Performance Measurement Of Supply Chain Management: A Balanced Scorecard Approach At ADNOC (Abu Dhabi National Oil Company), UAE

Background

Topic: Balanced Scorecard Approach at Abu Dhabi National Oil Company (ADNOC)

The United Arab Emirates (UAE) is recognized as one the best developed and oil rich nations across the globe. It is noted that the country stands to be the seventh largest oil reserve, most of which is situated in its capital Abu Dhabi. Concerning ADNOC, it is not only the leading organization in UAE, but also ranks as the 12^th oil manufacturer in the world. Further, with over $60 billion annual revenue, the firm also is considered to be a major employment generator (28,000 workers) and a ‘supermajor’ operating association (Albadri, 2013: 121-145). It is noted that the widely spread oil exporting company also greatly focuses on an effective management and measurement of its supply chain as well. Moreover, a regular check of the chain is also important to ensure the production of customer demanding goods as well. With a growth in the degree of competition within and outside the nation has led the management of ADNOC to redesign its supply chain to guarantee speediness, cost efficiency and reliability.

This particular research proposal focuses on the concept of Balanced Scorecard approach to check performance management of ADNOC`s supply chain. In addition to a literature review on the related topic, the research also takes into consideration several methods that will be used to conduct a detailed study. Furthermore, a timeline along with expected outcomes of the research has also been included in the proposal.

As per Morton (2013: 190), with a growth of UAE`s capabilities and rise of competition, the ADNOC passed its business plan of five years. In addition to a focus on development the organization also highlights the needs of maximising value by the end of 2030. On the other hand, measuring performance of the supply chain is regarded to be one of the most crucial aspects that need to be regularly checked and kept updated to ensure smooth functioning of a firm. It is noted that careful evaluation of the supply chain helps the management to work towards upgrading it as well (Albadri, 2013: 121-145). Concerning the Balanced Scorecard approach, the tool takes into consideration several metrics and tries to align them in the most profitable manner with strategic objectives of and organization. ADNOC`s focus on designing its growth pattern can be tracked and studied with the help of the Balanced Scorecard method in an efficient manner.

The objectives of this research proposal are as follows:

• To study the growth of ADNOC
• To understand the concept of performance measurement
• To understand the concept of Balanced Scorecard
• To apply the Balanced Scorecard to ADNOC

The questions for this research proposal are the following:

• What is the importance of performance measurement?
• What is the present condition of ADNOC?
• What are the development and growth plans of ADNOC?
• How can performance in ADNOC be measured with the help of Balanced Scorecard?

ADNOC like every other business organization also looks forward to expand its business and capabilities. The management of the firm focuses on measuring its current operations and supply chain with a motive to upgrade them. The researcher focuses on the need for enhancing the various metrics and fields in ADNOC. Moreover, the low availability of data and limited studies conducted on the topic, not only encourages the researcher to carry out a detailed investigation, but also adversely limits collection of information.

Research Aims

This chapter of the research proposal focuses on discussing about the topic of the study based on various reviewed articles, journals, books and reports. In addition to a general discussion on the Balanced Scorecard tool the literature review focuses on ADNOC as well. Furthermore, a balanced scorecard approach in the company has also been taken into consideration. It is noted that this part of the proposal requires primary information.  

Balanced scorecard is a strategy and efficiency planning cum management tool. It is basically a semi-standard organized report which is extensively supported by automation tools and design methods (Nen, 2013: 189). Further, the tool was first proposed in the year 1992 by Kaplan and Norton.

According to Niven (2014: 101), it provides managers with an ample context which helps in translating an organization’s strategic goals into articulate of performance actions set. As stated by Vincent and Kumar (2014: 211-230), a balanced scorecard provides the managers four different outlooks to choose their measures from. It supplements conventional financial statistics with performance portions for internal processes, customers, improvement activities and innovation.

The scorecard approaches to provide balance to the financial perception as well. The model suggests to view the organization from four perspectives; Financial, Internal Business Process, Learning and Growth and finally from the viewpoint of Customers. The next step is to collect and analyze relative all of these perspectives (Epstein, Verbeeten and Widener, 2016: 312).

