be contained in one document
2.4 You must not submit appendices as separate documents
2.5 You must word process your assignment using MS word, or equivalent, and convert it in to a pdf file

format
a. The file name should only consist of your full 9-digit membership number and the assignment

number, e.g. “005429889 AS1 ”. Please note that this should reflect the assignment
number, not the module number.

b. You may wish to make use of Adobe Acrobat’s Reduce File Size… function
2.6 Every page should be numbered and contain your candidate number at the top of the document in

the header.

The average number of pages for a 3,000 word assignment is 27 (including appendices). The maximum
number of pages allowed for a 3,000 word assignment is 50 pages in total. You should not exceed this
allowance. In the case of the integrative assignment, the average number of pages for a 5,000 word
assignment is 45. The maximum number of pages allowed for a 5,000 word integrative assignment is 100
pages in total.

You must hand in your assignment no later than the submission deadline stated in your timetable. There are
penalties if your submission is handed in late without prior agreement from CIPS through the Reasonable
Adjustment, Special Consideration or Extension Policies (see section 15, page 8 and 9). Submissions that do
not meet the submission requirements (for example Word rather than , multiple files, candidates
name present) will not be accepted and if the revised version is not sent within the submission timeframe the
corrected version may be subject to penalty.

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3. Planning and conducting your research
It is important that you address the requirements of the assignment brief. Some students fail to do this and
overlook one or more requirements of the assignment brief. The assignment title will include command
words. These are words such as “analyse”, “describe” etc. and define what you are expected to do. A list of
common command words and their definitions is included as an appendix to this document to help you plan
the depth of detail and type of information to research and present within your assignment.

You should take care when reproducing company information not already in the public domain within your
assignment. It is your responsibility to ensure you comply with your own company expectations if the
information is considered confidential or sensitive.

CIPS is looking for evidence that a student understands a concept and can apply it appropriately within a given
contexts defined by the assignment brief. In order to address the assignment tasks, it is not necessary to
identify any real suppliers or products. Therefore, it is acceptable to refer to a supplier as ‘Supplier A’ for
example, rather than identify real suppliers. Products can be referred to as product ‘X’ or ‘Y’ for example,
rather than identify any sensitive procurements. It is best practice to explain, within your introduction, the
naming conventions you will adopt e.g. “for the purposes of confidentiality, suppliers or products will be
referred to as…”.

Research forms part of the assessment criteria, hence it is an essential element of your assignment
preparation. Do not fail to realise the importance of collecting information to support and underpin your
assignment work. It is vital that you demonstrate your ability to establish information needs, obtain relevant
information and use it sensibly, in order to arrive at appropriate conclusions, recommendations and/or
decisions. You should establish the nature of the information required, follow up possible sources and ensure
you allow time to obtain the information. You may be dependent on other colleagues or suppliers to obtain
relevant information – do not underestimate the time it may take you to gather it. In order to conduct your
research effectively, you will need to conduct wider reading associated with the topics covered in the module
content.

Useful sources of information include those freely available to CIPS members such as our Knowledge site and
the Supply Management site. Additionally, websites such as those of the National Audit Office and the
Financial Times are a great source of case studies and examples of successes and failures which can support
your assignment preparation.

Your reference list and bibliography will provide an indication of the level of research, information collection
and application within your assignment.

4. Structuring your assignment submission
Presentation: Your assignment submission should be word processed with minimum font size 12pt and 1.5 or
double line spacing. You should adopt an appropriate layout and structure for your assignment submission.
The structure and presentation of your assignment is considered as part of the marking process so it is
important that you take the time to carefully plan your assignment and use a logical layout and structure. This
guidance document outlines a suggested structure for your assignment.

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For many of you this assignment will be dealing with issues that are of importance to your employer and they
will, in all likelihood, be interested in seeing a copy of your assignment. Spending some extra time making it as
professional as possible will pay dividends here.

Approach: The assignment title may include a number of requirements. Read it carefully and identify what
these are. Plan your assignment and research to ensure that you address all the requirements. As a guide,
you should aim to place approximately equal emphasis on each requirement within the layout of your
assignment submission. This means you will usually produce approximately the same volume of content for
each requirement within your assignment submission. Plan your research and the structure of your
assignment submission accordingly. However, during your planning or research, you may identify that it is not
appropriate to place equal emphasis on each requirement within the assignment title.

For example, factors beyond your control, such as the nature of your organisation or the external business
environment in which it operates, may mean that it is not appropriate to place equal emphasis on each
requirement of the assignment title. In such circumstances, acknowledge this within your assignment
submission to demonstrate to the assessor that you have considered all the requirements of the assignment
title. Explain to the assessor why you have adopted a particular approach to demonstrate your ability to
make judgements. Think carefully about the structure, style and content of your assignment; the key is to
ensure you justify any deviation from the assignment requirements in order to explain to the assessor why
you have adopted an unusual approach. Failure to do so could mean you fail to gain marks in the knowledge
and approach section of the assessment criteria.

Remember also that the marking team will not be familiar with your company, company-specific terminology
or acronyms. Take care to ensure you explain necessary background information, or the meaning of company-
specific terminology, in order to provide the marking team with an understanding of the nature of your
organisation and the business environment in which it operates.

5. Assignment front sheet
Please complete and attach the assignment front sheet to your submission. Your name should not appear
anywhere within your assignment.

6. Contents page

The contents page helps the reader to navigate around the document and highlights important sections and
sub-sections; this also helps you to ensure your work is structured and flows in a logical order.

7. Executive summary

The aim of an executive summary is to prepare the reader, in advance of reading a lengthy document, for
what to expect. It should briefly summarise the content and conclusions/recommendations. This is good
academic and business practice and is recommended for all assessments (assignments and project work). We
recommend you keep this to one page if possible.

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8. Assignment – main body
CIPS recommends a short introduction to the assignment to set the scene. You may wish to take the
opportunity to introduce your company or the business environment relevant to your assignment, define any
relevant terms, explain the scope of your assignment, the approach you have taken, any exclusions and
assumptions.

Assignments should have a good balance of relevant underpinning theory, tools or models and practical
application (use of examples from your organisation, or one with which you are familiar). You must select
appropriate models to demonstrate knowledge and application. It is suggested you consult and reflect upon
the programme content for the relevant module(s) in the first instance and conduct an audit of the theories,
tools and models etc., in order to identify those which may be appropriate for your assignment.

For any theories, tools or models that you include, your assignment should contain a brief description and
justification of its selection in relation to your analysis.

You should ensure you include discussion on how it was used and what information was generated from it –
interpret the findings of your analysis. Avoid citing models, tools etc., without applying them within your
analysis as this will gain no marks. You may wish to use tables or diagrams to demonstrate your application of
relevant tools or models.

When including information about the theories, tools and models etc. within your assignment, narrative
should be integrated in to the content of your assignment. Assignment submissions which simply skip from
one model or tool, for example, to the next, without linking them in some way or consolidating them in
conclusions, will be unlikely to demonstrate the extent of your comprehension of the module content and
your ability to apply it to practical business situations.

Providing a sound argument for selection and application of a particular theory, model, tool or technique –
highlighting why it is appropriate, its strengths and weaknesses/limitations (as well as your findings) – is likely
to be awarded higher marks.

The positioning of models/tools and techniques will depend on a number of factors, but ideally you should
aim for a good balance of discussion and visual impact. It is a matter of personal judgement and preference,
but, essentially they should be relevant and visually enhance the work, enabling the reader to grasp the flow
of your discussion. You should also consider:

• The strength and possible limitations of the model for the task
• The quality and depth of information contained within your assignment
• Appropriateness for the subject matter
• Whether large pieces of supporting evidence for an argument may be better placed in the Appendices

The application and insight section of the assessment criteria is the most heavily weighted. It is important to
demonstrate your ability to apply relevant tools, theories, models etc., according to the modules content and
the assignment title. The outcomes of your application will generate evidence which you must present within
your assignment submission.

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9. Conclusions and recommendations
Again, the application and insight section of the assessment criteria is the most heavily weighted. You must,
therefore, ensure you demonstrate your ability to interpret your evidence and findings by providing
recommendations, proposals for change and/or conclusions, as appropriate, which are consistent with the
evidence you have generated. This will exhibit the validity of your insight. Thorough application of tools of
analysis will help to provide strong findings which will form the foundation of your conclusions and
recommendations.

Your conclusions and recommendations must be consistent with your analysis and findings and should act as
a summary. It is important that any conclusions or recommendations are justified as part of your overall
assignment submission. When you have completed your assignment, take time to re-read it a day or so later
and check that your conclusions really are consistent with the evidence generated from your analysis.

10. Referencing
In order to avoid plagiarism, whenever you use someone’s words directly, or make reference to the ideas or
work of others, you must reference this appropriately using a recognised referencing system, such as the
Harvard system of referencing or as outlined in the CIPS Reference Guidance document. The following points
will help you cite sources of information appropriately within the body of your assignment.

• When a reference is made in your assignment to a particular document, the author (or editor, compiler or
translator) individual or organisation and year of publication are inserted in brackets:

o e.g. Agriculture still employs half a million people in rural Britain (Shucksmith, 2000).

