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Procurement system

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presentation describe how effective procurement system can be

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  • @Sairam Chvv You may change the .zip to .ppt will do. i tried. it works.
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Procurement system

  1. 1. 1<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Outsource for Purchasing & Supply Systems Training Center<br /> Towards Proactive Procurement System<br />Almahi Suliman Adam<br />Certified Trainer by ILLAF Train UK<br />Ex Shell Africa Co, P&G MIC Dammam<br />www.outsource-sd.com<br />
  2. 2. 2<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Procurement is<br />Procurement is anorganization systemmeant with specifying and acquiring goods, services and work of the required quality, of the right quantity, on the right delivery (Date & Place), at a reasonable price; and from the right third party considering thewhole life costof purchased goods/services andfocusing on getting bettervalue for moneyinvested in procurement.<br />
  3. 3. 3<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Why procurement is important? <br />Departments spend more than 50% of their Budget a year on procuring goods and services to deliver their core services. Failure to purchase them cost effectively can put the achievement of key objectives at risk.<br />Procurement directly influences profit margin and sales volume.<br />
  4. 4. 12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />4<br />The Major Procurement Problems <br />Undesired Quality Of Goods/Services And inadequate Quantity<br /> High Cost Of Purchased Goods/Services<br /> Increasing cost of maintenance<br /> Disastrous Delay In Delivery Of Goods/Services<br /> High Cost Of Inventory<br /> Increasing Cost Of Procurement Staff And Tools<br /> Safety Issues<br /> Bad Conditions Of Payment<br /> Unsecured Sources And Uncertainty Of Continuous Supply<br /> Absenteeism Of Suppliers Management <br /> Failure to Meet Customers’ Needs<br /> Failure To Get Rid Of Obsolete Assets<br /> And else …<br />
  5. 5. 5<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />What is the RADICAL Solution for procurement Problems?<br />
  6. 6. 6<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Effective Procurement Department?<br />
  7. 7. 7<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />As Procurement Department …<br />Can not stand alone and yet, has no magical solution for procurement problems!<br />
  8. 8. 8<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Proactive ProcurementSystemis the radical Solution;<br />You Get What you Pay for<br />Right <br />Outputs<br />In the<br />Right<br /> Time <br />Right <br />Inputs <br />In the<br />Right <br />Time<br />Procurement <br />Dept<br />
  9. 9. 9<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />What’s right Inputs?<br />Right Items’ Specifications and Predefined Standards<br />Efficient lead Time<br />Right Payment System<br />Supportive Organizational Structure<br />Adequate Authorization<br />Right Material Planning System<br />Right inventory Control system<br />Right support from Senior managers<br />Right Technology<br />Right, Enough and Qualified Personnel with ongoing training facilities<br />Right Training for Clients (Initiators) <br />Right Model of Decision making (Rational Model)<br />
  10. 10. 10<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />What’s Right Outputs?<br />Enough, Qualified, sustaining and well managed sources (Suppliers)<br />Required quality and adequate Quantity of goods<br />Just In time (JIT) Delivery of Goods, Services and Work<br />Better Value for Money invested in Procurement<br />Zero Stock (Approach)<br />Customer Satisfaction<br />Optimal Payment terms<br />And else …..<br />
  11. 11. 11<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Shareholders<br />Company Credibility<br />Social Cultural & Environmental<br />Industry<br />Economic Forces<br />TechnologyForces<br />Global Challenges<br />Competitive Forces<br />Company Mission<br />Political & Legal Issues<br />EnvironmentofProcurementSystem<br />
  12. 12. 12<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Before We Cross or Blame Procurement Department?<br />Do We have Strategic Business Plan?<br />
  13. 13. 13<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Strategic <br />Business Plan<br />Master Planning<br />Production <br />Plan<br />Planning<br />Master <br />Production Schedule<br />Material<br /> Requirement Plan<br />Production <br />Activity<br /> Control<br />Implementation<br />Procurement <br />Overhaul The Operational Planning & Control System<br />
  14. 14. 14<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Before We Cross or Blame Procurement Department …<br /> Has each unit involved in the procurement system given …. <br />The Right Required Inputs?<br />In the right Required time?<br />
  15. 15. 15<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Caution!!<br />Dear Procurement Manager<br /> NEVER Keep Silent if you don’t get the right inputs in the right time<br /> Otherwise …<br />
  16. 16. 16<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />You Will Be Responsible for any Procurement Failure that may cause bad consequences in the whole Company system<br />
  17. 17. 17<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Get<br />Started: <br />
  18. 18. 18<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Build Up a Dynamic Procurement Team <br />Qualified Personnel With Accounting Background <br /> and Give Them: <br />Initial And Ongoing Training<br />Needed Technology<br />Needed Authorization<br />Needed Tools<br />Clear Mission, Objectives, Principles, Policies And Code Of Practice.<br />And:<br />Evaluate Their Performance progressively.<br />
