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Process analysis and improvements.
To effectively analyze the performance of Aramco’s procurement process and identify areas for
process improvement, it’s essential to first establish Key Performance Indicators (KPIs) that align
with the organization’s strategic objectives.
Key Performance Indicators (KPIs)
Effective KPIs for tracking improvements in the procurement process would include:
• Time: Measures such as cycle time from requisition to order fulfillment.
• Cost: Monitoring spending against budget.
• Quality: Rate of acceptance of delivered goods based on compliance with specifications.
• Flexibility: Responsiveness of the process to changes in requirements or market
conditions.
Improvement Suggestions
Here’s how each step can be analyzed along with proposed improvements for optimization.
1. Initiation of Purchase Request
• Analysis: Track the average time taken from need identification to purchase request
submission and approval.
• Improvement: Implement an automated system for request initiation and approvals to
reduce manual hold-ups and accelerate the process.
2. Supplier Selection Process
• Analysis: Evaluate the diversity of the supplier base and the effectiveness of supplier
evaluations based on performance data.
• Improvement: Integrate a more robust supplier management system that allows dynamic
updating of supplier data, feedback scores, and performance histories to broaden the
selection process.
3. Evaluation of Bids
• Analysis: Measure the consistency of bid evaluations across different departments and the
average time to evaluate and select a supplier.
• Improvement: Employ automated tools for bid analysis to ensure objective and consistent
evaluations and significantly reduce decision-making time.
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4. Issuance of Purchase Order
• Analysis: Assess the accuracy of purchase orders issued and the time taken for issuance
post-supplier selection.
• Improvement: Deploy an ERP system that integrates directly with the procurement
platform to automatically generate and send purchase orders upon bid approval.
5. Receiving and Inspection
• Analysis: Check the percentage of rejected deliveries due to non-compliance with
specifications and track inspection times.
• Improvement: Introduce advanced inspection technologies and training for inspectors to
enhance the accuracy and efficiency of the inspection process.
6. Approval and Payment Process
• Analysis: Analyze the time taken for payment processing and the rate of discrepancies
between invoices and delivered goods/services.
• Improvement: Automate the invoicing and payment processes and set up a dedicated
discrepancy resolution team to handle exceptions swiftly.
In reviewing the current steps, several areas have been identified where process enhancements
could be beneficial:
• Enhancement of Digital Tools: Implementing or improving digital systems for purchase
requests and approvals could potentially reduce processing times.
• Supplier Management: Developing a more robust mechanism for continuously assessing
supplier performance.
• Quality Assurance: Strengthening inspection and verification procedures to ensure that
all procured items meet Aramco’s stringent requirements.
• Process Flexibility: Enhancing adaptability to respond more quickly to emergencies or
changes in procurement needs.