• If the author’s name occurs naturally in the sentence, only the year of publication is given:
o e.g. … concept is discussed by Jones (1998)…

• When referring to more than one document by an author published in the same year, these are
distinguished by adding lower case letters (a, b, c) after the year:

o e.g. (Watson, 1999a)

• If there are two authors, the names of both should be given:
o e.g. (Lines and Walker, 1997)

• Where there are more than two authors, cite the first author, followed by ‘et al.’:
o e.g. (Morgan et al., 1998)

• Quotations: Direct quotations are used to show the work of another party word-for-word; the exact
words must be copied from the source document. When citing quotations, include the page number of
where the quotation can be found in the source document. Please note quotations used within your
assignment content are included within the total word count.

o Short quotations may be run into the text, using single quotation marks.
o e.g. While they recommend that teams ‘…be encouraged to improve collaboration within an

organisation autonomously’ (Driedonks, et al., 2010, p. 115), they …

Longer quotations should be separated from the rest of the text by means of a new and indented paragraph
and optional size reduction. These do not need quotation marks, however the author, date and page
reference must be included in brackets at the end of the indented paragraph of quoted text. You are advised
to use long quotations sparingly as they are included as part of the word count. Ask yourself whether they

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really add value to your assignment, or whether there is a better way of representing the information you
wish to present to the reader of your assignment.

Referencing electronic resources can be confusing, it is difficult to know which information to include or
where to find it. As a rule, provide as much information as possible concerning authorship, location and
availability. Electronic citations require much of the same information as print sources (author, year of
publication, title, publisher). However, some extra details are required:
• identify that you accessed the source in an electronic format
• provide an accurate access date for online sources (that is, identify when a source was viewed or

downloaded)
• provide the location of an online source (for example, a database or web address)
Unlike printed material, internet sources can easily be changed, or disappear altogether, so full and accurate
citation information is essential.

Example – referencing web documents
British Lawnmower Museum (no date) Lawnmowers of the Rich and Famous [online] Southport, British
Lawnmower Museum. Available: http://www.lawnmowerworld.co.uk/Rich.htm [Accessed10 March 2004]

Example – referencing electronic journals
Hart, K. (1998) The place of the 1898 Cambridge Anthropological Expedition to the Torres Straits (CAETS) in
the history of British social anthropology. Science as a culture. [Online] 11 (1). Available: http://human-
nature.com/science-as-culture/hart.html [Accessed 9 November 2003]

Example – referencing journal articles from a web-based full-text database
Mahoney, R. (2000) Leadership and learning organisations, The Learning Organization. [Online] 7 (5), 241-244.
Available: http://www.emerald-library.com/brev/11907ec1.htm [Accessed 23 October 2000]

The source materials you use should be included in a reference list at the end of your assignment. See the
following sections relating to your reference list and bibliography.

11. Reference list
A reference list is essential to ensure the works of others is acknowledged and to avoid the risk of plagiarism
issues. You must use a recognised referencing system, such as the Harvard system or as outlined in the CIPS
Reference Guidance document, as assessors will need to identify sources you have accessed during your
research and used within your assignment. See the section relating to referencing for information on how to
cite sources of information within the body of your assignment.

References are arranged alphabetically by author’s name (or title, if no author) which has been used in the
body of the text and should be presented in the following way:

• Book references – include where possible, the following information in the order listed here:
o Author(s)/Editor(s) – Surname first, followed by first name(s) or initials (be consistent). Include

all names if there are two or three authors; if more than three, use the first name and then et
al. For editors, compilers or translators (instead of author), give the abbreviation ed/eds,
comp/comps or trans following the name(s): e.g. Peckham, T. and Smith, G. (eds.)

o Year of publication – e.g. (1996)

http://www.lawnmowerworld.co.uk/Rich.htm

http://human-nature.com/science-as-culture/hart.html

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o Title – capitalise the first letter of the first word and any proper nouns; use bold, italics or
underline (be consistent); Include any sub-title, separating it from the title by a colon

o Edition – only include if not the first edition
o Series – include if relevant.

Modern versions of MS Word have some helpful tools to assist with referencing and citations. These allow
you to build a list of sources which you can access to cite in the body of your assignment using the “insert
citation” tool under the references section of the toolbar. It allows you to insert a list of “works cited” which
will automatically include all sources which you have cited within your assignment.

12. Bibliography
When researching subject areas, you may read widely, but not all will be relevant to the assignment you are
working on. However, this work should not go unrecognised and more importantly, a bibliography records
earlier reading that may be useful later when researching for future assessments or projects. If you have
documented your reading, this can be located again with ease.

13. Appendices
Core material – which is defined as text that the assessor would need to read in order to understand and
appreciate your work fully – should NOT be placed in appendices. An appendix is not a “catch-all”, or a
substitute for effective writing and editing of your assignment to meet the word count. You do not have to
use appendices – indeed; it is considered best practice that assignments only include appendices in
exceptional circumstances. For example, information that is not essential to your assignment, but validates
the content of it, provides confirmatory evidence or provides information or material that the assessor would
not otherwise be able to access, should be placed in an appendix. Documents that are available in the public
domain should be referenced, in accordance with a recognised referencing system, rather than including
them as appendices.

Examples of things which could be useful as appendices to an assignment include:

• Supporting evidence – feedback, testimonials, stakeholder interview outcomes etc.
• Technical information presented in tables and graphs – organisational charts, statistics etc.
• Supplementary data which adds useful information or insight, but is not essential to the

understanding of the personal statement – including organisation-specific material (ensure
appropriate permissions have been sought for use outside your organisation).

Appendices should be presented in the order they are mentioned in your assignment, and it is essential to
refer to each appendix within the text of your assignment. You should NOT include something as an appendix
if it is not discussed within the assignment, nor should you include any material which is readily available in
the public domain – it should be referenced in the text of the assignment using a recognised system of
referencing.

Appendices do not form part of the word count for your assignment.

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14. Word Count
The expected word count for your assignment will be highlighted on your assignment task. Your assignment
can be up to 10% below the stated word count, or up to 10% higher than the stated word count. If your
assignment exceeds (or falls short of) the stated word count by more than 10%, you may fail to gain marks
under the structure and presentation section of the assessment criteria.

The following are excluded from the word count:

• Front page
• Contents Page
• Executive Summary
• Models, tables, diagrams, graphs etc.
• Reference list
• Bibliography and appendices

You must state your assignment word count on the assignment front sheet.

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15. Policies

a. Plagiarism
Plagiarism is submitting someone else’s work as your own when you are not the author. The attempt to pass-
off the ideas, research, theories, or words of others as one’s own is considered to be a serious academic
offence. Most students know when they are intentionally plagiarising, for example, copying an entire essay
out of a book or buying a paper off the Internet. However, many students are tripped up by unintentional
plagiarism – not giving proper credit for others’ quotes, facts, ideas, or data. A good rule-of-thumb for
students is to always give credit for any ideas that are not their own by citing their sources.

The most common forms of plagiarism are:

• Copying and pasting material from a website
• Copying the work of another student (past or present)
• Copying course material or lecture notes
• Copying material out of a textbook, journal or other publication

You must take care when writing your assignment that the work you submit is your own. You are permitted
to reproduce short extracts, diagrams, tables and illustrations from other publications. But, these must be
clearly referenced and the source acknowledged. CIPS treats plagiarism very seriously and if your work is
found to contain unacknowledged third party content you may fail your assignment.

In order to avoid plagiarism, whenever you use someone’s words directly, or make reference to the ideas or
work of others, you must reference this appropriately using a recognised referencing system, such as the
Harvard system of referencing or CIPS Referencing Guidance. Failure to reference the work of others, whether
intentional or accidental is considered plagiarism, which constitutes a form of cheating (malpractice or
maladministration) and is not tolerated by CIPS. The Malpractice and Maladministration Policy includes details
of the consequences for students if they are found to have plagiarised.

b. Reasonable adjustment and special consideration
CIPS has a responsibility to ensure that all candidates have equal opportunities to reach their full potential. In
some instances, candidates may require adjustments to the assessment process to give them an equal
opportunity, and CIPS has a responsibility to ensure that appropriate adjustments are made for each
candidate.

Applications for a Reasonable Adjustment should be made in advance of the assessment. Candidates may
apply for Special Consideration in exceptional circumstances that could not possibly be predicted. This also
applies to candidates wishing to report any incident which may affect their assessment performance.

If you require a Reasonable Adjustment or Special Consideration, you should contact your CIPS programme
lead who will be able to assist you. Further information about Reasonable Adjustments and Special
Consideration can be obtained through the reasonable adjustment and special consideration policy which is
available on the Learning Management System (LMS) under the FAQ section.

http://www.cips.org/Documents/Policies%20and%20Procedures/A8.1_Malpractice_and_Maladministration_Policy_and_Procedure_Nov14

http://www.cips.org/Documents/Qualifications/Online%20assessment/G6.2_and_G7.3_Reasonable_Adjustments_and_Special_Consideration_Policy_and_Procedure_fv_03.11.14

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c. Extensions beyond submission deadlines
Extensions cannot be granted by tutors. Applications by students for an extension must be made in writing
and submitted to their Programme Lead. These will then be considered by CIPS. The application for an
extension should be completed 7 days before the submission deadline date.

All reasons for extensions require independent corroboration, usually from your employer or, in the case of
medical problems, doctor. There are some circumstances which are regarded as acceptable reasons for
granting an extension and some which are not. Examples are:

Acceptable reasons

• Holidays booked prior to start of programme
• Significant medical conditions/concerns
• Compassionate (e.g. family bereavement)
• Verified work-related travel

Unacceptable reasons:

• Workload
• Computer problems
• Lost assignments
• Desired books not in library
• Unverifiable travel difficulties
• Unawareness of the submission deadline

d. Assessment reviews and appeals
Should you wish to appeal against your result you should apply to CIPS following the assessment review and
appeals procedure within two weeks of the result release date. The assessment appeals policy can be found
on the Learning Management System (LMS) under the FAQ section. If you wish to request a review of your
assessment result, you should contact your CIPS Programme Lead who will be able to assist you.

