Projects in a commercial environment- HPRO4004-Procurement
By Georgina Grant -1611161
Executive summary
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.
Table of contents
Introduction …………………………………………………………………………………….. Page 1
The procurement process ……………………………………………………………... Page 2-4
Supplier Reimbursement and Contract Relationships
…show more content…
The procurement process
The procurement life cycle can be made up into 13 key stages. The stages I am going to follow the CIPS stages of procurement and supply management. (Cips.org, 2017)
(Cips.org, 2017)
Stage 1
The first stage of the process is to understand and define the buyer’s needs. This is where the procurement department need to recognize that a product is needed in order to purchase it. This needs to be done with a high level specification which can be achieved by using a variety of stakeholders. This stage is where all the requirements for the product need be identified.
Stage 2
The second stage is market/commodity this needs to be taken place after the buyer has got the buyer needs to a high specification to ensure that at this stage the right product is chosen. At this stage the procurement department need to research all options available within the market. By getting an estimate of what is on the current market, it enables the buyer to pick out potential suppliers also familiarising the buyer with the competition in the market. This is also the stage where the procurement department would be able to look into conducting an analysis on how they are going to achieve the product i.e. make or purchase it/ utilize the service. By conducting market research it gives stakeholders a clear picture of the market.
Stage 3
The third stage is developing the plan. Once the specification has been
According to the Project Management Body of Knowledge (PMBOK) there are four phases in the project procurement process. The PMBOK Guide (Project Management Institute, 2008) defines these as Plan Procurements, Conduct Procurements, Administer Procurements,
The performance of suppliers and vendors is reviewed to determine if they should still be included in the list of qualified suppliers or vendors. The choice of contract for each is reviewed to determine if the decision to share risk was justified and if the choice of incentives
Stages of the product supply chain or network design, location of raw material in relation to the manufacturer, distributor, retailer and consumer, etc.
2. Other than that,in addition, I’ll explain about the principles of ‘Design and Built’ and ‘Traditional’ procurement routes and what is most advisable to you with regards to procurement route and contract.
The stages in a supply chain are normally the supplier, the manufacturer, the distributor, the retailer, and finally the customer.
The key point at this step is to understand the purpose of product, and design the product is such way that it can be used for this purpose. The specifications agreed on the internal level will provide clear vision of companies’ quality position at the market, and it is essential that all departments know it. Involving the customer at this stage is essentially, due to him and only he can evaluate how well product meets his requirements.
Procurement is referred as a process where, the project team plans the activities and items of a project that is required to be created or bought from someone outside the project team or organization. In order to make this decision, make-or-buy analysis is done by the project team that helps them to decide whether to perform activities within the team or to contract with a seller. Most of the organizations don’t have enough qualified resources for performing all the activities of a project. Therefore during make-buy-analysis project team objectively look at the skills that are required to make a product and evaluate the current resources. If the current resources don’t have enough skills then new resources are hired or work is outsourced to the seller who has relevant skills whereas, it is useful to outsource the work instead of purchasing new resources, when the organization wants to concentrate on all of its effort into development and research of new products
The first step in devising an effective supply chain is to consider the nature of demand for your product.
Finally, procurement strategies and techniques for managing suppliers, selection of product category placement, product life cycle, trend analysis and enhancement of process efficiency will be explored. The combination of these elements will be used to form a procurement plan that will be recommended for adoption by the board.
Procurement is the process by which organizations acquire goods, works and services. The procurement cycle involves planning, beginning with needs assessment through needs preparation, inviting offers, contractor selection, awarding contracts, executing and managing contracts, as well as final accounting and auditing. Procurement can therefore be viewed as a strategic component of supply chain management relating to satisfying customer or buyer needs.
There are five stages that a customer usually goes through when he or she around their purchase: problem/need recognition, information search, evaluation of alternatives, purchase, and post purchase behavior.
Explain the three decision phases (categories) that must be made in a successful supply chain?
The ‘Consumer Buying Process’ dictates the buying behaviors of consumers. The ‘Consumer Buying Process’ is made up of six stages and a consumer may or may not progress through each depending on the potential purchase or repurchase (Ingram, LaForge, Avila, Schwepker, & Williams, 2015). The six stages are:
New Service-Product Development Process- Continuously pursuing a better product and services to better meets customer’s needs should be a priority of a firm. The core process keeps the company afloat and provides a competitive advantage for the firm. Managers should be able to develop customer satisfaction procedures on how the firms plans to achieve goals or meet project designed to customer specifications. A firm supply chain value should incorporate the needs to always produce new services by scanning the environment and pursuing best innovative practices.
Traditionally procurement had been more operations oriented or needs based. Whereby whatever the company wanted or needed would be requested through the procurement department and the authorized representative would just make a few calls to find the item and its availability and make the purchasing arrangement. Rarely were there long-term contracts in place to optimize delivery, availability, or to ensure the quality of the products met or exceeded the firm’s