Dubai PR Network, Online Press Release from Dubai and Middle East
Filter PR by
  
New procurement approaches can release value and profit margins in light of reduced oil revenues

PA Consulting Group expert urges regional purchasing departments to adapt current practises to raise value

Dubai, UAE, 5 April 2015: A warning from the International Monetary Fund that lower oil exports could drain $300billion from Middle East and Central Asia economies has led a local management expert to recommend a change in current procurement models to help regional businesses succeed in current market conditions.  

Paul Ellis, a programme delivery expert at PA Consulting Group, believes now is the time for procurement managers to update their commercial models and procurement practices, which he believes carry the unintended consequence of driving costs through non-value adding activities.  

“Adopting ‘turnkey’ contracting, for example, in an attempt to transfer risk and integration efforts to a single contractor for complex projects will almost inevitably attract risk premiums, contingency sums and added management costs,” said Ellis.

“The hoped for reduced management effort and single point of accountability is seldom a reality in such cases, and the buying organisation itself inevitably picks up the consequences when things go wrong.”  

As Middle East businesses recover from the impact of reduced oil revenues, Ellis advises that adopting a more pragmatic and considered approach to managing these risks, placing responsibility and accountability with the party best positioned to manage mitigating actions, would eliminate non-value adding costs and enhance the chances of successful delivery.  But such an approach requires procurement managers to update their purchasing models.

He added: “Many procurement processes widely employed in the region are no longer prevalent in commercial enterprises or governments in other parts of the world.  Bid bonds and performance bonds, for example, are used far more selectively.  

“The very nature of a bond in itself attracts risk premiums, which further widens the gap between cost and delivered value.  Greater efforts to refine business requirements and more active management of the procurement process through market-making, active pre-qualification, imaginative contractual incentives and stronger vendor engagement would produce far better results for the purchasing organisation.”

Ellis agrees with the conclusions of the IMF that it is highly likely the sustained period of low oil prices will impact government budgets and expenditure and result in severe financial pressure on government and businesses across the Middle East to deliver their objectives in the prevailing market conditions.  

Now is the time for procurement departments to take a more strategic role in the management of the market and supplier base.  By adopting an active management of cost rather than leveraging price, procurement managers can optimise their delivered value and strengthen the relationships with their suppliers.

“Organisations that embrace the potential of more active management of integration and risk will also develop transferable commercial, project and programme management skills that will increase competiveness and further enhance the region’s talent pool,” said Ellis.  

“Furthermore, raising the bar for the procurement profession will provide rich career opportunities across all sectors of the economy, repositioning procurement as a strategic driver rather than a service function at the heart of an organisation.”
 
PA Consulting Group has been operating in the Gulf region for the last 30 years, successfully delivering more than 150 projects in 13 Middle Eastern countries, across sectors including financial services, transport, energy, government, defence and security, healthcare, education and manufacturing.

 

Posted by : GoDubai PR Dept, -
Viewed 12023 times
PR Category : Energy and Industry
Posted on : Sunday, April 5, 2015  3:28:00 PM UAE local time (GMT+4)
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of DubaiPRNetwork.com.
Email this article Print this article

Share this article with your friends and followers
NewsVine
Back to

Related Stories


 
 
Most Viewed Press Release posted in the last 7 days
Aigner Aprilia [7649-Views]
Top Toners to Up Your Skincare Game [6124-Views]
Stay Refreshed this Festive Season & Give the Gift of Self Care with Kocostar's Fabulous F... [5771-Views]
Raise Eyebrows with Flormar's New Range [5502-Views]
Stress-free Tresses [5466-Views]
Sukin for Men [5203-Views]
Matte Made in Heaven [5112-Views]
'Tis the Season to Gift and Glow' With Foreo Holiday Gift Sets [5026-Views]
Nourish your hair with Vierro's Styling Cream range [5008-Views]
Shop the New Frozen 2 Collection at Max Fashion! [4477-Views]
Monochrome Moment [4410-Views]
UAE's Minister Al Mazrouei Announced President of the Unido General Conference in Abu Dhab... [4258-Views]
Dubai Customs discusses more mutual cooperation with Ukrainian Consul General [4246-Views]
Skincare Through The Ages: The 20-Something's Skincare Guide [4197-Views]
Foreo Expects a Record Sale for Black Friday [3922-Views]
Steve Madden set to arrive in Dubai to kick off brand's 30th Anniversary Celebration [3752-Views]
Dubai Festival City Witnesses Over 1600 Runners Participating at the Second Season of the ... [3697-Views]
Dubai Fitness Challenge Continues to Inspire the City [3642-Views]
The Eberhard & Co. “Sistema Magini” Chronograph Sells at Auction for 156,000 Euros [3587-Views]
New showroom opening at Habsiguda, Hyderabad [3446-Views]
Adventurous Sailor François Gabart begins the 2019 Brest Atlantiques race [3422-Views]
Dubai Pink Ride Attracts More than 4500 Participants [3245-Views]
Explore Hello Kitty Mania as Candylicious Turns 10 [3227-Views]
Dubai Chamber and First Abu Dhabi Bank sign MoU on digital trade [3221-Views]
Time for tennis - Ugo Humbert joins Rado YoungStars [3068-Views]
 
RSS Facebook Twitter LinkedDin
 
Top Sections
 
Top Stories