16. Grading
The assessment criteria (see Appendix 1) breaks down each section of the assessment criteria and indicates
what is expected for each grade. The marks you are awarded for each section of the assessment criteria will
be combined in order to arrive at a total percentage result. The grade you receive for your assignment is
based upon this result as follows:

Fail less than 50% Merit 60-74%
Pass 50-59% Distinction 75% or more

17. Marking and results
Following submission of your assignment, it will be marked by a member of the CIPS assessment team,
according to the assessment criteria (see Appendix 1). CIPS employs rigorous quality assurance processes
which ensure a standard approach to assessment is adopted. The assessment outcomes and processes are
evaluated by the CIPS Assessment Quality Board.

http://www.cips.org/Documents/Policies%20and%20Procedures/I1.1_I1.3_Assessment_Review_and_Appeals_Policy_and_Procedure

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When your result is released it can be accessed via the My CIPS section of the CIPS website. Your CIPS
Programme Lead will also provide you with feedback following the release of your result. The assessment
criterion (see Appendix 1) includes the following sections which are weighted in order to help you understand
their relative importance:

• Structure and presentation (20%)
• Research (20%)
• Knowledge and approach (20%)
• Application and insight (40%).

18. And finally
This document is by no means exhaustive, but provides some guidance on how you might approach the
development of your assignment submission. It is a guide on what is generally good practice in assignment
preparation, which enables you to understand the implications of what you are doing and gives you the best
opportunity to succeed in what you do.

Good luck with your assignment preparation.

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Appendix 1: Assignment Assessment Criteria
Pass with Distinction:

75% +

Pass with Merit:
60% – 74%

Pass:
50% – 59%

Failure:
Less than 50%

Structure
and
Presentation
20%

Excellent presentation
standards incorporating
effective executive
summary, structure and
content. Supports work
with references and
bibliography appropriate
to the assessment. Work
is communicated
innovatively to a very
high and professional
standard. Layout of work
includes innovative use of
graphics, tables, data,
references, headings,
numbered paragraphs
and appendices.
Composition of answers
in keeping with any
desired word count.

Effective presentation
standards incorporating
executive summary,
structure and content;
although refinement of
these would achieve
better marks. Supports
work with references and
bibliography appropriate
to the assessment. Work
is communicated
effective to a high
standard. Layout of work
includes effective use of
graphics, tables, data,
references, headings,
numbered paragraphs
and appendices.
Composition of answers
in keeping with any
desired word count.

Presentation makes use
of an executive summary,
structure and content.
Supports work with
references and
bibliography appropriate
to the assessment. Work
is communicated to a
satisfactory standard.
Limited use is made of
graphics, tables, data,
references, headings,
numbered paragraphs
and appendices.
Composition of answers
in keeping with any
desired word count.

Disappointing
presentation standards
demonstrating the need
to improve its executive
summary, structure and
content. Limited use of
references and
bibliography. Work is
communicated
ineffectively. Layout of
work makes limited use
of graphics, tables, data,
references, headings,
numbered paragraphs
and appendices.
Composition of answers
may not be in keeping
with any desired word
count.

Research
20%

Work demonstrates
excellent collation of
appropriate primary,
secondary, quantitative
and/or qualitative
research. Evidence of
analysis of research with
a reasoned critique
provided. Work refers to
purposeful and relevant
sources of research.
Extensive references and
bibliography.

Work demonstrates
collation of appropriate
primary, secondary,
quantitative or
qualitative research.
Evidence of the analysis
of research is provided.
Work refers to
appropriate sources of
research. A range of
references and
bibliography.

Work demonstrates
limited collation of
primary, secondary,
quantitative or
qualitative research.
There is scope to create
an analysis or refinement
of the research
presented. Work refers
to sources of research. A
reasonable number of
references and
bibliography.

Work demonstrates a
lack of primary,
secondary, quantitative
or qualitative research
and there are evident
gaps in the work that the
candidate has
undertaken. Small
number of references
and bibliography.

Knowledge
and
Approach
20%

Work demonstrates a full
understanding of
relevant theory, models,
techniques, processes,
outcomes or other
aspects of the syllabus
that are appropriately
selected to formulate
answers. Applies a well
thought-out
methodology to develop
answers.

Work demonstrates an
effective understanding
of relevant theory,
models, techniques,
processes, outcomes or
other aspects of the
syllabus that are
appropriately selected to
formulate answers.

Work demonstrates a
satisfactory
understanding of
relevant theory, models,
techniques, processes,
outcomes or other
aspects of the syllabus
that are appropriately
selected to formulate
answers.

Work demonstrates a
limited or sporadic
understanding of
relevant theory, models,
techniques, processes,
outcomes or other
aspects of the syllabus
selected to formulate
answers.

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Pass with Distinction:
75% +

Pass with Merit:
60% – 74%
Pass:
50% – 59%
Failure:
Less than 50%

Application
and Insight
40%

Work demonstrates the
fitting application of
theory, models,
techniques, processes,
outcomes or other
aspects of the syllabus.
Candidate creates
proposals for change that
can achieve business
improvements whilst
recognising boundaries
that can affect their
implementation. The
work is supported by an
innovative or appropriate
business case or
implementation plan
when relevant.

Work demonstrates an
effective application of
theory, models,
techniques, processes,
outcomes or other
aspects of the syllabus.
Candidate creates
proposals for change that
can achieve business
improvements. The work
is supported by an
effective business case or
implementation plan
when relevant.

Work demonstrates the
application of some
limited theory, models,
techniques, processes,
outcomes or other
aspects of the syllabus.
Candidate creates limited
proposals for change that
can achieve business
improvements. A limited
business case or
implementation plan is
presented when relevant.

Work demonstrates
limited or sporadic
application of theory,
models, techniques,
processes, outcomes or
other aspects of the
syllabus. Candidate’s
proposals for change lack
justification. The work
lacks an effective
business case or
implementation plan
when relevant.

Appendix 2: Command Words

Command
Word

Definition

Analyse Examine a topic together with thoughts and judgments about it, by dividing the topic into its
separate parts and looking at each part in detail

Appraise Evaluate, judge or assess something
Argue Provide reasons for or against something, clearly and in proper order, using or citing evidence

so that a case can be proved. Also compare with Discuss
Assess Evaluate or judge the importance of something, referring to the special knowledge of experts

where possible. This may involve from other texts
Comment on Write notes explaining your own criticism and observations of something
Compare Examine one thing in relation to another thing, so that points of similarity or difference

become evident
Consider Take something in to account, or make allowance for something. Think carefully about

something or reflect upon it
Contrast Emphasise the differences between two opposite or dissimilar things
Criticise Give your judgements about the good or bad qualities of theories or opinions, supporting

your decision with evidence
Define Explain the exact meaning of a word or phrase
Describe Give a full account or a detailed representation of something
Discuss Consider something by writing about it from different points of view.
Evaluate Calculate or judge the value of something; include your personal opinion in your evaluation

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Command
Word
Definition

together with appropriate reasons for your opinion
Explain Give reasons for, or account for something, so that it is clear or easy to understand
Identify Identify to state or briefly mention items of information
Illustrate Clarify or explain something by using examples or diagrams
Interpret Use your own ideas to explain the significance of something
Justify Show good reasons for decisions, recommendations or conclusions, perhaps by referring to

other texts
List Mention items separately in number order or by using bullet points
Outline Give the main features, facts or the general idea of something, omitting minor details
Propose Put forward (for example a point of view, idea, argument, suggestion) for consideration or

action
Reconcile Show how two apparently conflicting things can appear similar or compatible
Relate Establish a connection or association between things to show how they affect each other or

how they are alike
Review Examine and assess a subject critically
Show Explain thoroughly or prove something, so that the truth can be established
State Put something into words clearly and briefly
Suggest This means that there may be more than one answer. You must give the most appropriate

answer, or answers. It is good practice to state why it is the most appropriate answer
Summarise Give a brief, concise account of the main points of something, leaving out details and

examples

Classification: Internal Use

Excusive Summary:

The assessment has been related to the development of the sourcing plan in SABIC. The procurement department has been dedicated to procure the right materials, cost, and time to all SABIC affiliates. Valves have been selected as an example of material category procured by spot buying department.

It has been found that the procurement function has to implement various aspects of modern day technology and automation to be able to supply the needs of the industry. The industry has become competitive and thus it is important for the company to produce at cheaper costs. Cost savings can be done in the stage of procurement. Collaboration with suppliers will be the key in understanding the market’s modern day trends as well as innovation techniques that can improve the overall procurement process. Suppliers can also know about the needs and demands of the company with the help of this collaboration. These suppliers are to be contracted and chosen based on the quality of the products. They are to be connected on a real time platform whereby they can measure the needs and demands of the company. This will enable suppliers to adjust their production quickly accordingly. Cost savings can also be done with the help of proper techniques by the procurement department. The procurement department can also take the help of data analysis, which can provide them with proper information relating to the demand, types of customers, conditions in the market etc.

All these aspects can be summed up in the development of a proper procurement strategy that in turn can contribute to the development of the procurement department in the days to come.

Introduction

The basis of the success of the companies in the modern days has been the development of a proper supply chain management (SCM) which in turn has helped the companies to procure the right kind of materials, developing the same and delivering the finished products in a timely manner to the eventual customers. The globalization of the business environment has made it apparent that customers today have various choices at hands in most of the industries and thus the companies have to perform to the best of their abilities in order to succeed. The SCM helps the organizations in this regard and provides them the ability to deliver high quality products and services to the eventual customers (Christopher, 2016).

The researches in the field have analysed that the needs and the preferences of the customers in the market play an integral role in the development of procurement functions in the SCM process. Technological aspects have been at the fore in the development of the procurement process in SCM today (De Barros et al, 2015).

SABIC procurement process is developed to make the procurement department in sync with the business environment in Saudi Arabia. The procurement function related to valves will be considered in the context of SABIC. Thus, it will be important to understand the process of procurement in the department so that it can provide a detailed understanding of the similar companies all over the world.

