|


  

 
 

 

 i

 
  

 


ë Consumption Management
ë Supplier Selection
ë Contract Negotiation
ë Purchasing
ë Contract Management
ë Contract Closure
 x 
 

 

ë ¦ ective procurement begins with an
understanding o how much o what categories
o products / Services are required across the
entire company as well as by each operating unit
ë Better economies o scale can be achieved i
requirements are aggregated
Setting Up ¦
pected Level o Consumptions /
requirement
ë Compared with actual level o consumption
 
 

 

ë Consumption above e
pectations is either a
problem to be corrected or it re lects inaccurate
e
pectations that need to be reset.
ë Consumption below e
pectations may point to
an opportunity that should be e
ploited or it
also may simply re lect inaccurate e
pectations
to begin with.
 ]  


here are a number o reasons why the selection and
evaluation o suppliers are more important today than
they were in the recent past
Cost O Material or Services
Reliability
Quality
Financial aspects
Innovation
Lead imes
   
i
ë Replenishment Lead ë Pricing erms
ime ë In ormation
ë On-ime Per ormance Coordination
ë Supply Fle
ibility Capability
ë Delivery Frequency / ë Design Collaboration
Minimum Lot Size Capability
ë Supply Quality ë ¦
change Rates, a
es,
ë Inbound ransportation Duties
Cost
  

  

Discussion Question:

Large Pool o Suppliers VS Small Pool o

Suppliers?
 
 

ë §dvantages:
ë Lower Price due to bulk quantities
ë ¦nabler o JI

ë More willingness in investment and commitment

ë Lower administration Cost

ë ¦asier to track down material supply

ë Disadvantages:
ë Low variety
ë Dependency / Risks
 
   
ë Supply Continuity
§ use ul approach to ensure the reliability o
supply stream and improve supply continuity
provides alternative sources in the event o
supply stoppages
ë Competitive Pressure
Increase the buyer·s negotiating power through the
perceived threat o being able to switch business
easily

   


ë §dditional §dmin. ¦
pense: ¦
tra e ort and

time in supplier management.
ë Short term Relationship
ë Frequent change o suppliers results in lack o
motivation by both sides to work together
ë Lower volumes o business compared to the
whole
 £
 
|


      
 
 
 
 




i
 
i



   

 

ë o establish a good ë Need Variety

relationship
ë Spread risk o supply
ë Less quality variability
interruption
ë Lower cost
ë Create competition
ë ransportation economies
ë Proprietary product or ë In ormation
process ë
ë Volume too small to split
 m. Contract Negotiation
ë his is where the speci ic items, prices, and
service levels are worked out.
ë he simplest negotiations are or contracts to
purchase indirect products where suppliers are
selected on the basis o lowest price
ë he most comple
negotiations are or contracts
to purchase direct materials that must meet
e
acting quality requirements and where high
service levels and technical support are needed
 Ñ 
 

ë hese activities are the routine activities related
to issuing purchase orders or needed products.
ë Purchasing is normally associated with a
unctional activity to acquire material / services

ë Purchasing VS Procurement What is the

di erence?
  

ë Procurement is the acquisition o goods and/or
services at the best possible TOTAL COST OF
OWNERSHIP, in the right quantity and quality, at the
right time, in the right place and rom the right source
or the direct bene it or use o corporations, or
individuals.
ë In short
Procurement is concerned with the overall gathering o
resources to acquire goods/services, while purchasing is
the speci ic act o acquiring something by paying
money or it. Purchasing is little part o procurement
 !  
 

 " 

 


 
 

 

 

 


 - 

 



 

 




 

 

 &


 

 .  

,   
'
 

 

 '  , 
  
(
) 

   - ,  *   


 !/ 
,
 + , 


 
!"

# 0

 
!  ,  

$  
 %  
 1+
   
$ 
  %  
 2*

 
 


 
 
  


#
Purchasing Mentality Procurement Mentality
.


 
  

 

3
 3


  
 &
  
 
|
  - 

 



) | 
 4 
&

 -

  
5    |) 
 


 6

 
 
* 6

 
 

 
 
 
  

/   
   

 
  
 
|

)  |


 

  



   
  
 
  
$ 
%

Centralized VS Decentralized Purchasing


 
%
& 

&
Purchasing in any organization dependent on many
actors, such as market conditions & types o
materials required.

ë Centralized Purchasing- purchasing department located at

the irm·s corporate o ice makes all the purchasing
decisions.

ë ecentralized Purchasing- individual, local purchasing

departments, such as plant level, make their own
purchasing decisions.

 
%
& 

&

' Centralization 
' ecentralization
ë Concentrated volume- ë Closer knowledge o
leveraging purchase requirements
volume ë Local sourcing
ë §void duplication
ë Less bureaucracy
ë Specialization
ë Lower transportation
costs
ë No competition within
units
ë Common supply base
 D 
 


ë Contract administration ensures that the seller·s
per ormance meets contractual requirements
ë Contracts are legal relationships, so it is
important that legal and contracting
pro essionals be involved in writing and
administering contracts
ë Many project managers ignore contractual
issues, which can result in serious problems
 

 

 

ë Changes to any part o the project need to be reviewed,
approved, and documented by the same people in the
same way that the original part o the plan was
approved
ë ¦valuation o any change should include an impact
analysis. How will the change a ect the scope, time,
cost, and quality o the goods or services being
provided?
ë Changes must be documented in writing. Project team
members should also document all important meetings
and telephone phone calls
 ‰ 
' 
ë Contract close-out includes
ë product veri ication to determine i all work was
completed correctly and satis actorily
ë administrative activities to update records to re lect
inal results
ë archiving in ormation or uture use

ë Procurement audits identi y lessons learned in

the procurement process
 ¦'
  

ë Internet has grown and evolved, more and more
companies have become involved in e-business.

ë  

% E-Procurement is the business to business

(B2B) purchasing of goods and services through the
Internet.
 ¦'( 
)  


 

ë One o the most important impacts o the
Internet and e-business in supply chain
management is the availability o instantaneous
in ormation. In ormation like pricing, location
o materials, status o shipments, and availability
o parts throughout the supply chain.
 ¦'( 
)  


 

ë Package carriers such as Fed¦
, UPS, ime
Matters, DHL, CS e
perienced substantial
increase in the number o packages they deliver
or companies due to the growth o e-business
 e-Procurement

  e-Procurement System
ë ime savings
ë Cost savings
ë §ccuracy
ë Real time
ë rackability
ë Management
 ¦' 
ë ¦' uses advanced technology to
assist business transactions in a web-based
environment and acilitates the transaction o
in ormation low and und low. ¦-commerce
involves business-to-business transaction (B2B)
such as Covisint, business-to- Customer
transaction such as §mazon.com (B2C),
customer-to-business transaction (C2B) such as
priceline.com, and customer-to-customer
transaction (C2C) such as e-Bay auction.