As stated by Garci?a marti?nez et al., (2016: 110-119), the ADNOC is a state-possessed oil producing organization built up in 1971 to oversee, create and save Abu Dhabi’s hydrocarbon assets. It is noted that the firm works over the whole hydrocarbon esteem chain through a system of well planned and largely coordinated associations, with interests varying from investigation, generation, storage, refining and circulation, to the improvement of an extensive range of petrochemical items. ADNOC works through a gathering of organizations encompassing 18 subsidiaries and joint endeavours. In addition to providing and supporting loves of million UAE nationals, ADNOC globally 12^th and is recognized as Abu Dhabi`s growth catalyst (Kumar bhaskaran and K Sukumaran, 2016: 91-108).

As opined by Al-Sumairi (2013: 189), ADNOC focused on measuring its supply chain in order to figure out areas of pitfall and thereby integrate major changes. It is noted that the firm undertook a Balanced Scorecard method in the year 2009, along with a proper management of its strategies. Further, managers also indulged in proper training and education to be able to implement and utilize the BSC in the most profitable manner. According to Alzahmi and Rothwell (2016: 342), in addition to redefining objectives and KPIs, the tool helped towards directing business operations as well. The performance measurement technique also greatly contributed towards aligning the production of goods in ADNOC to the economic and development needs of UAE. Further, entering new markets and designing competitive advantage factors was also focused on by the BSC. A proper implementation of the tool contributed towards raising capability of the firm`s supply chain along with ensuring a improvement in the brand`s goodwill.

Research Questions

With a motive to develop efficiencies, ADNOC tend to establish group acquirement of goods that not only will influence business operations, but also will build up a clear understanding of needs and thereby ensure expense optimisation. It is noted that the method of single entry will help to eradicate duplication issues, lower cycle period and also improve efficiency (Dorsman, Arslan-Ayaydin and Karan, 2016: 190-212). Moreover, in order to develop supply chain and operational capabilities, ADNOC has also redesigned its HR recruitment and selection strategies as well. A creation of talented workforce directly contributes towards achieving goals and objectives of the firm. On the other hand, the administration of ADNOC have also taken steps to link its process of employment to business strategies, with a focus on boosting performance of the organization as a whole (Adnoc.ae., 2017). The use of BSC in this process will help the managers to understand and learn about the proper functioning of the implemented plans. Furthermore, ADNOC has taken to reforming and creating a powerful leadership pipeline. It is the leaders who has a clear knowledge about the exposure of the firm and guide the employees towards fulfilling business aims. According to Rahman and Sharif (2014: 231-244), the company`s leadership initiatives will be based on common behavioural aspects. A robust plan for youth development shall focus on providing high quality on job training as well. The structured learning will be based on a number of cultural prospects that ensure proper coaching and experience gaining of the workforce (Mattoox, 2016: 412).

One of the factors that have been studied with the help of Balanced Scorecard is the infrastructure of ADNOC.  The performance measurement tool has helped the management towards building up floors that support critical thinking and innovation. A sense of creativity among the employees is known to be of great importance to business firms. Further, the supportive and friendly environment has positively affected results as well. An easy flow of communication through the building floors facilitates smooth flow of operations and information among various departments (GulfNews., 2017).

Concerning the individual metrics of Balanced Scorecard, ADNOC has undertaken and aimed for the following policies:

1. Financial Perspective:

• ROCE
• Abidance to Budget

1. Internal Process Perspective:

• Environment Sustainability
• Health Standards
• Safety and Security Measures

1. Learning and Growth Perspective:

• Emiratization
• Employee Engagement

1. Customer Perspective:

• New Market Intervention
• Energy Business Initiative

A proper utilization and alignment of BSC will help ADNOC to expand business strategies in the most profitable manner in the future plans as well. Additionally, being a performance driven corporation and increased commercial focus, the organization largely depends on supply chain performance measurement aspect and BSC to achieve top levels of excellence along with ensuring a long term success.

This part of the proposal takes into consideration a number of methods and techniques that will be utilized by the researcher to facilitate the research. In addition to various well designed models, tools and theoretical frameworks will also be used to carry out the study in this field. In order to ensure achievement of research objectives and answering of the questions, the researcher concentrates on planning and coordinating methods in a logical manner as well.