This category plan provides an in-depth analysis of the key aspects surrounding the valves category as of August 2018, presenting a schema for a category strategy based on current SABIC requirements and supply market dynamics. The category team is to monitor the evolution of internal requirements and external supply market dynamics, and adjust the proposed recommendations in this document as required. The scope of the category buyer covers all manual and control valves, including spare parts and services.

Internal category profile

· In 20

, spend for valves, spares and services was USD 41.1 MM

· SABIC’s KSA affiliates account for 77% of valves and spares spend

· Number of unique specs is too high (125,000)

· Over the last three years, SABIC has purchased valves from more than 683 suppliers

· 524 active plank agreements, only 12% of spend procured through these, 64% of these contracts now expired

· Several data quality issues: availability of capital projects data, spend categorization discipline and accuracy, and vendor name standardization

External category profile

· Global market size for industrial valves in 2017 was approximately USD 20.5 billion

· Over the next 4 years, GCC (Gulf Cooperation Council) market activity expected to grow at 11% CAGR (Compounded Annual Growth Rate)

· Despite recent consolidation, valves supply market is very fragmented (top 10 suppliers account for 25% of the world’s production facilities)

Total cost of ownership

· Acquisition cost represents less than 50% of the total lifecycle cost

· Current selection of suppliers based on acquisition price is suboptimal

Category strategy

· Three main category objectives: complexity reduction (of specifications and suppliers), cost reduction (leveraging total cost of ownership models), and localization of valves and spares

· Improve master data quality and conduct a spec standardization

· Reduce number of suppliers, bundling volumes across geographies and over time, also across categories (mega supplier agreements) and across companies (buying consortia)

· Establish long term performance based agreements with a reduced number of suppliers to be used both in new projects and replacements/repairs – three criteria: technical qualification, total cost of ownership, and local content development

· Price revision mechanism (e.g. index, frequency, etc.) to be part of the contract

· Pilot VMI (Vendor Managed Inventory) with a selected number of SKUs (Stock Keeping Unit) and back-to-back SLAs (Service Level Agreement) with customers and suppliers

Category strategy implementation

· Implementation plan sees all strategies above yielding benefits within 12 months

· Four enablers: people (capacity, training, cross-functional teaming), information (access within and outside SABIC), tools (as needed), and organizational alignment (management sponsorship)

We believe that, by following the recommendations laid out in this plan, SABIC can see a double-digit reduction of its valves cost while improving service levels offered to its internal customers.

1. Category Definition

1.1. Category Description

Valves are mechanical devices widely used across many industries (e.g., petroleum, petrochemical, chemical, power, pharmaceutical, water, etc.) to regulate, direct or control the flow of a fluid (gases, liquids, fluidized solids) by opening, closing, or partially obstructing various passageways.

There are two common ways to classify valves. The first one, by how they are actuated. Based on this, valves can be hydraulic, pneumatic, electrical and manual. The second and most common classification is based on their design. As we describe below, different designs are suitable for different process requirements.

Gate valves

A gate valve opens by lifting a round or rectangular gate/wedge out of the path of the fluid. The distinct feature of a gate valve is that the sealing surfaces between the gate and seat are planar. Gate valves are often used when there is a straight-line flow of fluid and minimum restriction is desired.

Selected features:

· Frequently used

· Economic

· Not suitable for throttling (create vibration)

· Minimum pressure drop

· Typically rising stem – when the valve is opened or closed, the hand wheel remains in the same position and it is the stem that rises or falls

Plug valves

This is one the simplest and earliest valve designs. It consists of a plug, which is generally tapered toward the bottom. This plug fits in a seat in the body of the valve, and contains a port to allow the fluid flow. The rotation of the plug is used to control the opening – rotating the plug by 90 degrees completely opens/closes the valve.

Plug valves provide reliable leak tight service, can be quickly opened and closed, and offer low resistance to flow. These valves are seldom used for regulating flow.

Globe valves

Globe valves are most commonly used for pipeline flow regulation. They consist of a movable disc-type element and a stationary ring seat in a generally spherical body.

The plug in a globe valve (sometimes referred to as disc) is connected to a stem, which is operated by screw action, using a hand wheel in manual valves or an actuator in automated ones.

Ball valves

A ball valve is a one-way valve with a spherical disc that controls the flow through it. The sphere has a hole, or port, through the middle to allow the flow when the port is in line with both ends of the valve. The ball valve, along with the butterfly valve and plug valve, is part of the quarter turn valves family.

Ball valves are very commonly used for flow regulation and can be found in all sizes and materials. They are generally operated with a wrench/lever instead of a wheel. Depending on the body, we find different types: single body, three-piece body, split body, top entry, and welded. Ball valves can be also classified based on their port/bore style as:

· Full port – over-sized ball so that the hole in it is the same size as the pipeline, which reduces friction loss

· Reduced port – hole in the ball is of a smaller size than the pipeline (flow area is smaller than the pipe)

· V port – either a ‘V’ shaped ball or a ‘V’ shaped seat

Check valves

Check valves, also known as a no-return valves, allow fluids to flow through them in only one direction. These valves close by the pressure exercised by the fluid, not needing to be controlled by any external element. Accordingly, most do not have any valve handle or stem.

Check valves are generally small, simple, and inexpensive in comparison to most other valves. The most common types of check valves are:

· Lift – closing member, the movable part to block the flow, is a ball or a disc

· Diaphragm – use a flexing rubber diaphragm positioned to create a normally-closed valve

· Swing or tilting disc – have a swinging gate hinged at the top and open as fluid flows through

Butterfly valves

Butterfly valves can be used for isolating and regulating flow. The closing mechanism takes the form of a disc. Their operation is similar to that of a ball valve, which allows for quick shut off. Butterfly valves are generally favored for low temperature/pressure applications due to their low cost. They are also lighter and require less maintenance. Nevertheless, because the closing mechanism is always present within the flow, butterfly valves produce higher pressure drops and turbulence than other types of valve.

The most commonly used butterfly valve types are:

· Wafer-style – designed to maintain a seal against bidirectional pressure differential and prevent backflow in systems designed for unidirectional flow. It accomplishes this with a tightly fitted seal (e.g., gasket), and a flat valve face on the upstream and downstream sides of the valve.

· Lug-style – with threaded inserts at both sides of the body, this valve is installed between two flanges using a separate set of bolts for each flange. This permits either side of the piping system to be disconnected without disturbing the other one.

Solenoid valves

These electromechanically operated valves are controlled by an electric current through a solenoid. In the case of a two-port valve, the flow can be switched on and off. In the case of a three-port valve, the outflow is switched between the two outlet ports.

Diaphragm valves

Diaphragm valves get their name from a flexible disc that comes into contact with a seat at the top of the valve body to form a seal. This diaphragm is a flexible, pressure responsive element that transmits force to open and close the valve. Diaphragm valves are extremely clean, leak proof and easy to maintain (most repairs can be made without interrupting the pipeline).

These are linear motion valves used to start/stop and control fluid flow, mostly in moderate pressure and temperature systems. The two most common types of diaphragm valves are:

· Weir diaphragm valves are the most popular type of the two and are typically used for small flows, and for corrosive and abrasive environments

· Straight-way diaphragm valves’ bodies have a flat bottom that is parallel to the flow stream. These valves are typically used in situations where the flow direction changes within the system

Needle valves

These valves have a small port and a threaded, needle-shaped plunger. They allow precise regulation of flow, but they are generally only capable of handling relatively low flow rates.

Needle valves are similar to globe valves in their functioning, having a needle-like point at the end of the valve stem, instead of a disc. They are mostly used to start, stop, and regulate the flow rate within a pipeline. Indeed, needle valves are usually used in flow-metering applications, especially when a constant, calibrated, low flow rate must be maintained for some time.

Relief valves

Relief valves (also called safety relief valves or pressure relief valves) are passive devices designed to open when pressure exceeds a certain threshold (set value) to relieve it from the vessel or line to which the valve is connected.

These are critical safety devices that prevent pressure within the system from exceeding design tolerances. Hence their proper functioning is an important element of the plant’s overall safety system.

Control valves

Control valves are automated valves that can make precise adjustments to regulate the flow of a fluid, based on signals received from instruments situated throughout the system.

The opening or closing of automatic control valves is usually done by electrical, hydraulic or pneumatic actuators.

Control valves can be of many of the different types of valves described in this section (globe, butterfly, ball, diaphragm, etc.).

Other valve types

Other less common valve types include:

· Angle valves: These valves are used for controlling the flow of a fluid, which leaves the valve at a right angle (90 degrees) to the direction in which it enters it

· Pilot valves: Small valves that control a limited-flow control feed to a separate piloted valve. Typically, this valve controls a high pressure or high flow feed. Pilot valves allow a small and easily operated feed to control a much higher pressure or higher flow feed, which would otherwise require a much larger force for operation

· Shuttle valves: Valves that allow fluid to flow through it from one of two sources. Generally, a shuttle valve is used in pneumatic systems, although sometimes it can be found in hydraulic systems too

· Poppet valves: Valves typically used to control the timing and quantity of gas or vapor flow into an engine

Valve specifications

Valves can be made of multiple materials including forged or casted steel (carbon and stainless), iron, plastic (e.g., PVC), bronze, and exotic alloys. Different operational requirements dictate different design requirements (material, size, temperature rating, pressure rating, etc.). Most valves are manufactured according to international standards. The most common ones are: API (600, 602, 603, 608, 609, 598, 6D), ASME (B16.34, B16.10) and DIN (3202-4, 3202-5, 3339, 3351-1, 3352-2, 3352-3, 3352-4).

Valves have five main components: body, bonnet, seat, disc and stem.

The body of the valve is the main pressure containing structure and comprises all internal parts.

The bonnet provides a leak-proof closure to the valve body, ensuring containment of the fluid. Bonnets can be bolted, welded, threaded or screwed depending on pressure rating requirements.

