The Aspect of Quality Assurance and Control Measures - Dissertation Example

?Quality Assurance & Control in the Procurement Chain (Oil & Gas Industry) Table of Contents I.Introduction 3 II.Literature Review 4 III.Problem ment 10 IV.Research Questions 11 V.Research Objectives 12 VI.Research Methodology 13 VII.Research Structure 18 VIII.Conclusion 19 References 20 I. Introduction In the current market situation, governments tend to impose high taxation charges on the extraction of oil and gas that in turn influences the pricing strategies of oil and gas industry in various economies. A major concern of government in this regard is the efficient quality assurance from the industry players in providing significant emphasis on greenhouse gas emissions and customer interests. This concern can be stated as quite vital for the oil and gas companies as the products offered by the industry is termed to be inelastic providing minimum opportunity to the customers to switch to substitute products (Slocum, 2006). The research study proposed in this paper shall emphasise on this aspect of quality assurance and control measures as considered by the oil and gas companies. Further description of this paper will thereby focus on identifying the particulars of the research process intended to be executed. In other words, a comprehensive and detailed outline of the research planning shall be provided in this paper with due consideration to the research problem, research questions and the research methodology to be followed in the study. II. Literature Review Various measures had been considered in concern to the aspect of quality assurance and control in the oil and gas companies. These include environmental regulations and procurement rules imposed by the government with the intention to standardise the operations of the industry players. For instance, in 1991 the prescribed environmental rules by the European Commission signified the Fifth Action Programme which was intended to regulate the organisational operations of oil and gas companies in the UK with due consideration to the quality control measures. As stated in the regulatory programme, the industry is responsible for its environmental impacts and assurance to customer interests. Thus, the industry players should be concerned regarding the efficient use of resources, quality measures to control the consumer confidence. Companies should also intend maintaining a community standard in their operations as directed in the programme (Gao, 1998). In the current day context, gas and oil industry plays a significant role for an economy. The industry nearly contributed 24% to the total GDP earning of the UK in 2008. The industry also witnessed a significant rise in the investors’ interest. This in turn significantly enhanced the profitability of major industry players with inelastic consumer demand and increased financial strength (UK National Statistics, 2009). However, from an in-depth perspective it can be observed that the taxation charges were increased in the recent years. To be illustrated, the budget planned in 2011 stated a hike in revenue tax charges from 20% in the prior fiscal year, i.e. 2010-2011, to 32% in the current fiscal year, i.e. 2011-2012. It is worth mentioning that the UK oil and gas industry was recognised to be one of the most stable industries in comparison to the energy industries of other economies. With strong barriers to the price hike in the industry, the UK government also focussed on relatively secure tax regimes that provided the investors in the industry with certainty assurance (Energy and Climate Change Committee Inquiry, 2011). On the similar context, it can be stated that with strict regulatory barriers the oil and gas industry in the UK is likely to face various challenges in maintaining its profit. According to the report forwarded by Energy and Climate Change Committee (2011), there are various challenges likely to be faced by the oil and gas industry in the economy due to the increase in tax charges. For instance, the industry is likely to witness decelerated investment operations that in turn shall cause a rapid decline in the total production of the industry. The most significant factor is stated to be witnessed in the supply chain of the industry. To be specific, reduction in investment and barriers to price increase shall motivate the industry players to adopt various measures in reducing the costs leading to job losses and reconsideration to the supply chain management approaches (Energy and Climate Change Committee Inquiry, 2011). In other words, the most significant influence of increase in the tax charges shall be witnessed in the procurement chain of the industry. The term procurement indicates the operations executed by a company to acquire something (Oxford University Press, 2011). From the managerial perspective procurement can be defined as the operations performed by companies to obtain the products as well as services from the external environment of the business required for the execution of its actual functions. Ashford Borough Council (2011) defines the procurement as “the term used for the full range of goods and services................................From the identification of a need to provide the service to sourcing and appointment of the service provider and thereafter, the management of those services or goods provided”. Thus, procurement can be stated as a diversified concept of organisational management to efficiently deal with the allocation of required resources along with the planning to render the services and products to the ultimate customers of the organisation. Buffett & Scott (2004) provides an extension to the thought, describing the concept to be a modified definition of supply chain management. According to the authors, programming effective planning to execute the procurement functions of an organisation rewards it with a competitive advantage of efficient management of organisational resources. The concept was further studied by various authors with an intention to note the efficiency of procurement as a prime factor of supply chain management on the organisational development. As stated by Thomas & Griffin (1996), there are three essential stages in an effective supply chain management, i.e. “procurement, production and distribution”. In the inefficiency of any of these elements, the management approach shall significantly hamper the overall organisational growth. It is in this regard that organisations