An Analysis Of The Gas Market In Australia: Sustainable Procurement Practices And Future Technologies

From the perspective of Australian gas suppliers, answer the following questions:

Describe the gas market in Australia. Consider private and business customers, and how they purchase power now and how it will change in the future. Use statistics

Outline sustainable procurement practices for AGL. You should consider its approach to capital, maintenance and operating activities. You should also consider project versus operating activities.

Consider new technologies and the impact they are having on procurement, both for end customers and for producers in the supply chain. What’s in the future?

Develop a project integration management plan (more emphasis on procurement) that will allow other gas suppliers to transition from traditional approaches to sustainable procurement strategies.

The Gas Market in Australia

The Australian gas market serves both the local and international customers, therefore, raising revenue for the country. The country has various gas basins located in different regions, which results in serving different markets. The country has developed the gas industry by introducing technology that has smoothened the relationship between the customers and the suppliers.

Describe the gas market in Australia. Consider private and business customers, and how they purchase power now and how it will change in the future. Use statistics

The Australian gas market exists in three regions distinguished by the gas basins and pipelines the supply to the areas (Pierce, 2018). The regions include the eastern region that connects the east and south territories. The eastern gas reserve has undergone various changes to supply both domestic and international markets (Pierce, 2018). The second regions consist of the western gas region that contains over half of the gas in the country. The market focusses heavily on exporting gas to the international markets (Pierce, 2018). Finally, the northern gas region produces the least among all other regions in Australia. The region focusses on exportation and domestic consumption of gas (Pierce, 2018).

The gas market has various ways of supplying to the customers both business and private consumers. The sector uses wholesale markets, which allow business and private consumers to purchase different amounts of gas without entering into permanent contracts (Pierce, 2018). The market balances the supply deficiencies caused when large buyers actual demand differs from the supply. Additionally, the gas industry applies the Victorian declared wholesale gas market that uses a gross pool. The gross pool has an open access to a transmission pipeline where the business and private consumers get gas. The market requires that the sellers and private consumers place bids for the gas before the supply to control the injections and withdrawals to the supply system, which reduces the costs of supplying.

The government supplies the gas at low prices to both private and business consumers. However, various changes such as the depletion of the Gippsland reserves and the sale of gas to the North Asia countries will cause an increase in prices. The depletion of reserves affect the prices through the increase of demand than the supply. On the other hand, the North Asia market will increase the prices since the local suppliers will need to fetch the same high prices locally and internationally. Therefore, the market projects an increase in the price of gas from eight Australian dollars to 13 Australian dollars by the year 2020 (Pierce, 2018).

Sustainable Procurement Practices for AGL

Outline sustainable procurement practices for AGL. You should consider its approach to capital, maintenance and operating activities. You should also consider project versus operating activities.

The AGL plans to introduce a sustainability sourcing policy that aims at meeting the organizational procurement vision and objectives. The sourcing policy focusses on designing procurement policies that minimize environmental destruction (Blome, 2017). The gas industry plans to achieve the objective by introducing technology improvements that reduce wastages. The industry realizes that the excess production of gases results in wastages that when introduced to the atmospheres cause global warming. Therefore, the industry intends to achieve less waste by streamlining operations to ensure that the supply of gas meets the exact demand by the market (Mark Pagell, 2018). Additionally, the industry will focus on timely repairs to the equipment used to produce and store the gas to prevent leakages. The environmental policies will require projects such as the sensitizing the consumers on how to handle the gas to avoid environmental destruction.

Additionally, AGL could introduce vendor-screening tools to ensure the proper vetting of suppliers before awarding contracts (Suzanne de Treville, 2016). The vetting procedures involve checking whether the persons can deliver the required products in the required quality, time and quantity. Therefore, vendor screening management in the gas industry allows that only persons who can prevent risks get the supply contracts. The vendor screening actions will require an investment in the human capital, which includes hiring experts to audit and investigate the suppliers. The audit and investigation check whether the suppliers have the ability to supply the gas industry. Moreover, the screening will alter operation activities in the gas industry by introducing new methods of doing business. The changes include the use of  an information system to place orders and bid for supply contracts (Suzanne de Treville, 2016).

Consider new technologies and the impact they are having on procurement, both for end customers and for producers in the supply chain. What’s in the future?

AGL will introduce a transport management software to track the movement of gas from the suppliers to the customers (Ishola, 2016). The technology will assist to improve the security and improve the efficiency of delivery to the customers. The improved efficiency arises from the ability to know the specific routes and times that the products follow to reach the customers. The customers benefit by having an ability to track the movement of the gas in terms of time, amount and distribution routes. Therefore, the customers receive products with minimal chances of error such as variances in the amounts ordered and received. On the other hand, the AGL benefits from having a better relationship with the customer due to the delivery of exact amounts of products within the required period. AGL also benefits from the tracking technology through the increased safety of supplies sent to the customers (Rebecca Stekelorum, 2018).

New Technologies and Their Impact on Procurement

Additional, technology includes the enterprise resource planning technology, which collects information about market demand and plans production to supply the customers (Wagner, 2018). The technology the ERP system will cover all aspects of the gas industry such as inventory control, product planning and purchases. The customers will benefit from the technology through quick and efficient deliveries. The customers will make orders through the system, which will alert the supplier to deliver exact amounts to the specific buyer. Additionally, the customers will also use the enterprise resource system to reduce shortages in inventory since the system notes the order levels and automatically requests for more supplies.