The valve seat is the interior surface of the body which contacts the disc to form a leak-tight seal. The seat ring provides a stable, uniform and replaceable shut off surface. Seats can be soft (e.g., Teflon or Viton, which offer better shutoff but are limited from a pressure / temperature rating perspective) or hard (mostly metallic and used for high pressure / temperature and aggressive environments).

The valve disc is a movable obstruction inside the body that restricts flow through the valve.

The valve stem transmits motion from the handle or controlling device to the disc. In some cases, the stem and the disc, or the stem and the handle, can be combined in one piece. Stems can be rising (no contact with the fluid) and non-rising (only usable in non-corrosive applications).

Valves end connections can be threaded (male / female), flanged (RF – raised face / FF – flat face FF / RTJ – ring type joint), or welded (butt / socket).

1.2. Category Tree

The category tree depicted below is structured based on the most common classification of valves, mirroring both the way the supply market is organized and SABIC’s internal category taxonomy.

Even for a company the size of SABIC, the number of unique specs observed is high. This is investigated further throughout different sections of this document.

2. Internal Category Profile

2.1. Spend Analysis

Valves are reparable static equipment, which means that, beyond the acquisition of new valves, spares and related services need to be also procured. As such, the analyses performed in this section encompass all valve types, spares and related services procured outside LSTK agreements for large capital projects. The latter have not been included in this section due to lack of data availability.

Spend evolution over time

The overall spend related to valves increased by 3% between 2015 and 2017. This growth was uneven – while valves spend increased by 14%, the spend for valve spares and related services decreased by 4% and 24% respectively.

This change might indicate a shift in the maintenance strategy, as it could be driven by an increasing proportion of valve replacements vs. repairs. This hypothesis will be validated during the implementation phase.

Spend breakdown by region

Despite the global footprint of the company, SABIC’s KSA operations continue to dominate the external spend. More specifically, 77% of valve materials spend (valves and spares) correspond to affiliates located in the Kingdom.

As a matter of fact, almost two thirds of valve materials spend correspond to the following nine affiliates: PETROKEMYA (2000), SAUDI KAYAN (1900), SADAF (1100), SAFCO JUBAIL (4000), IBN ZAHR (3300), YANPET (1300), SHARQ (1200), HADEED (2100) and YANSAB (1800).

Not only the total valve materials spend is different by region, but also its relative distribution. In the graph below, we observe that the relative value of spares to valves is significantly larger in the KSA.

Something similar happens when we analyse the relative size of the spares and services spend across regions.

These differences should be further explored, but are likely driven by a combination of four factors:

· Tendency to repair vs. replace (e.g., in the KSA more valves are repaired and that is why the relative spend in spares is higher)

· Extent to which repair services are outsourced vs. performed in-house (e.g., in KSA, more valves are repaired in-house and hence the spend for services is relatively small)

· Nature of the repair contracts (e.g., valve repairs outside the KSA can be under lump sum service contracts with the supplier also providing spares bundled under the same one)

· Extent to which smaller repair services are scheduled within larger turnarounds, having a similar effect to the one described above

Spend breakdown by valve type

Over the last three years, the top five valve types (control, gate, ball, relief, and solenoid) accounted for more than 60% of the valve spend (excluding spares and services).

It is also observed that there is a significant amount of valve spend uncategorized in the system (USD 12.7 MM). This issue is explored in more detailed at the end of this section.

Spend breakdown by specification

Given the extensive network of SABIC locations and the category complexity, a large number of unique specifications is to be expected. The spend by specification varies significantly though. As shown in the chart below, 21% of the total account for 80% of the spend.

This is interesting from a couple of different perspectives. First, it identifies those specifications where special attention needs to be placed within the context of securing advantageous agreements. Second, it detects the need to manage the complexity derived by the excessive number of existing variants (e.g., impact on inventory carrying costs and plant maintainability). Both insights and required actions are addressed in more detail in the category strategy section.

Spend breakdown by supplier

Another area where excessive complexity is found is within the number of suppliers currently used. Over the last three years, SABIC has purchased valves from 683 suppliers – a mix of manufacturers, agents, traders, stockers and service providers.

This represents a unique opportunity to better manage cost and complexity by reducing the number and rethinking the type of suppliers that we do business with. As a matter of fact, volume consolidation would likely enable direct negotiations with manufacturers, avoiding the need to deal through non-value adding intermediaries.

2.2. Spend Trend

While developing a detailed understanding of the historical spend is critical, it is equally so to develop a clear view of SABIC upcoming requirements (ongoing operational expenditures, upcoming capital projects, JVs, mergers and acquisitions). This will be an instrumental piece of information to develop the scope of work and increase the attractiveness of SABIC’s business for suppliers.

While no major changes are expected to SABIC’s operational requirements, upcoming projects should be considered when going to market.

2.3. Agreements in place

Despite having 524 active plank agreements, only 18% of the spend in the last three years was procured through these. In addition, 66% of those contracts are now expired.

2.4. Limitations to the analysis

Spend transparency is the backbone of a robust category strategy. While analysis performed offers a good basis for the development of the same one, several data quality issues were encountered and should be addressed for future efforts (within and outside the valves category).

Capital projects data

Despite being an important spend driver, data for valves purchased within EPC contracts for large capital projects is not available.

Spend categorization

Over the last three years, at least 12,161 valves have not been properly categorized, hindering company’s ability to achieve the level of spend transparency required for maximum procurement effectiveness. This seems to be related to suboptimal discipline at the time of data entry. For example, the valve shown in the figure below was generically categorized under material class “valve” despite a more detailed material class (“valve, butterfly”) being available.

In addition, another issue related to spend categorization has been identified. As the figure below shows, there are instances where there is more than one material class (e.g., “Valve, Ball”, and “Ball Valve”) for the same UNSPC, again hindering SABIC’s ability to sort spend data easily and accurately.

Finally, it has also been observed an excessive usage of certain “generic” material classes that further limit spend transparency. In the example below, the same material class is used for recording multiple transactions of very different nature, as the variance analysis suggests.

Spec standardization

Specification standardization is a critical enabler of cost savings driven by procurement, inventory management, and maintenance. Analyzing the attributes entered in the system to describe valves, we observe an excessive amount of possible entries for each attribute. This is likely driven by an absence of a pre-established taxonomy at the attribute level, and prevents the company from understanding the real amount of truly unique specifications. For example, typically, port types for ball valves can be narrowed down to four, “Full”, “Standard”, “Reduced”, and “V”. Currently, there are 183 different port types in the system (note: port type is the attribute where the least variance is observed).

Vendor name standardization

Similarly to what happens with specifications, the lack of consistent supplier master data results in multiple vendor codes being associated with one same vendor, making it time consuming and potentially inaccurate to run basic analysis like spend by vendor.

3. External category profile

3.1. Global supply market dynamics

The global market size for industrial valves in 2017 was approximately USD 20.5 billion. This was the lowest point in a downward trend following the oil price collapse of 2014. This high correlation demonstrates the importance of the oil & gas industry for the industrial valves market, it being its single largest consumer.

Over the next 4 years, the valves market is expected to grow at 8% CAGR (Compound Annual Growth Rate) as oil prices recover.

Since 2015, we have seen multiple mergers and acquisitions within the valves industry (the table below lists the key ones).

Despite recent consolidation, the valves supply market continues to be very fragmented, with the top 10 suppliers accounting for 25% of the world’s production facilities. These top suppliers are: Emerson (including Pentair, Fisher and Tyco), Samson, Schlumberger (including Cameron), CIRCOR Energy, Flowserve, GE Oil & Gas, IMI, Metso, and Curtis Wright.

An additional layer of complexity comes from the extensive use of distributors and agents (especially in markets like Saudi Arabia), which increases the degree of fragmentation further.

It is also important to notice that the same level of fragmentation is not observed across all types of valves. For control and high spec valves, both of which have a higher degree of complexity (size, pressure rating, special operating conditions, etc.), there are fewer credible suppliers, which affects that balance of power between demand and supply as we will see in section 5.

3.2. Regional supply market dynamics

Within the Gulf Cooperation Council (GCC), we observe that the valve industry slowed down in 2017 and 2018 driven by a delayed response to the drop in oil prices in the form of project cancelation/postponements.

Over the next 4 years, the GCC valves market is expected to grow at 11% CAGR as oil prices recover, and with a prominent role of the KSA energy sector.

Oil & gas has been the main engine behind industrial valves demand in the GCC. It is expected that the relative importance of this sector will decrease as the petrochemicals sector expands over the coming 3 years.

Currently, there are several Saudi companies (see table below) supplying valves locally, but true manufacturing (beyond assembly) is limited due to the lack of basic enablers within the valves manufacturing value chain (e.g., the existence of casting and forging capacity in Saudi Arabia).

3.3. Cost structure

The biggest cost component of a valve is its raw material, which accounts for 45% to 55% of the cost of the valve depending on the specification. Hence, it is important to understand in depth the raw material market (often carbon steel) and test the correlation between theoretical (should cost analysis) vs. actual cost/price increases.

Generally speaking, margins for standard valves are lower due to stronger competition in this segment, with players facing pressure from emerging manufacturers from low cost countries such as China. High spec valves’ market is less fragmented and more competitive, and consequently enjoy higher margins.

4. Total cost of ownership (TCO)

Total cost of ownership (TCO) is a financial estimate of the direct and indirect costs incurred when acquiring a product or a service. It is calculated by accounting for all the costs that will be incurred through the lifecycle of the product or service.

This analysis is critical from a procurement standpoint since it informs the cost elements that need to be evaluated to select the most appropriate supplier (the lowest acquisition price is not always the lowest total lifecycle cost). For valves, there are six relevant cost elements that need to be considered.

Acquisition cost

Acquisition cost is composed of the actual price paid to the supplier for the valve (after any discounts applied) and the internal cost to process the PO. SABIC PO processing costs are tabulated below.

