Slide of the webinar held by Indonesia Procurement Purchasing Community. 6 June 2020. Discuss about vendor selection in procurement.

1. VENDOR
SELECTION
IPPC Webinar
6 Juni 2020

2. 2
Working history
Material Planner, PT Henkel Indonesien
Raw Material Manager, PT Sepatu Bata, Tbk
RM Procurement Manager, PT PZ Cussons Indonesia
Direct Procurement Manager, PT Frisian Flag Indonesia
Regional Procurement Manager, PT Shell Indonesia
Adhe Priyambodo
Education
- Engineering Physics, ITS Surabaya
- Diploma in Procurement & Supply, CIPS
Professional membership
- Chartered Institute of Procurement
and Supply (CIPS), UK
- Indonesian Production & Operations
Management Society (IPOMS)
- Asosiasi Logistik Indonesia (ALI)
.

3. 3
Key
Topics
Why ?
How ?
“Mengapa Vendor Selection Penting?”
“Bagaimana melakukanVendor Selection?”

4. 4
Select
Your
Team

5. 5
Procurement
Process
Pre-Award
Process
Tender
Award
Post-Award
Process
Sourcing
Management
Contract
Management
> Define Needs
> Search
> Select
> Sign
> Perform
> Coach

6. 6
#1
Mengapa Vendor
Selection Penting?

7. Procurement Contribution (1)
7
Corporate
Key
Interest
Customer Satisfaction
Time to Market
Improving Productivity
Managing Risk
Return of Investment
Creating
Value
+
Managing
Risk

8. Procurement Contribution (2)
8
Spend
Management
“Value for
Money”
Value
Improvement
Cost
Saving
Cash
Creation
Waste
Reduction
Innovation
Risk
Management
Supply Risk
Legal &
Ethics
Environment

9. 1. Spend Management : Konsep “Value for Money”
9
5R
Right
Quality Right
Quantity
Right
Time
Right
Place
Right
Price

10. 2. Value Improvement : “Cost Saving”
10
Scenario 1 : Sales naik 10%
Component % of Sales
Sales Revenue 1000 100%
Material Purchase 600 60%
Other Cost 100 10%
Cost of Good Sold 700 70%
Operational Expenses 200 20%
Gross Profit 100 10%
Value (Rp)
Component % of Sales
Sales Revenue 1050 105%
Material Purchase 630 63%
Other Cost 100 10%
Cost of Good Sold 730 73%
Operational Expenses 210 21%
Gross Profit 110 11%
Value (Rp)
Component % of Sales
Sales Revenue 1000 100%
Material Purchase 570 57%
Other Cost 100 10%
Cost of Good Sold 670 67%
Operational Expenses 190 19%
Gross Profit 140 14%
Value (Rp)
Laporan Laba - Rugi
Scenario 2 : COGS dan Opex turun 5%

11. 2. Value Improvement : “Cash Creation”
11
Payment In
Advance
Letter of
Credit
Cash On
Delivery
Open
Account
Consignment
Term of Payment
More Risk for Buyer
Cash Advantage for Buyer

12. 2. Value Improvement : “Waste Reduction”
12

13. 3. Manage Risk: “Supply Continuity Risk”
13
✘ Bencana Alam
✘ Kebakaran
✘ Kekacauan Politik
✘ Kebangkrutan
✘ Gangguan Listrik
✘ Gangguan Transportasi
✘ Pemogokan
✘ Kelangkaan Bahan Baku

14. 3. Manage Risk: “Legal and Ethics”
14

15. 3. Manage Risk: “Environments”
15

16. Green & Responsible Procurement
16

17. Procurement Contribution
17
Spend
Management
“Value for
Money”
Value
Improvement
Cost
Saving
Cash
Creation
Waste
Reduction
Innovation
Risk
Management
Supply Risk
Legal &
Ethics
Environment

18. 18
#2
Bagaimana melakukan
Vendor Selection ?

19. Operational vs Strategic Procurement
19
Risk
Spend
High
Low
Low
High
Strategic
Operational

20. Kraljic
Matrix
20
Custom Bulk Raw
Material
Custom Packaging
Stationary Custom
Spare part
Specialty
Bulk
Material/
Commodity
Standard
Spare part
Secondary
Ingredients
Consumables
Office service
Standard
Packaging Machinery

21. 21
How?
Right Strategy
Right Execution
> Define Sourcing Strategy
> Seek Approval from Stakeholder
> Tender : RFQ / RFP / ITT
> Negotiation & Awards

22. 22
Sourcing
Strategy
Contract Profile ?
How to Approach the Market?
> Contract Scope ? – volume, SKU, areas, etc.
> Specification ?
> Contract Budget ?
> Single, Dual or Multi Source ?
> Local or Import ?
> Supplier type ? – traders/producer, local/MNC, etc.
> Contract Duration ?
> Pricing Scheme ? – item, lumpsum, cost-plus, etc.
> Payment Term & Incoterm ?
> Contract KPI ? – on-time delivery, quality, safety, etc.
> Critical Contract Term ? – min volume, insurance, etc.
> Tender approach : open, restricted, negotiated
> Award Criteria : criteria, scoring method, PIC
> Timeline
> Resource – team, budget

23. 23
Tender
Approach
Invite to Tender
(RFQ)
Receive Bid
Evaluate Bid
Clarification &
Negotiation
Award
Open
List Potential Suppliers
Pre-Qualification (RFI)
Select Sort-Listed Supplier
based on pre-qualification
criteria
Invite Sort-Listed Supplier to
Tender (RFQ)
Receive Bid
Evaluate Bid
Clarification & Negotiation
Award
Restricted
List Potential Supplier
(Single / Multiple)
Invite Suppliers to Tender
(RFQ)
Receive Bid
Evaluate Bid
Clarification & Negotiation
Award
Negotiated

24. 24
Pre-
Qualification
What ?
Technical
Capability
Capacity
Quality
Assurance
HSE
Commercial
Legal
Financial
Ethics:
Labour,
Sustainability,
etc.
How ?
Technical
Questionnaire
Plant Visit /
Audit
Trial
Commercial
Legal:
Integrity
Screening
Financial:
Ratio Analysis
Ethics:
Certification
Check
Who’s responsible
for Pre-Qualification
process ?

25. 25
Award
Criteria
Technical
Good
“Functional Fit”
Be able to work
with us on the
same technical
level
(eg. Quality,
Delivery, Service,
Safety, etc.)
Total Cost of
Ownership
Acquisition Cost
Tooling
Operating
Maintenance
Training
Disposal
Value Add Solutions
Innovation
Continuous
Improvement
System Integration
CSR
Flexibility
Reputation

26. 26
Tender
Ethics
> Supplier must sign-off our code of practice
> Single contact points
> Communicate the process & timeline clearly
> Give same responses to all participants questions
> No supplier own the IP of specification
> Always communicate in writing
> Obtain management mandate before negotiation
> Communicate award and regret officially

27. THANKS!
Any questions?
You can find me at:
✘ adhe.priyambodo@gmail.com
✘ Adhe Priyambodo
27