  19. 19. 19<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Build Up a sustainable Vendor Database System & Never Be a Fireman<br />Scan the market with the predefined items and specifications to discover the most attractive opportunities of sourcing<br />Build up cross functional team for sources’ Evaluation<br />Select the valuable qualified suppliers and give them sufficient consideration.<br />Build up Suppliers Relationship Management System (SRM).<br />
  20. 20. 20<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Get the Clients Ready<br />Budget Owners:<br />Inform them with procurement policies and code of processing<br />Have a copy of their planned needs’ Specifications even before the ordering time to make the required preparation.<br />Beaware of their S.O.P<br />Order Originator<br />Any originator should be pre-qualified to Procurement system<br />Any originator should get full training in procurement system – originator Side<br />Any originator should comply with the procurement system needs<br />
  21. 21. 21<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Procurement<br />Supportive<br />Activities <br />Primary<br /> Activities<br />Storeroom<br />Items<br />Non<br />Storeroom <br />Items<br />Procurement for Primary and Supportive activities <br />
  22. 22. 22<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Priority<br /> (Demand)<br />Capacity<br />(Resources)<br />Balance<br />Priorities vs Capacity<br />Key Questions:<br />What are the Priorities?<br />What is the Available Capacity?<br />How can variance between priorities & Capacity Be resolved<br />
  23. 23. 23<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Working with Value/Quantity Parameter<br />High Value Big Quantity<br />High Value small Quantity<br />Value<br />Low Value Big Quantity<br />Low Value Small Quantity<br />Quantity<br />
  24. 24. 24<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Partnership & Alliances <br />Long-term<br />Relationship<br />Continuous Searching for Alternatives <br />Value<br />Streamline & make JIT Delivery<br />Simplify & Decrease Purchasing Efforts<br />Quantity <br />Sourcing Strategies according to Value/Quantity Parameter<br />
  25. 25. 25<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Better Value for Money (VFM)<br />Procurement should be based on <br />BetterValue for Money (VFM)= Optimum [whole life cost + quality]<br />BetterValue for money (VFM)≠ initial lowest price cost <br />
  26. 26. 26<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />How to Achieve Better Value For Money<br />Getting an increased level or quality at the same cost.<br />Avoiding unnecessary purchases.<br />Ensuring that user needs are met but not exceeded.<br />Specifying the purchasing requirements in output terms so that suppliers can recommend cost-effective and innovative solutions to meet the needs.<br />Sharpen your approach to NEGOTIATION to get a good deal from suppliers.<br />Cut of the mediators and reach the direct suppliers.<br />Optimizing the cost of delivering a service or goods over the full life of the contract rather than minimizing the initial price.<br />aggregating transactions to obtain volume discounts.<br />Collaborating with other Companies to obtain the best prices and secure better discounts from bulk buying. <br />Developing a more effective working relationship with key suppliers to allow both departments and suppliers to get maximum value from the assignment by identifying opportunities to reduce costs and adopt innovative approaches.<br />Reducing the cost of buying goods or services by streamlining procurement and finance processes.<br />Reducing the level of stocks held.<br />
  27. 27. 27<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Key Principles To Follow:<br />Adopt a strategic approach to procurement;<br />Make appropriate use of Technology<br />Manage procurement risks;<br />Develop contract strategies and manage supplier relationships;<br />Develop partnerships and longer term collaboration with suppliers when appropriate;<br />Ensure there is reliable procurement financial management information;<br />Measure and evaluate procurement performance.<br />
  28. 28. 28<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Competitive Procurement Policy<br />Goods and services should be acquiredbycompetition, unless there are convincing reasons to the contrary. The form of competition should beappropriate to thevalueandcomplexityof the procurement; suppliers should begivenequalopportunitiesto participate. <br />
  29. 29. 29<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Typical Stages in Competitive Procurement<br />Key information on suppliers’ performance & Prices<br />End users identify demand for goods and services and manage and evaluate suppliers’ performance<br />Procurement units advise end users on procurement methods & contracts & appoint suppliers<br />Suppliers provide <br />goods & services<br />
  30. 30. 30<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />The Conclusion!<br />Regard Procurement as aSYSTEMrather than a department.<br />Consider thewhole life cost(WLC) in procurement process rather than the initial price.<br />Get Bettervalue for money(VFM)invested in procurement.<br />
  31. 31. 31<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Procurement <br />System<br />WLC<br />VFM<br />Infodat Training & Business Development Center<br />
  32. 32. 32<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />Procurement<br />S.W.V<br />Outsource for Purchasing & Supply Systems Training Center<br />
  33. 33. 33<br />12/15/2010<br />AlmahiSuliman Adam - Towards Proactive Procurement System<br />How can we Serve Procurement System<br />Establish & Develop New procurement Divisions & Entities.<br />Run Researches & Studies in particular procurement Issues.<br />Train Initiators & Buyers<br />Manage group discussion & Seminars for Procurement Authors.<br />Audit, Evaluate Procurement Entities Performance and Advise.<br />
  34. 34. 34<br />12/15/2010<br />Almahi Suliman Adam - Towards Proactive Procurement System<br />For More<br />www.outsource-sd.com<br />Outsource for Purchasing & Supply Systems Training Center<br />

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