Transportation cost

Transportation cost is mostly dependent on the Incoterm the contract is negotiated under. Unless it is a DDP contract (which is commonly used), there will be a transportation cost incurred that will depend on a variety of factors, including the delivery weight, size, and shipment mode.

The tables below summarize the different Incoterms and the associated costs for SABIC.

Installation cost

Initial installation costs are covered under the EPC contract. For replacements, these are covered under the maintenance and repair cost element.

Inventory carrying cost

Inventory carrying cost includes taxes, employee costs, depreciation, insurance, cost to keep items in storage, opportunity cost, cost of insuring and replacing items, and the overall cost of capital for the company. To simplify its calculation, it is typically expressed as a percentage of the inventory value. For SABIC, it is assumed to be 18%.

Maintenance and repair cost

Maintenance and repair cost is comprised of:

· The price of the spare part, plus the processing cost for the PO (as per the table under acquisition cost section), plus a warehouse transaction cost of SAR 77

· The labor cost associated to the activity (repair and overhaul, test and paint, installation cost)

Disposal and salvage cost

Typically estimated within the range of 4 to 6% of the PO value.

Applying the logic described above, we calculate the total cost of ownership for valves of different characteristics, since the weighting of the different cost elements vary by type of valve.

The analysis above shows that, in both cases, the acquisition cost represents less than 50% of the total lifecycle cost of the valve, spare parts acquisition costs accounting for 30 to 40%. According to this, selecting suppliers based on acquisition price is a flawed approach as, unless spare parts are included in the contract and factored into the bid evaluation process, the lowest price supplier might not necessarily be the lowest total lifecycle cost one.

5. Category strategy

5.1. SABIC category objectives

The business environment has become more competitive and thus the customers have to be satisfied according to their changing nature of needs and demands. Companies are able to survive in the market if they can meet the needs and demands of their stakeholders. Profit making happens when the needs and demands of all the stakeholders are fulfilled.

Given the competition in the market, it has become very important for the companies to control costs in the procurement process that in turn can create a competitive price for the finished products supplied to their customers.

SABIC GPS (Global Procurements Services)’s mission is “to ensure efficient, reliable Procurement with proactive value maximization, supporting SABIC’s global growth objectives while complying with ethical standards”. In line with this and supported by findings from analysis conducted, three main category objectives emerge:

1. Reduce complexity. There is an excessive proliferation of specifications and suppliers. The former is partly driven by master data quality (same spec with different material numbers) and lack of standardization (different specs for the same functional requirement), which needs to be enhanced. The latter requires a more disciplined approach (at portfolio level) to supplier selection.

2. Reduce total cost. Higher costs are a typical side effect of the excessive complexity described above. Moreover, total cost of ownership analysis in section 4 demonstrates that price-based supplier selection can be suboptimal. Leveraging more advanced strategies (as described in section 5.3) and enabling technology (e.g., e-catalogs), as well as improved contract compliance, will also contribute to total cost reduction.

3. Localize standard valves. In line with Vision 2030 and the National Transformation Program, there is a renewed push towards local content development in SABIC. This has been formalized under the NUSANED program, which has a specific workstream on Procurement. Given the relatively low complexity of standard valves, this should be a target for further localization.

5.2. Supply – demand power assessment

Collaboration with stakeholders

The suppliers have been the main stakeholder of the procurement process. Collaborating with the suppliers may provide subsequent information to the company in relation to the market trends and demands. Collaboration with suppliers in different geographical areas has been able to provide new technologies and innovation (Espín et al, 2016). Procurement department can communicate with the suppliers and can know about the new techniques and ways in the production process. The suppliers can provide important inputs in this regard and this can be applied in the value chain of the company. Collaborating with stakeholders has also been seen to be important in the case of sustainable operations. The suppliers can be included in the development of a circular economy (Witjes, S., & Lozano, 2016). Long-term contracts can eradicate the problems of the high costs of materials that SABIC has been incurring presently.

Different balances of power between a company and its suppliers result in different types of relationships. In the same way, different balances of power dictate different purchasing strategies to extract as much value as possible from a company’s supply base.

Potential basic strategies and detailed approaches based on supply – demand power balance

Four basic strategies exist based on the balance of power between supply and demand. Within each of these four basic strategies, 16 levers can be used to create value for the organization. We offer below and explanation of the four basic strategies:

Manage spend

In the case of low supply and demand power, the first basic strategy involves professional steering of demand. Managing spend first of all requires detailed knowledge of who is buying what from which supplier. Based on this, one can then consider the possibility of offsetting low demand power by bundling demand, either within the company or across company boundaries. But first, an uncompromising analysis of whether the demand in question is actually justified is necessary.

Leverage competition among suppliers

Where high demand power exists, the second basic strategy is to leverage competition among suppliers to the advantage of the company. Variations of this basic strategy consist of further fueling competition through appropriate measures on the supplier market, or influencing supplier pricing through analytical tools.

Seek joint advantage with supplier

Where there is both high supply power and high demand power, the third basic strategy aims at searching jointly with the supplier for advantages. The different variants of this basic strategy depend on the scope

and intensity of the partnership. The scope can range from coordinated demand and capacity planning to complete intermeshing of the value chain. Meanwhile, the intensity can range anywhere from a project-based sharing of costs to the sharing of financial success and risk.

Change the nature of demand

In cases where supply power is high, the fourth basic strategy is to change the nature of demand. High supply power exists whenever a supplier succeeds in establishing a monopolistic or oligopolistic position due to a unique technical advantage or exclusive market access. This position is far from being inevitable, and in fact is often brought about by the buying company itself – with or without its knowledge. Changing the nature of demand requires sounding out the limits – that is, determining to what extent the company can modify technical specifications to regain freedom of choice. Experience shows that it is possible to circumvent nearly all monopolies and manage the remaining risk using appropriate measures.

These four basic strategies encompass 16 different levers each that allow companies to maximize value extracted from their supply base. To select the most appropriate ones, balance of supply and demand power needs to be assessed. To be effective, assessment of supply and demand power should be conducted at a level of granularity such that it enables the differentiation between supply market dynamics of similar, but uniquely distinct categories or subcategories. For valves, the proposed segmentation is:

· Manual valves (standard spec) – Valves of multiple types (gate, ball, solenoid, butterfly, check, globe, plug, diaphragm, needle) with one thing in common: specification (material, size, rating) is such that it can be supplied by multitude of providers

· Manual valves (high spec) – Valves of multiple types (gate, ball, solenoid, butterfly, check, globe, plug, diaphragm, needle) with one thing in common: specification (material, size, rating) is such that it can be supplied by a significantly smaller number of providers (e.g., chlorine process)

· Control valves

· Relief valves

· Spare parts

· Services

Manual valves (standard spec)

Supply power is low. Despite recent M&A activity, there are many credible suppliers. This supply market fragmentation, together with low switching costs, force suppliers to compete aggressively within this valves segment.

Demand power is medium. Although SABIC is one of the main industrial players in the KSA, and an important reference for suppliers in the region, its annual spend represents less than 5% of the GCC valves market for this segment.

Manual valves (high spec)

Supply power is medium. The supply market for high spec valves is less fragmented than for standard ones (all high spec valves manufacturers produce standard valves, but not the other way around). In addition, switching costs are also higher within this valves segment.

Demand power is low. Although SABIC is one of the main industrial players in the KSA, and an important reference for suppliers in the region, its annual spend represents less than 0.5% of the GCC valves market for this segment.

Control valves

Supply power is medium. The supply market for control valves is also less fragmented than for standard ones and switching costs are also higher within this valves segment.

Demand power is low. Although SABIC is one of the main industrial players in the KSA, and an important reference for suppliers in the region, its annual spend represents less than 1% of the GCC valves market for this segment.

Relief valves
Supply power is low. Despite recent M&A activity, there are many credible suppliers. This supply market fragmentation, together with low switching costs, force suppliers to compete aggressively within this valves segment.

Demand power is medium. Although SABIC is one of the main industrial players in the KSA, and an important reference for suppliers in the region, its annual spend represents a small portion of the GCC valves market for this segment.

Spare parts

Supply power is medium. Although the supply market for spare parts is highly fragmented, SABIC end user preference to buy from the same manufacturer increases significantly switching costs. Differences are observed between spare parts (e.g., for seats, discs, etc., the OEM is essentially dictated, while for more generic parts like gaskets, non-branded alternatives are acceptable).

Services

Supply power is medium-low. Although less fragmented than the market of standard valves, there are enough suppliers (with little differentiability) in the market to secure a healthy level of competition.

Demand power is high. SABIC is one of the main industrial players in the KSA, and an important reference for suppliers in the region. This, together with the typically small size of service providers give SABIC a strong bargaining position.

Based on the assessment above, the relative positioning of the different valves sub-categories within the supply-demand power matrix is as follows:

5.3. Category management strategies

Strategies presented in this section are based on the current balance of power between supply and demand for the different valves sub-categories, but also on the potential levers that can be applied to shift the demand power upwards (to the right of the matrix) and the supply power downwards (to the bottom of the matrix).

Strategies for manual valves (standard spec) and relief valves (same balance of power as manual valves)

The balance of power for these standard valves is favorable to SABIC given the relatively high spend and the large number of suppliers that can supply this type of valves.

· Supplier consolidation: To shift demand power from medium to high for these standard valves for which many manufactures exist, SABIC should leverage more effectively its scale and reduce the excessive number of companies it purchases from. The mix of suppliers is equally important – SABIC should try to minimize (specially for repairable valves) the usage of agents and distributors, finding the right balance with manufacturers to optimize the cost-to-service level ratio (e.g., leveraging distributors / agents for only low volume specs not covered by existing contracts). This needs to be looked at region by region since the maturity of the supply market will vary, and with it the capabilities (including service level) and competitiveness (total cost of ownership) of both distributors and manufacturers.