should emphasis on the efficient execution of the management approach. On the similar context, the authors also stated that supply chain management is increasingly becoming competitive in the current market scenario due to the inclusion of global suppliers to the industry which requires greater emphasis to the essential elements of the concept (Thomas & Griffin, 1996). Furthermore, Croom & Et. Al. (2000) state that “Companies will not seek to achieve cost reductions or profit improvement at the expense of their supply chain partners, but rather seek to make the supply chain as a whole more competitive”. However, according to the authors most of the companies consider supply chain management to be insignificant to certain extent in providing a competitive advantage to the organisation in the post-modern era. Another feature of supply chain management in the context of procurement is that organisations need to depend on other industries in order to gain efficiency in procurement management. With this concern, procurement also signifies the interdependent relationship of various related industries with the purpose of gaining competitive advantage from the implication of an effective supply chain management (Tan, 2001). For instance, in the case of oil and gas industry, the industry players have to depend on technology industries as well as on the steel and other mineral and energy industries for its efficient procurement of resources. However, in this regard the oil and gas industry faces various challenges, such as the rapid change in the external as well as in the internal business environment of organisations. Another major challenge of the industry is its complex operational design. To be specific, one of the major challenges faced by the oil and gas industry in the global platform is the growing dependency on global suppliers than the local players giving rise to the bargaining power of the suppliers. Moreover, the increasing competition between suppliers is also affecting their contribution to the competitive advantage of the oil and gas industry (Kwok & Hampson, 1997). It is worth mentioning that supply chain management has a vital impact on the competency of the oil and gas companies in the post-modern era, as the industry is observed to be highly depended on the collaboration of its supporting industries. As stated by Bento (2003), “Not many industries benefit from maximizing supply-chain efficiencies more than oil and gas companies”. It is due to the reason that procurement operations in the oil and gas companies largely depend on the suppliers and consumers related to various industries. Few of the common strategies adopted by the oil and gas companies in the UK are witnessed to be concerned with the contractual and partnership accord with the players in the supply chain of the organisation. However, this strategy to consider partnerships as a vital aspect to enhance efficiency in the supply chain management is subject to the legal formalities to a large extent (Bento, 2003). Evidences have further proved that “...............supply chain in the oil and gas industry, for quite some time was not taken seriously by players in an industry where technical advancement and time were the core values aiming only for fast exploration and high production of oil and gas” (Mohammad, 2008). It is worth mentioning that researches have concluded that almost 80% of the costs incurred by oil and gas companies are because of the supply chain management initiatives executed by the companies. It is in this regard that oil and gas companies have intended to reduce the cost incurred from supply chain management initiatives by efficient planning of procurement operations such as the involvement of innovative approaches (Mohammad, 2008). A major contribution to the rising concern of oil and gas companies regarding the supply chain management and the procurement system can be identified from the increased burden of revenue tax. Increased tax indicates to the increase in the costs incurred by the oil and gas companies in the impending years which can be observed to be more intensified with the barriers to increase the price and hamper the quality assurance as has been prescribed by the regulatory bodies. The situation becomes more crucial due to a probable reduction in the investment structure of the industry (Energy and Climate Change Committee Inquiry, 2011). In a nutshell, it can be stated that oil and gas companies are likely to concentrate on the cost reduction in its procurement process that shall require reconsideration of the supply chain management strategies. The issue emerges to be quite significant in the post-modern context due to the increasing competition and requirement of customer confidence in the international market. III. Problem Statement The problem identified in this context can be related with the significance of cost reduction in the current situation of the oil and gas industry without hampering the quality control and assurance measures. The increase in the revenue tax charges from the current fiscal year that is likely to cause a significant rise in the cost structure of the oil and gas companies, especially in the UK along with a significant reduction in the investments. It can be further stated that a considerable amount of cost is raised by the procurement process executed in the industry. This implies that the industry players are likely to reduce the costs incurred from procurement by reconsidering the entire process that shall significantly influence the quality control measures undertaken by the companies. Therefore, the efficient allocation of resources through procurement with due consideration to the cost reduction, consumer confidence and enhancement of the competency can be identified as one of the major challenges faced by the industry in the current day phenomenon. IV. Research Questions With reference to the above description, it can be apparently observed that supply chain management approaches relate to a broad periphery of organisational management theory. Focussing on a significantly broad concern of the oil and gas industry shall cause various limitations in gaining efficiency in the research study. In this concern, the research study shall be focused on a particular industry player in a specific market. Evidences illustrated in the above discussion further revealed that oil and gas industry plays a significant role in the UK economy and the problem is also expected to have a