How Should Reverse Auction fit into an Overall Procurement Strategy?
It is quite challenging to discuss about procurement management without stating the importance of its strategies. There are four main basic procurement strategies that serve different functions within a procurement management. To begin with, a “Partnership” strategy focuses mainly on constructing mutual commitment in long term relationship with suppliers. While a “Secure Supply” strategy aims to secure short and long term supply while reducing risk from suppliers. In addition, a “Category Management and E-Procurement solutions” serves as a tool to reduce logistic complexity, improve operational efficiency, and attempts to reduce the number of suppliers. Lastly, a “Competive Bidding” strategy emphasizes on obtaining the “Best Deal” for short term transactions with suppliers.(van weele) Each of these four strategies involves a unique purchasing methodology, which implies that the complexity is embedded in an individual strategic implication. Therefore, it requires different tools to accomplish the specific strategical characteristics. A business entity may need to support and execute procurement decisions with other strategic apparatus with analytical methods, including market analysis, uncertainty analysis, price forecasting, supplier relationship and along with others.(Harvard) Due to the fact that procurement strategies are the focal point in the planning stage of all business firms and is a vital
A basic definition for the procurement is “the way the building is realised” and “involves assembling and organising the skills and services of a team of construction professionals”. (the Construction Round Table, 1995). More precisely, the construction industry describes procurement as “a system that establishes the roles and relationships which make up a project organisation”; hence the overall organisation and communication structure for the management, administration and control of a project is established by the procurement system. (D.C.H Coles, 2010)
{Build the Supply Base: supplier selection1. supplier evaluation- find potential suppliers, supplier certification (qualification, education, certificationISO 9000,14000). 2. Supplier development- integrate supplier in system, quality require, product specs, schedule/delivery, procurement polices, training, engineer/production help, information transfer procedures. 3. Negotiation- significant element, strategies: Cost based price model (open books to supplier, based on time and materials) Market based price model (based on published, auction, index prices: commodities) Competitive bidding (most common, no longterm relationship, request for rfq). 4. Contracting- share risks, benefits, incentives. Centralized purchasing, E procurement (online catalogs/exchanges, online auctions).} Logistics MGT- obtain efficient operations through integration of all material acquisition, movement, and storage activities. Frequent for outsourcing, allow competitive advantage from reduce costs and improve customer service. 1.Shipping systems: truck(flexible, moves majority manufactured goods) rail( large loads, containers) Airfreight( fast/flexible light loads, expensive) water( used for bulky low value cargo, oldest way of transportation) Pipelines( transport oil, gas,
In this assignment I will be writing a formal report that will explain a typical procurement process, I will outline a variety of methods of supplier reimbursement and contract relationships; I will also outline the pros and cons of each contract type. As well as this, I will explain a typical supplier selection process through the use of Carters 10 C’s and a typical selection process model.
This paper includes a description of the procurement planning process. The most valuable output of the plan procurement process will be identified. Furthermore, the various contract types will be explained. A source criterion that would be applicable to any project will be described and three criteria that would apply to most projects will be identified. An analysis of the ethical
Organisations around the world are increasingly operating in very dynamic business environments. Among the areas that are being monitored is the way raw materials for production are procured and how the finished products reach the market and eventually the consumer. This paper will provide a review of published documents on strategic procurement in organizations by providing a critical analysis of the strengths and weaknesses of their findings. The paper will present the impacts of the findings of the reviewed articles on the activities of an organisation that operates in a business to customer industry. And also a supermarket will be used in this case.
Procurement management is the processes to purchase or acquire the products, services or results needed from outside the project team to perform the work. Project Procurement Management involves not just purchasing products, services or results, but also ensuring that those that are purchased are right for the project, meets standards and is based on project requirements. This life cycle includes tracking from order through deployment and completing with invoice reconciliation.
Procurement by public entities is guided by primary law principles of transparency, equal treatment and non-discrimination, procurement laws sets up an extensive legal framework regarding the procurement of work, supply and service contracts. There are two main reasons for the use of specific procedures i.e. why contracting authorities do not just negotiate or simply buy from the closest supplier. First, it provides for more public accountability and therefore less cases of corruption practices. Additionally, tendering procedures aim to ensure the best value for money by making it necessary for suppliers to act highly competitive. As a result, market mechanisms will help in facilitating the best possible practices. In situations where market mechanisms are not effective, tender procedures might lose their effectiveness as well. If for example there is lack of competition due to certain complexities or as a result of lower bidder interest, negotiations with just one or two suppliers may be the most efficient manner to handle the process. Therefore, we discuss the inherent advantages and disadvantages of sealed bidding and contracting by negotiation as procedural frameworks for tendering.
Comparing to the option of upgrading the whole procurement system, my recommendation aligns with Russell Menere (National Procurement Manager of BAL)’s idea, which is to implement short term improvements based on current procurement system in
Baria Planning Solutions (BPS) is a consulting firm serving manufacturers with $95 million in annual sales. BPS analyses its customer spending categories and identifies various sources of potential savings. It carries out various change management, supplier consolidation and purchase standardization initiatives to attain its objective. It specialises in “Spend Analysis”. In order to expand, BPS acquired various niche service providers. BPS practised a solution selling process which was essentially a
Getting into a contract is systematic since there are certain steps that ought to be followed before any contract can be complete and legally binding (Lando, 2003). Contract management is the segment of the procurement cycle in which a supplier delivers the required goods, or services in accordance with a department’s stipulations and Terms and Conditions of Contract. The buyer and supplier’s approach to managing their relationship is critically important to certifying successful contract delivery and best value for money for the taxpayer.
Procurement intends to explore supply market opportunities and to implement resourcing strategies that deliver the best possible supply outcome to the organization, its stakeholders and clients (Kidd, 2005). Therefore, construction procurement exists to purchase a construction project as requirement of firms or organizational entities to achieve its goals. However, the choice to use external resources is the part of firms’ decision-making
and let them see my side of the business. I have to cut costs, so we
A procurement strategy is an important tool in the procurement of goods or services. The strategy serves as a guide in the procurement process and should be updated regularly to ensure it satisfies the needs of the organisation. A strategy is defined as a plan selected to bring a desired future. It involves planning and ordering of resources so as to realize the most efficient and effective use of these resources. With respect to strategic procurement, this implies a plan to optimise the organisations external spending and procurement of goods or services in a way that serves the organisations objectives. A procurement strategy has several components that make it unique to a specific organisation. An effective procurement strategy is reliant on the prevailing market conditions, the nature of the organisation, its strategy as well as its requirements (Fields, Craighead and Ketchen, 2015).
Strategic sourcing is the process used in the supply management as a tool to decide which supplier will be used to provide product/service to the organization.
Nowadays there is a tendency among companies who are more and are becoming part of e-procurement: that’s mean, increasing number of companies which use web-sites and web-based applications as a SCM solution.