As per Quilan et al., (2015: 211-243), the concept of research investigation can be segregated into three individual parts, which are as follows:

• Exploratory Investigation
• Hypothesis Investigation
• Descriptive Investigation

Research Rationale

It is noted that the research will opt for the descriptive method because of its widespread and practical approach. Descriptive Investigation focuses on connecting and developing a relationship between thought processes and premise. Further, along with an individual thinking pattern, the researcher will concentrate on the use of modular frameworks as well.

According to Johnson and Clark (2016: 132-150), the feature of research philosophy can be differentiated into three categories, they are:

• Positivism Philosophy
• Realism Philosophy
• Interpretive Philosophy

Among the three different types of research philosophy, the researcher will depend on realism philosophy with a motive to meet objectives in the most efficient manner. It is the genuine and authentic approach of the method, which will significantly help the researcher to obtain expected results.

As stated by Blumberg, Cooper and Schindler (2014: 89), the topic of approaching a research work is typically segregated into three categories, which are:

• Inductive Approach
• Deductive Approach

In order to carry out the study in an effective manner, the researcher will tend to choose a deductive approach. It is noted that the use of reviewed studies and theories shall help in answering various research questions. The use of existing information in the field will educate the researcher about the condition and advancement of the ADNOC.

One of the most important factors towards commence a research is the development of a firm strategy. In order to learn about ADNOC, the concept of performance management and thereby use Balanced Scorecard to approach the organization, the researcher will form a survey strategy. In addition to focusing on the earlier published information, the researcher will study 10 managers from the departments of ADNOC.

As per Liamputtong (2013: 432), the procedure for collecting information is typically separated into two major parts, which are the following:

• Primary Collection
• Secondary Collection

It is noted that the researcher will opt for both primary and secondary information collecting processes to facilitate the research. Concerning primary data, surveys and questionnaires shall be used. On the other hand, books, journals, articles, reports and discussion papers will be source of secondary data.

As stated by Taylor, Bogdan and DeVault (2015: 231), the process of data collection is followed by sampling the gathered information, which further can be divided into the following types:

• Probability Sampling
• Non-Probability Sampling

As compared to the probability method, the non-probability sampling of information prioritizes enhancing the investigation by choosing information carefully and not on a random basis (Liamputtong, 2013: 432). It is noted that the researcher will depend on non-probability sampling of the collected data. In addition to being focused on studying about ADNOC, the departmental managers will be chosen carefully and also will be asked 10 open ended questions.

As per Blumberg, Cooper and Schindler (2014: 89), the process of analyzing the collected data can be divided into three individual categories, which are:

• Quantitative Analysis
• Mixed Analysis
• Qualitative Analysis

It is noted that the scrutinizing of data will be done with the use of mixed analysis method. The use of qualitative as well as quantitative analysis will help the researcher to study the primary and secondary information in an efficient manner.

There may arise several complications and challenges that will directly affect carrying out and final results of a research (Johnson and Clark, 2016: 132-150). The various issues that will be confronted by the researcher are as follows:

1. Accessibility problems at the time of gathering primary data will affect the study.
2. A biased reply from the ADNOC managers also will influence the output of the research.
3. Time management issues shall limit a detailed investigation into the topic.

Literature Review

Activities	September 2017	November 2017	March 2018	August 2018	December 2018	April 2019	October 2019	February 2020	May 2020	August 2020
Choosing topic
Getting approval
Organizing research methods
Secondary data compilation
Literature review
Primary data compilation
Data analysis
Interpreting data
Findings
Final report

Table: Gantt Chart

(Source: As created by author)

The separate and distinguished parts of the proposal will not only help the researcher to carry out a detailed study, but also ultimately contribute towards developing a fruitful study. In order to facilitate the investigation the researcher will need to understand the background of the topic and thereby note down his objectives, questions and rationale for the research.  With prioritization of aims, the researcher will build up a literature review that shall focus on the present condition of ADNOC along with the concept of performance measurement. It is the clear knowledge of both that will help the researcher to successfully apply the Balanced Scorecard tool to the organization. Furthermore, the various methodologies will also guide the researcher and thereby significantly help to logically approach each question and achieve every objective of the research.