· Master data management: Detailed spend analysis has highlighted several data quality issues (see section 2.4). These should be addressed (e.g., data cleansing, data entry discipline) as master data quality is a key enabler of many of the most impactful sourcing levers (e.g., standardization).

· Standardization: Detailed spend analysis has also highlighted an excessive amount of specifications. An important root cause of this is master data quality (same spec with different material numbers). This should be addressed first (e.g., data cleansing, data entry discipline). Beyond this, a spec commonality1 exercise in conjunction with engineering, and involving selected manufacturers, can significantly reduce the number of specifications further (avoiding duplication of specs for the same functional requirement – process/application). In addition to the intrinsic benefits, reduction of reduction of the number of specifications will be a key enabler for the further localization of the supply base.

In addition, to prevent unexpected price revision requests, a properly documented mechanism (e.g. index, frequency, etc.) should be part of the contract.

· Vendor managed inventory: For better management of working capital and further reduction of intrinsic complexity, VMI (e.g., VSP, CSP) should be piloted for a selected number of SKUs, making sure these are available in KSA and that back-to-back SLAs are in place with customers and suppliers.

· LCC (Low Cost Country) sourcing: For low complexity valves, there are many low-cost country suppliers offering very competitive prices. These suppliers should be invited to participate in the RFP described above, even in the KSA, at least for benchmarking purposes (since this valve segment is also a target for local manufacturing).

· Total cost of ownership: As discussed in section 4, acquisition price is only a portion of the total cost incurred over the life cycle of a valve. As such, it is important to select suppliers of repairable valves (as defined by the Reliability department) based, not only on the valve price, but also on the prices of the main spare parts (BOM to be defined in conjunction with the Reliability department). For this, the latter should be included in the scope of the RFP and awarded as part of the contract.

1Excellence in Capital Projects study shows that specification standardization reduces project cost by 5% on average, reduces maintenance cost by 9% on average, and also improves project schedule performance by 4% on average

Strategies for manual valves (high spec)

The balance of power for these more special valves is favorable to suppliers given the smaller number of manufacturers.

· Mega supplier agreement: To shift demand power from low to medium for these more special valves for which less manufactures exist, SABIC should leverage more effectively its scale by bundling volumes across categories within those suppliers that provide multiple products to the organization (e.g., Flowserve provides both valves and pumps).

· Buying consortia: The same effect as explained above can be achieved by consolidating volumes across companies with similar requirements (SABIC is already exploring this opportunity to some extent through the expansion of the scope of its Shared Services organization).

· Competitive bidding: To establish long term performance based agreements with a reduced number of suppliers to be used in both new projects (through a preferred list of suppliers for EPCs to use), as well as for replacements/repairs. To accomplish this, a request for proposal (RFP) should be issued to develop a detailed understanding of supply base product offerings, performance and pricing points, putting technically qualified suppliers in competition on a total cost of ownership basis.
· Total cost of ownership: As discussed in section 4, acquisition price is only a portion of the total cost incurred over the life cycle of a valve. As such, it is important to select suppliers of repairable valves (as defined by the Reliability department) based, not only on the valve price, but also on the prices of the main spare parts (BOM to be defined in conjunction with the Reliability department). For this, the latter should be included in the scope of the RFP and awarded as part of the contract.

Strategies for control valves

The balance of power for this type of valves is favorable to suppliers given the smaller number of manufacturers and a relatively lower annual spend by SABIC.

· Supplier consolidation: SABIC should try to minimize (specially for repairable valves) the usage of agents and distributors, finding the right balance with manufacturers to optimize the cost-to-service level ratio (e.g., leveraging distributors / agents for only low volume specs not covered by existing contracts). This needs to be looked at region by region since the maturity of the supply market will vary, and with it the capabilities (including service level) and competitiveness (total cost of ownership) of both distributors and manufacturers.

· Standardization: Detailed spend analysis has also highlighted an excessive amount of specifications. An important root cause of this is master data quality (same spec with different material numbers). This should be addressed first (e.g., data cleansing, data entry discipline). Beyond this, a spec commonality2 exercise in conjunction with engineering, and involving selected manufacturers, can significantly reduce the number of specifications further (avoiding duplication of specs for the same functional requirement – process/application). In addition to the intrinsic benefits, reduction of the number of specifications will be a key enabler for the further localization of the supply base.

· Competitive bidding: To establish long term performance based agreements with a reduced number of suppliers to be used both in new projects (through a preferred list of suppliers for EPCs to use), as well as for replacements/repairs. To accomplish this, a request for proposal (RFP) should be issued to develop a detailed understanding of supply base product offerings, performance and pricing points, putting technically qualified suppliers in competition on a total cost of ownership basis. In addition, to prevent unexpected price revision requests, a properly documented mechanism (e.g. index, frequency, etc.) should be part of the contract.

Strategies for spare parts

The balance of power for spare parts is favorable to SABIC given the relatively high spend and the fragmentation of the supply market.

· Standardization: To further increase demand power, the biggest driver is the reduction of number of valve manufacturers and specifications used. In addition, we can reduce supply power by reducing switching costs through “detachment” of valves OEM from spare part suppliers (the latter are often suppliers to the OEMs themselves). This requires a detailed mapping of the specifications of both valves and main spare parts.

· Competitive bidding: Incorporate spare parts within the scope of the RFPs for the different valve segments to ensure prices are locked before the acquisition of the valve as part of a long-term agreement.

Strategies for services

The balance of power for services is favorable to SABIC given the high spend, and the fragmentation of a supply market with smaller companies.

· Unbundled prices: Develop service masters for the most commonly required services, breaking down the main activities and material requirements to ensure comparability of supplier offers and prevent price inflation. This will also enable the establishment of more effective flat rate performance based service contracts.

· Competitive bidding: To establish long term agreement, issue a request for proposal (RFP) to develop a detailed understanding of supply base offerings, performance and pricing points, putting technically qualified suppliers in competition on a total cost of ownership basis. RFP should explore the possibility of service providers supplying the spare parts with the right price control mechanisms.

2Excellence in Capital Projects study shows that specification standardization reduces project cost by 5% on average, reduces maintenance cost by 9% on average, and also improves project schedule performance by 4% on average

5.4. Localization potential

In line with Vision 2030 and the National Transformation Program, there is a renewed push towards local content development in SABIC. This has been formalized under the NUSANED program, which has a specific workstream on Procurement. Ultimately, the objective of this workstream is to increase the share of value that is retained in the KSA by promoting the localization of manufacturing and other operations within the value chain. In addition, localization enables the establishment of more effective ways to serve our customers, such as vendor stocking, e-cataloging, and consignment stocking programs.

This section provides a high level qualitative assessment of the current localization level for key steps throughout the category’s value chain, as well as the potential for further localization of each step.

This assessment can be used to provide direction on areas for more detailed analysis, with data to be collected from suppliers during Request-for-Information and Request-for-Proposal stages, and in coordination with efforts undertaken by other organizations within SABIC, for example, the Local Content Unit. The overall summary of current and potential localization is shown below, with a brief commentary on each step.

In summary, although several companies manufacture/assemble valves in the Kingdom, true manufacturing is limited by the lack of some basic enablers within the valves manufacturing value chain, such as the existence of casting and forging capabilities in Saudi Arabia.

It is expected that localization programs launched in the back of the National Transformation Program will address this and increase the locally manufactured capacity within the next 5 to 10 years. For example, as part of recent outreach efforts by Saudi Aramco’s IKTVA program, different MOUs are being signed and acted on. In 2016 GE Oil & Gas started the construction of a multi-model manufacturing and service facility at MODON’s site in the second Industrial City, Dammam. GE is also collaborating with Saudi Aramco and Cividale SpA to build a USD400 million forging and casting facility, planned to start operations in 2020.

It is important to notice that, since Vision 2030 and the National Transformation Program have propelled local content to the agendas of all major industrial players in the KSA, the picture summarized above is very dynamic. SABIC should also remain connected and collaborate with governmental (e.g., Namaa) and corporate programs (e.g., IKTVA) to ensure a cost effective and impactful contribution to the creation of local content in the KSA.

5.5. Guidelines

Proper guidelines have been important to ensure sustainability of the procurement activities as well as efficiency in the value chain (Yan, Chien & Yang, 2016). This can be instrumental in the case of the procurement department of SABIC, as quality of the procured materials will play an important role in the development of the finished products. The sustainable operations will also be important for SABIC as per the guidelines of the Saudi Arabian Government. The environment has to be protected and the society overall should be developed (Environmental protection in KSA, 2019). This can only be done with the help of proper guidelines to the suppliers of the company. Proper guidelines can also enable the procurement department to sign contracts with trusted suppliers, which in the long run can reduce the costs of procured materials. This can make SABIC products competitive to a certain extent in the near future.

6. Category strategy implementation

6.1. Implementation plan

Implementation of the described category strategies requires a structured approach. Below a description is offered of the different steps that need to be followed (referencing the strategies described in the previous section), the estimated timeline associated to each of them and the roles and responsibilities of the different members of the cross-functional team.

Implementation plan

1. Align with identified stakeholder groups and establish cross-functional team including Category Management, GPS functions (Management, Standardization, etc.), End Users, Engineering, Reliability, Local Content Unit and IT.

2. Complete an item level volume forecast and collection of specification datasheets for all types of valves, spare parts and services for the next 3 years covering both new projects and maintenance activities, and develop Total Cost of Ownership models (in coordination and with the support of the SABIC’s Reliability teams).