considerable impact on the UK based oil and gas companies as the tax imposition has been confirm by the UK government. Furthermore, the study shall concentrate on the procurement strategies adopted by BP which is recognised to be one of the major players in the global market. The company has also been recorded to pay considerable significance to the aspects of quality control and quality assurance not only because of the hikes in the revenue tax rate but also due to the continuous pressure from the macro-economic factors such as the social and legal aspects (Usborne & Cornwell, 2010). Considering these aspects, the research questions can be identified as follows. What are the procurement strategies undertaken by BP? How much effective are these strategies to deal with cost reduction and quality assurance as well as quality control? How much competitive are these strategies in the 21st century market context? V. Research Objectives The research objectives in this context are to obtain rational and empirical evidences in relation to the questions mentioned above. To be specific the research shall be concentrated on an in-depth understanding of the procurement process executed by BP in its organisational operations. Moreover, the study shall emphasise on the recognition of the efficiency in the procurement strategies adopted by the company with an intention to reduce operational costs. It is worth mentioning that the research study shall provide further emphasis on the quality control as well as quality assurance initiatives considered by the company that in turn is likely to contribute to its overall competency. Therefore, three major aspects shall be considered in this study, i.e. the procurement strategies adopted by BP, its efficiency in reducing costs without hampering the efficiency of the supply chain management in the company, and the competitive advantage of the process in effectively controlling the quality and assuring a quality performance of the company in the 21st century context. However, the prime aim of the research study shall be to identify the features of the procurement process executed in BP by evaluating its pros and cons with due consideration to the aspects of quality control and quality assurance. The analysis of the current strategies adopted by BP shall assist in identifying the limitations of its procurement process based on which few recommendations shall be suggested for the company to attain competitive advantage. VI. Research Methodology Research methodology is termed to be one of the most significant aspects of a research study. The concept is termed to be concerned with the research techniques applied in the research process from the collection of sufficient amount of relevant data to the analysis of the research findings. Therefore, research methodology possesses a considerable significance in a research study as it directly contributes to the attainment of the research objectives (Walden, 2002). The research process in this case is based on the deductive theory. According to Bryman & Bell (2007), the deductive theory represents the generalised view regarding the relationship existing between theory and the process of the research. The implication of this particular theory emphasises on the deduction of the theoretical concepts into concise hypotheses that shall be evaluated on the basis of empirical evidences collected in the research process (Bryman & Bell, 2007). With this concern, the research process will emphasise on collecting relevant data regarding the research problem and developing a theoretical base for the research that shall further lead to the hypotheses for the study. Another major factor of the management or business researches as stated by Bryman & Bell (2007) is the epistemology consideration. There are three broad categories of epistemology, i.e. positivism, interpretivism and realism. In this case the research theory shall consider a positivist epistemology in relation to the strategies adopted by the company and its efficacy in the contemporary business environment of 21st century. This shall significantly assist in evaluating the facts related to the research problem from a critical perspective. Considering the deductive research theory on the basis of a positivist epistemology the research process shall be concentrated on the implication of a quantitative research approach. Adhering to the fundamental principles of a quantitative research method, the execution of the research process shall emphasise on quantifying the collected data and implementing statistical tools to analyse the data collected and thus attain the objective of the research. It is worth mentioning that the research study shall be based on objectivism as its ontological consideration during its execution (Bryman & Bell, 2007). The research design to be adhered in this case shall be identified as a quasi-experimental approach. According to the approach, the research process considers a few features of the experimental research design, i.e. the data collection process focuses on an identified control group but in their natural setting to have an insight of the issue (Bryman & Bell, 2007). This enhances the significance of sampling and the data collection method to be applied in the research process. Sampling Robson (2002) states sampling to be a selection of research participants from the population. In this context, population refers to as the total number of cases related to the research problem. In this case all the top and middle level management personnel associated with BP in the UK and also the experts concerned with the efficiency of supply chain management strategies adopted by industry players in the UK oil and gas industry. There are various sampling methods used in a research process, such as probability and non-probability sampling. In this case the research study shall be concentrated on the probability sampling method. In this regard the cluster sampling method shall be applied to identify the sample size of the respondents in this research. Data Collection Data collection is termed to be one of the crucial facets of a research process. It not only provides with enhanced efficiency to the study playing a major role in the attainment of the objectives but also signifies the viability of the research findings (Bryman & Bell, 2007). In this case, the data shall be collected through a questionnaire survey method fundamentally focussing on the primary data sources. It is worth mentioning