References

ADNOC Distribution. (2017). ADNOC Distribution. [online] Available at: https://adnocdistribution.ae/ [Accessed 3 Aug. 2017].

Adnoc.ae. (2017). Supreme Petroleum Council Approves ADNOC’s 2030 Strategy and Five Year Business Plan Focused On Growth And Maximising Value. [online] Available at: https://www.adnoc.ae/en/news-and-media/press-releases/2016/spc-approves-adnoc-strategy [Accessed 3 Aug. 2017].

Albadri, F. A. (2013). Cases on enterprise information systems and implementation stages: learning from the Gulf. Hershey, PA, Business Science Reference, pp. 121-145.

Al-Sumairi, M. (2013). Managing a corporate performance measurement system: an empirical study of balanced scorecard in a Saudi oil company. Newcastle upon Tyne, University of Newcastle upon Tyne, p. 189.

Alzahmi, R., and Rothwell, W. J. (2016). Managers’ perceptions of strategic workforce planning and organizational alignment: A single case analysis. University Park, Pennsylvania : Pennsylvania State University, p. 342.

Blumberg, B. F., Cooper, D. R., and Schindler, P. S., (2014). Business research methods, London. McGraw-Hill Education, p.89.

Dorsman, A., Arslan-Ayaydin, S, and Karan, M. B. (2016). Energy and Finance: Sustainability in the Energy Industry. Springer Science and Business Media, pp. 190-212.

Epstein, M. J., Verbeeten, F., and Widener, S. K. (2016). Performance measurement and management control: contemporary issues. Bingley, UK : Emerald, p. 312.

Garci?a marti?nez, P., Santos, A., Toure?, A., and Flores, J. C. (2016). United Arab Emirates: selected issues. Washington, D.C.: International Monetary Fund, pp. 110-119.

GulfNews. (2017). Adnoc to focus on creating greater efficiencies. [online] Available at: https://gulfnews.com/business/sectors/energy/adnoc-to-focus-on-creating-greater-efficiencies-1.1923338 [Accessed 3 Aug. 2017].

Johnson, P., and Clark, M., (2016). Business and management research methodologies. Social constructionist research methodologies Volume 5 Volume 5, London. SAGE, pp. 132-150.

Kumar bhaskaran, R., and K Sukumaran, S. (2016). An empirical study on the valuation of oil companies. OPEC Energy Review. (40), p. 91-108.

Liamputtong, P., (2013). Qualitative research methods, Australia. Oxford University Press, p. 432.

Mattoox, J. R. (2016). Learning analytics: measurement innovations to support employee development. Philadelphia, PA : Kogan Page, p. 412.

Morton, M. Q. (2013). Buraimi the struggle for power, influence and oil in Arabia. London, I.B. Tauris, p. 190.

Nen, P. R. (2013). Balanced scorecard diagnostics: maintaining maximum performance. Hoboken, N.J.: Wiley, p. 189.

Niven, P. R. (2014). Balanced scorecard evolution a dynamic approach to strategy execution. Hoboken, NJ,: Wiley, p. 101.

Quilan, C., Babin, B., Carr, J., Griffin, M., and Zikmund, W. G., (2015). Business research methods, Andover. Cengage Learning EMEA., pp. 211-243.

Rahman, F. and Sharif, M.Y., 2014. The Effectiveness of Leadership Development Programs: Developing a Research Framework for the Oil Exploration Companies in Abu Dhabi. Abu Dhabi, UAE: National Archives, pp. 231-244.

Smith, R. F. (2013). Business process management and the balanced scorecard: using processes as strategic drivers. Hoboken, N.J.: Wiley, p. 56.

Taylor, S.J., Bogdan, R. and DeVault, M., (2015). Introduction to qualitative research methods: A guidebook and resource, New York. John Wiley and Sons, p.231.

Vincent, C., and Kumar, M. (2014). Business performance measurement and management. Newcastle upon Tyne : Cambridge Scholars Publishing, pp. 211-230.