On the other hand, the system benefits AGL by allowing smooth operations in delivering gas to the market. The system will identify the raw material requirements and order from the suppliers to avoid shortages in production. Additionally, the system will identify customer demands and supply with the exact amounts (Russell R. S., 2014).

Develop a project integration management plan (more emphasis on procurement) that will allow other gas suppliers to transition from traditional approaches to sustainable procurement strategies.

The integration plan will assist the parties involved in the Australian gas industry to shift from traditional procurement activities. The procurements parties involve the suppliers and customers who deal with gas in Australia. The parties should embrace the changes to increase efficiency and effectiveness in the supply and procurement of gas in the Australian market. The integration will follow various stages and approaches to ensure success.

The stages involve the development of a procurement approach that explains the relationship and responsibilities of the parties (Ishola, 2016). The project leader communicates the plans to use Ln ensuring that all parties move to the new system. The steps include the development of strategic alliances that require that all the procurement parties follow the set standards. The agreements include the parties accepting to purchase the necessary software and experts to develop an information based system. The project team monitors all the parties to ensure the commitment to shift from the traditional procurement methods.

Additionally, the project team specifies the requirements to develop the system. For example, for the new system, the project team will require purchasing software and hardware tools for the successful development of the system. Furthermore, the project team sets the deadlines for the purchase of the components to ensure successful development (Ishola, 2016). All the procurement parties should adhere to the definitions to ensure efficiency in the development.

Project Integration Management Plan

Furthermore, the project integration will require the definition of the type of contract to use when dealing with the suppliers. The project team should use the time and material contract to ensure that the contracted experts get pay depending on the time spent at work. Additionally, the contract will allow flexibility and achievement of the intended system.

The project team will identify the various risks facing the system’s development. The risk identification will check whether the time and material contract will result in risks to the system (Boyer, 2018). Furthermore, the team will analyze the vendors, check the budget and scope to check the areas of possible risk, which will cause failure.

Project risk management

The team will manage risks by selecting experts to identify the possible sources of risk and develop solutions to control risk. For example, the team will choose various experts who will identify the risks presented by the suppliers and develop methods of preventing the occurrence of risks. The team could prevent the risks posed by the vendors by employing vendor management techniques (Hartney, 2016).

Cost determination

The project management team will use request for quotes sent to various suppliers to identify the various prices of supplies. The team will send the request for proposals to the suppliers with the explanation of products needed (Boyer, 2018). The suppliers then send quotations of the products with the prices to the team.

The team will use a project logbook to specify all the parts needs for the success of the system development. The logbook will provide documentation about the various components of the project including the cost, price and quality of the system (Ishola, 2016). Additionally, the document specifies the various steps of the project to ensure simplicity and efficiency.

Procurement constraints

The system has various constraints that could pose challenges in the development. The constraints include cost and time that could cause failure of the system. The cost constraint arises from increases in the market cost of products during the development of the system. Furthermore, the time constraint comes in due to the delay in the delivery of the required resources to develop the system (Blome, 2017).

Contract approval process

The stage will begin with the procurement team determining the products to purchase from the external suppliers. The team will send proposals to the suppliers to identify the various prices offered by the vendors (Ishola, 2016). The project team vets the prices and the quality of products offered and then determines the best suppliers.

The project team will make decisions based on the quality and the cost of the products (Blome, 2017). The project team will ensure that the products bought meet the budgeted amounts of money to avoid increases in cost. Furthermore, the team will only accept the products that meet the highest quality.

Vendor management

The project team will meet with the suppliers to review the ability to continue supplying the products (Hartney, 2016). The team should ensure that the vendors have the ability to supply the right quality of products at the necessary costs. The meetings will occur weekly to monitor progress and ability to continue the relationship.

The project team will have various metrics to ensure meeting of the set objectives (Ishola, 2016). The metrics include checking whether the quality of the products aligns with the requirements. Additionally, the team will check whether the system meets the set quality score.

References

Blome, C. (2017). International Journal of Operations and Production Management. Emerald Publishing. Retrieved from https://www.emeraldinsight.com/journals.htm?issn=0144-3577

Boyer, S. (2018). 8 Top Project Management Methods, Approaches, Techniques. Retrieved May 25, 2018, from https://www.nutcache.com

Hartney, J. (2016). The 10 PMBOK Knowledge Areas. Retrieved May 26, 2018, from Project Engineer: www.projectengineer.net

Ishola, T. (2016). Principles of Purchasing and Supply. National Open University of Nigeria. Retrieved from https://www.pdfdrive.com

Mark Pagell, B. F. (2018). Journal of Supply Chain. Wiley Online Library. Retrieved from https://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1745-493X

Pierce, J. (2018). Gas Markets. Retrieved from AEMC: https://www.aemc.gov.au

Rebecca Stekelorum, I. L. (2018). Extending CSR in SME's Upstream Supply Chains: A Dynamic Capabilities Perspective. Taylor and Francis Journal. Retrieved from https://www.supplychain-forum.com/

Russell R. S., T. B. (2014). Operations and Supply Chain Management (8 ed.). Wiley. Retrieved from https://www.wileydirect.com.au/buy/operations-and-supply-chain-management-8th-edition/

Suzanne de Treville, T. B. (2016). Journal of Operations Management. Elsevier. Retrieved from https://www.elsevier.com/wps/find/journaldescription.cws_home/523929/description#description

Wagner, D. B. (2018). Supply Chain Management; An International Journal. Emerald Publishing. Retrieved from https://www.emeraldinsight.com/journals.htm?issn=1359-8546