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LEC 2: PROCUREMENT MANAGEMENT - Coggle Diagram
LEC 2: PROCUREMENT MANAGEMENT
I. Purchasing vs Procurement
Purchasing
5 rights: quality, quantity, place, time, price
characteristics: reactive (respond to request), transactional (orders and contracts), tactical (short-term)
Ex: 1 room for meeting with capacity of 100 people for next week
Procurement
include purchasing activitíe prior to and after the act of purchase
EX: realize that each month there is one meeting => make a contract
5 rights: quality(fit for purpose), quantity (sufficient, meet demand), place (right sources, right delivered place), time (neither late or early), price (reasonable)
II. Procurement & Supply cycle
Define business needs and develop specification
purpose: to understand and define the business oppoturnity or business need and any foreseen risks
how to define -> coss-functional stakeholders (EX: HANU)
internal: reside within the company EX: students, teachers
external: reside outside the company, not closely connected EX: Latrobe, BIDV
connected: outside the company, closely connected EX: neighborhood
Market analysis and make or buy decision
purpose: to asset the market options available in the marketplace, to answer the question "to buy or to make"
Tools
Speedled analysis
5 forces : Competitive Rivalry, Threat of new entrants, Threat of substitutes
Develop the strategy and plan
purpose: to obtain the item , which should consider the values and ESG goals of the organization as well as the potiential impact of the external environment
Tools
5 forces: Bargaining Power of Buyers, Bargaining Power of Suppliers
Kraljic matrix : The Kraljic Matrix helps organizations identify the appropriate procurement strategies for different types of items.
Non-Critical Items
Leverage Items
Strategic Items
Bottleneck Items
Pre- procurement market testing
purpose: to identify both stakeholder and business needs now and in the future, and how changes to implement the procurement strategy can meet those needs flexibly, to identify if it is the right time to go into the market place
Tool: Product life cycle
Develop documentation and detailed specification
to develop the tender documents, including a detailed specification to ensure consistency on pricing, product quality, and operational functionality
general information -> RFI
high value or complex items (yes- ITT), (no- RFQ)
Supplier selection to participate in tender
purpose: RFI to gain insights into suppliers: size, capabilities, financials, strengths and weaknesses; to determine if they should be included in the tender process
Tools: Carter's 10 Cs
Issue tender documents
purpose: to send ITT or RFQ to selected suppliers and wait for their responses to answer any question
Bid and tender evaluation and validation
purpose: to identify which supplier is offering the best value for money and meets the sustainability needed to select the preferred supplier
Contract award and implementation
Warehouse, logistics and receipt
Contract performance and improvement
Supplier relationship management
Asset management