3. Develop long list of value adding suppliers (limited to manufacturers, agencies and distributors) from different geographies (including low cost countries), and validate vendor list with cross-functional team
(LCC sourcing)

4. Define, as a cross-functional team, supplier evaluation criteria (sample provided below), and apply supplier selection process (being currently developed by GPS and LCU) – two main options:

i. Pass/Fail approach for both technical capabilities and local content development, and lowest TCO as a deciding criterion

ii. Pass/Fail approach for technical capabilities, and ROI (Return on Investment) measurement of local content development to TCO)

Within the technical capabilities assessment, attention should be also paid to other advantages derived from contracting with manufacturers directly (e.g., price fixing throughout duration of the contract, access to technical support, SKU proliferation control, inventory complexity reduction, etc.).
(total cost of ownership)

5. Develop and issue request for proposal package based on defined supplier evaluation criteria. Given degree of overlap of the supply base among the different valves subcategories, consider making it a single event (starting with standard specifications) for maximum impact
(competitive bidding)
, and including a preliminary study of
(vendor managed inventory).

6. Evaluate supplier capabilities, putting technically qualified suppliers in competition throughout negotiations, evaluating opportunities to consolidate volumes across different types of suppliers, and covering spare parts and value-added services required during the lifetime of the valve, as well as volume rebates for other categories provided by the same suppliers (e.g., pumps).
(supplier consolidation, mega supplier agreement)

7. Select suppliers and sign performance-based agreements. It is important to have alternative suppliers to maintain competition and minimize risk. To prevent unexpected price revision requests, agreements should also include a properly documented mechanism (e.g. index, frequency, etc.) to govern these requests. To the extent possible, agreed upon pricing should be loaded into internal or supplier hosted e-catalogs as a way of reducing ordering complexity and managing spec proliferation.

8. Develop a roadmap to improve identified master data quality flaws through a combination of data cleansing (to improve existing master data) and data entry procedures (to drive accurate data entry for new requirements), launching parallel initiative to existing go-to-market.
(master data management)

9. Develop a set of standard engineering designs and specifications to cover common applications
(standardization)
. This entails three main activities:

1) shelf population – work with engineering and manufacturers to select the standard valves specifications and parts to be included based functional requirements assessment;

2) shelf management – define addition and deletion methodology to prevent proliferation of specifications over time;

3) selection from the shelf – develop and implement compliance processes to ensure that shelf items are used by projects (including EPC contractors) whenever appropriate, as well as handling any requirements for deviations

10. If finally implemented, explore leveraging existing Shares Services initiative to consolidate valves’ volumes across companies.
(buying consortia)

11. To support KSA localization efforts, ensure closer collaboration internally (Local Content Unit, Procurement) and externally (SABIC, Namaa, other industrial players like Saudi Aramco, etc.) to maximize the impact and return on investment of activities that are better performed in a coordinated manner (e.g., outreach for investor attraction).

Roles and responsibilities – RACI matrix

6.2. Implementation enablers

A number of enablers are a prerequisite for a successful implementation of the defined category strategies.

People

Within this area, three elements are critical. First, ensure enough capacity from Category Management resources is made available to drive the implementation. Second, ensure Category Management resources assigned to the implementation receive adequate training on valves and strategic purchasing to establish a common language and understanding of the process. Third, build a solid cross-functional team involving all relevant functions as per the RACI matrix in the previous section.

Information

Many of the strategies proposed rely heavily on the power that information brings in your interactions with suppliers. Access to information within and outside SABIC is critical. It is important to monitor that demand forecasts and schedules, specifications and market trends information is made available to Category Management. This information, together with the category strategy, will feed different documents throughout the process (e.g., RFP package, negotiation templates).

Tools

The implementation of some of these strategies might require the usage of certain tools (e.g., sourcing technology) that should be made available to Category Management.

Organizational alignment

It is critical to guarantee strong support from appropriate management level to connect the different departments, enable a successful cross-functional teaming, and communicate with a single voice to the supply market. In addition, given that Category Management is relatively new to certain parts of the organization, its typical activities might be currently performed by other teams, making it necessary to define clear roles and responsibilities that need to be supported by management.

Mandate and empowerment

The implementation of this category plan might require deviating from certain existing procedures. The category team should be given the mandate to look for value beyond the current practices, and the authority to make award decisions within reason and after approval of the approach to be followed (i.e., business award based on Total Cost of Ownership, local content criteria, and technical capabilities).

Conclusion

The assessment underlines the fact that procurement has been an important aspect in SABIC. The valves industry has grown by leaps and bounds in Saudi Arabia and this has resulted in the growth of various companies. The competitive nature of the industry has led to price wars and this in turn has made it eminent that companies have to cut costs in the SCM process to be able to operate in the industry.

However, the procurement activities have to be developed to a certain extent according to the aspects that have been stated above in order to gain the most benefits in the process not only cost saving as the industry in Saudi Arabia has become competitive.

The procurement activities have been the major source of cost cutting and this can be done with the help of proper planning and deployment, collaboration with the stakeholders, cost savings, proper guidelines. The suppliers also have to be included in the procurement model which in turn can provide certain advantages relating to cost structures as well as understanding the nuances of the market.

References

Internal:

SABIC Master Data Record Management (MDRM) system:

· Category Tree; number of specs

· Unique ball valve attribute types

SABIC SAP HANA:

· Spend evolution over time for valves spares and related services

· Spend breakdown by region

· Spend breakdown by affiliate

· Valves materials spend breakdown across regions

· Valves materilas to services spend across regions

· Spend by valve type

· Cumulative spend by specification

· Spend by supplier

· Valve materials spend under contract

· Variance of transactions under same material class

· Multiple vendor codes for the same vendor

SABIC Procurement Global Supplier Relationship Management:

· Multiple vendor codes for the same vendor

· Sample Supplier evaluation criteria

SABIC Planning and Control Department: SABIC PO processing costs

SABIC Procurement Logistics Department : SABIC incoterms and associated costs

SABIC Local Content Department: Saudi companies supplying valves locally

External:

Advanced Category Management, CIPS South Africa Conference 2011,

https://www.cips.org/Documents/Wed%20track%203%20John%20McClelland%20ADR.PDF

BASF’s MVV Phase 3 Takes Valve Procurement to the Next Level,

http://www.valve-world-americas.com/webarticles/2018/07/11/basfs-mvv-phase-3-takes-valve-procurement-to-the-next-level.html

Bundling and Sourcing Create Real Value,

https://www.industrialspec.com/about-us/blog/detail/bundling-sourcing-strategic-procurement-supply-management-ism-difference

Category Planning Process, SA CIPSA Event – David Andrews,

https://www.cips.org/PageFiles/63064/Category%20Planning%20Process%20SA%20CIPSA%20Presentation%20Nov%2013%20Final

Category strategy development & implementation,

Category strategy development & implementation from FGB

Chan, A. T., Ngai, E. W., & Moon, K. K. (2017). The effects of strategic and manufacturing flexibilities and supply chain agility on firm performance in the fashion industry. European Journal of Operational Research, 259(2), 486-499.

Christopher, M. (2016). Logistics & supply chain management. Pearson UK.

Chui, M., Manyika, J., & Miremadi, M. (2016). Where machines could replace humans—and where they can’t (yet).McKinsey Quarterly, 30(2), 1-9.

De Barros, A. P., Ishikiriyama, C. S., Peres, R. C., & Gomes, C. F. S. (2015). Processes and benefits of the application of information technology in supply chain management: an analysis of the literature. Procedia Computer Science, 55, 698-705.

Economic Growth in Gulf Region Set to Improve following a Weak Performance in 2017:

https://www.worldbank.org/en/news/press-release/2018/03/19/economic-growth-in-gulf-region-set-to-improve-following-a-weak-performance-in-2017

Espín, J., Rovira, J., Calleja, A., Azzopardi-Muscat, N., Richardson, E., Palm, W., & Panteli, D. (2016). How can voluntary cross-border collaboration in public procurement improve access to health technologies in Europe. Policy brief,21.

Glas, A. H., & Kleemann, F. C. (2016). The impact of industry 4.0 on procurement and supply management: A conceptual and qualitative analysis. International Journal of Business and Management Invention, 5(6), 55-66.

Industrial Valves and Actuators Market Size, Share & Trends Analysis Report By End Use (Oil & Gas, Chemical, Energy & Power, Pulp & Paper), By Product, By System, By Region, And Segment Forecasts, 2018 – 2025 :

https://www.grandviewresearch.com/industry-analysis/industrial-valves-and-actuators

Nudurupati, S. S., Bhattacharya, A., Lascelles, D., & Caton, N. (2015). Strategic sourcing with multi-stakeholders through value co-creation: An evidence from global health care company. International Journal of Production Economics, 166, 248-257.

Reduce Costs in the Pipes, Valves, and Fittings Category with Source One’s Strategic Sourcing experts:

https://www.sourceoneinc.com/sample-spend-categories/indirects/sourcing-mro/pipes-valves-and-fittings-pvf/

Three “chess” moves to restructure supply markets

https://de.kearney.com/operations-performance-transformation/article?/a/three-chess-moves-to-restructure-supply-markets

Value creation and purchasing strategy, international Trade Forum:

http://www.tradeforum.org/article/Value-creation-and-purchasing-strategy/

Valves Category Description, Al Daleel Oil & Gas Supply Chain Portal,

https://www.scmdaleel.com/category/valves/135

Wang, G., Gunasekaran, A., Ngai, E. W., & Papadopoulos, T. (2016). Big data analytics in logistics and supply chain management: Certain investigations for research and applications. International Journal of Production Economics,176, 98-110.

Witjes, S., & Lozano, R. (2016). Towards a more Circular Economy: Proposing a framework linking sustainable public procurement and sustainable business models. Resources, Conservation and Recycling, 112, 37-44.

Yan, M. R., Chien, K. M., & Yang, T. N. (2016). Green component procurement collaboration for improving supply chain management in the high technology industries: A case study from the systems perspective. Sustainability, 8(2), 105.

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