that the questionnaires shall be presented in a mixed form, considering both the structured and unstructured questions aimed at obtaining an insight to the issue identified in the research. Furthermore, due to the fact that the research process emphasises on a broad population that shall influence the cluster samples determined in the process, conducting personal interview with all the clusters shall emerge to be a significant challenge in terms of costs, resources and time. Therefore, the survey shall be held through mail for selected clusters and personally for other sample clusters (Saunders & Et. Al., 2003). Along with the primary data sources, secondary information shall also be considered in the research study. Thereby, the secondary data sources shall be various articles and journals related to the research problem presenting the viewpoint and evidences of peer reviewed researches along with the official information of BP concerned with the procurement operations executed in the company. Data Analysis It has been stated in the previous discussion that the research study shall emphasise on the implication of a quantitative research approach. With this concern the research process shall consider a statistical analysis framework to analyse the collected data in the research process from primary and secondary data sources. The research objectives determined in this paper are mostly concerned with the strategies adopted by BP in relation to procurement and thus analysing its efficiency to meet the organisational goal, i.e. cost reduction along with quality control and assurance. Therefore, a significant relationship can be observed between the strategies and the cost structure of the company. It is in this context that the research process shall consider a correlation framework to analyse the data collected and thus support the research hypotheses. Notably, the structured questions shall be analysed through correlation statistical method, but the unstructured questions shall be analysed with the implication of graphical methods considering the challenges likely to be faced in quantifying the collected data. Ethical Considerations Ethical consideration also hosts a significant influence on the viability of the research study. Considering the fact that data shall be obtained from company officials and experts, a formal consideration shall be required from both the organisational personnel and the experts included in the sample size of the study. VII. Research Structure With due consideration to the research objectives and the research methodology, demonstrated in the above discussion, the proposed structure of the research study shall be as follows. Chapter 1: Introduction Chapter 2: Literature Review Chapter 3: Research Methodology Chapter 4: Investigation and Analysis of the Data Collected Chapter 5: Conclusions Chapter 6: Recommendations and Implementation VIII. Conclusion To be summed up, the objective of the research study shall be based on the identification of the importance of quality measures undertaken by the UK oil and gas industry to provide it with a competitive advantage. Accordingly, the study shall emphasise on elaborating the influence of fluctuation in cost expenditures on the organisational operations in relation to supply chain management. With this concern, the study shall be based on a deductive theory with a positivism epistemology focussing on the implementation of a quantitative research method. Thereby, the research design will focus on the collection of relevant data from primary as well as secondary data sources. The data collection process shall be executed through mail and personal questionnaire survey. Furthermore, statistical analytical tools shall be implemented to analyse the collected data. Conclusively, it can be stated that proper consideration shall be provided to the ethical aspects in the ultimate execution of the research process. References Ashford Borough Council. (2011). Procurement Definition. Retrieved July 09, 2011, from http://oxforddictionaries.com/definition/procurementhttp://www.ashford.gov.uk/business/doing_business_with_us/procurement_definition.aspx Bento, J. (2003). Supply Chain Logistics Require Attention. Management. Bryman, A. & Bell, E. (2007). Business Research Methods. Oxford, UK: Oxford University Press. Buffett, S. & Scott, N. (2004). An Algorithm for Procurement in Supply-Chain Management. Harvard School of Engineering and Applied Sciences. Croom, S. & Et. Al. (2000). Supply Chain Management: An Analytical Framework for Critical Literature Review. European Journal of Purchasing & Supply Management, Vol: 6, pp. 67-83. Energy and Climate Change Committee Inquiry. (2011). Implications for the North Sea Oil and Gas Industry of the Budget 2011. The United Kingdom Offshore Oil and Gas Industry Association (Oil & Gas UK). Gao, Z. (1998). Environmental Regulation of Oil and Gas. London, UK: Kluwer Law International. Kwok, T. & Hampson, K. (1997). Strategic Alliances between Contractors and Subcontractors - A Tender Evaluation Criterion for the Public Works Sector. International Conference on Construction Process Re-engineering. Mohammad, M. F. (2008). Procurement Strategies for the Oil and Gas Industry: To Capture Changing Values and Dealing with Multi Cultural Complexity. International Conference on Construction and Building Technology, Vol: 3, pp. 29-38. Oxford University Press. (2011). Oxford Dictionaries. Retrieved July 09, 2011, from http://oxforddictionaries.com/definition/procurement Robson, C. (2002). Real World Research: A Resource for Social Scientists and Practitioner-Researchers. UK: Blackwell Publishing. Saunders, M. & Et. Al. (2003). Research Methods for Business Students. New Delhi, India: Pearson Education Limited. Slocum, T. (2006). Hot Profits and Global Warming: How Oil Companies Hurt Consumers and the Environment. Public Citizen’s Energy Program. Tan, K. C. (2001). A Framework of Supply Chain Management Literature. European Journal of Purchasing & Supply Management, Vol: 7, pp. 39-48. Thomas, D. J. & Griffin, P. M. (1996). Coordinated Supply Chain Management. European Journal of Operational Research, Vol: 94, pp. 1-15. UK National Statistics. (2009). UK Energy Sector Indicators 2009. Background Indicators. Usborne, D. & Cornwell, R. (2010). BP Oil Leak Now Worse Than Exxon Valdez Disaster. Retrieved July 09, 2011, from http://www.independent.co.uk/news/world/americas/bp-oil-leak-now-worse-than-exxon-valdez-disaster-1985111.html Read More