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Course 2 Procurement Basics Trịnh Thị Quỳnh - Coggle Diagram
Course 2
Procurement Basics
Trịnh Thị Quỳnh
W1. Procurement Definitions
Procurement
Purchasing
Sourcing
Supply Management
Supply Chain Management
W2. Importance of Procurement
Procurement
Functional
Activities
Supplier management and identification
Buying
Negotiate and contract
Supply market research
Measurement of suppliers
Systems development
Importance of Procurement to an Organization
Deliver value and savings
Reduce cost
Increase revenue
Get early involvement for product design
Build strong relationships and drive innovation
Collaborative arrangements
Unique ideas for growth
Ensure proven quality and reputation
Quality materials from suppliers
Risk management
Reduce time-to-market
Involve suppliers in early product design
Improve material cost, quality, and developmental time
Contributing to Competitive Advantage
CPSM (Certified Professional Procurement Supply Management)
Procurement responsibilities grow
P2P
BPO
Mergers and acquisitions
Growing recognition of Procurement's contribution to firm's profitability
Takeaways
Procurement can create a competitive advantage for the firm
Deliver value and savings
Build strong relationships with suppliers
Ensure proven quality and reputation
Reduce time-to-market
W3. Procurement Processes
Forecasting and Planning requirements
Beginning of purchasing cycle
Sources of need
Operational needs
New product development process
Annual or biannual planning process
Actual needs are difficult to define clearly
Clarification of requirements
Purchase requisitions and/or statements of work
Forecasts and customer orders (e.g. from MRP)
New product development teams
Elements of a purchase requisition
Description of required material or service
Quantity required
Estimated unit cost
Operating account to be charged
Date of requisition
Date required
Authorized signature
Supplier Identification and Selection
Existing supplier
Familiarity and track record
List of preferred suppliers
New supplier
Need to identify potential suppliers
Need to evaluate and qualiífy
Purchase order
Quantity
Method of delivery
Material specification
Ship-to address
Quality requirements
P.O. number
Price
Order due date
Delivery date
Name and address of buyer
Receiving Process
Receipt and Inspection
Material packing slip
Bill of lading
Receiving discrepancy report
Electronic vs. paper documents
Invoices Settlement and payment
3-way match required to pay invoice
Invoice
Receiving report
P.O
Electronic funds transfer (EFT)
Mostly done electronically today
Information used to Analyze Actual Requirements
W4. Direct and Indirect
Indirect Purchases
Advertising and promotion
Consulting services
Services (cafeteria services, capital equipment, logistics)
Logistics
Production support items (palettes, stretch wrap)
MRO facilities
Maintenance, repair, and operating items
Key Take-aways
Indirects are just as big as directs
Marketing and sales are the largest bucket of indirects
Indirect materials and services are not in the product
Logistics is another large area
Direct materials are in the cost of goods sold
Spend analytics is essential for both directs and indirects
Indirect is still a great opportunity for the company
Spend Analytics/Information is key
Superior Internal Stakeholder Alignment
Requires Top Management Support
Directs in Most Companies are fairly mature
Direct Purchases
Raw materials (chemicals, flavors, abrasives)
Semi-finished products
Raw materials (chemicals, flavors, abrasives)
Finished goods
W5. Stakeholder Management
Definition of a stakeholder in procurement as an internal customer
Importance of managing stakeholders correctly to give them what they want, provide value for money, and ensure the success of the company
10 steps for better stakeholder management
Developing a deeper knowledge of the category, suppliers, and markets to create value for stakeholders
Have Deep Knowledge of Category, Suppliers and Markets
Use Those Conversations To Showcase That Value
Educate Them On The Market
Starting small to establish credibility and achieve quick wins
Pick a Category That You Can Be Successful
Always Give Credit to the Stakeholders, not Procurement
Aligning procurement activity to stakeholders' business needs
Understand What Their Business Objectives Are
What Can You Bring To Support Their Business Needs?
What Can You Offer?
Focusing on face-to-face engagements where possible
Communications Is Absolutely Critical Key To Success
Opt for Face-To-Face, Over Email, Phone, Text
Engage Them In Supplier Meetings
Profiling Your stakeholders
Split Your Stakeholders into Tiers-Make a Conscience Decisions Who Is Important and How Much Time You Should Spend With Them
Understand That People (Stakeholders) Are Wired
Very Differently
Considering co-locating procurement people with stakeholders
Be Part of Their Team
Can Be Very Powerful, but Must Have The Right Individual
Be Careful Not To be a Policy Enforcer-Be an Enabler
The Procurement/Corporate Policies Are Important, But More
Important To Create Value For The Stakeholder/Firm
Use Of Cross Functional Teams
For Large Cross Department Categories, Consider Using Cross Functional Teams
Creates buy-in from Stake holders
Consider using a Cross Functional Steering Committee
Senior Management, Cross Functional Team Lead
Understanding stakeholders' requirements and using their terminology
Do you Homework Before You Talk With The Stakeholder.
Over Time, You must become the "Expert"
Don't Start Your Conversation on Reducingn Price/Costs
Start With Relationships, Saving Come Later