Procurement Training Introduction to Procurement Final Version

1,870 views

Published on

Procurement training courses can be good to company owners or managers who are seeking to increase their businesses success. Here is a power point presentation that will let you know more about this course

Published in: Education, Business, Technology

Procurement Training Introduction to Procurement Final Version

  1. 1. Procurement Training Course DELIVERED BY: Business Services Support Limited Produced By Sheila Elliott Bsc Hons, FCCA, MBA www.businessservicessupport.com Tel: 0845 226 4315
  2. 2. Introduction & Overview     copyright© to Business Services Support Limited 2011 OBJECTIVES STRUCTURE & OUTLINE KEY OUTCOMES ABOUT THE TRAINER
  3. 3. Procurement Fundamentals Clarifying Industry Jargons & Acronyms MANY WORDS MEAN THE SAME THING Supply Chain Mana gemen t Purchasing Tendering Bidding RFI RFQ RFx ITT copyright© to Business Services Support Limited 2011 Procurement Specification Reqs (pronounce Sourcing Competitive Biddi ng wrecks)
  4. 4. Procurement Fundamentals Component of Supply Chain Management PRODUCERS SUPPLIERS OF PRODUC ERS CUSTOMERS SUPPLY CHAIN MANAGEMEN T copyright© to Business Services Support Limited 2011
  5. 5. Procurement Fundamentals Supply Chain Management Oversees & Optimises  The processes of buying goods and services from suppliers (purchasing)  Converting those goods and services into a finished product (production)  Delivering those products (or outputs) to customers (fulfilment) Our focus here is bullet point 1 copyright© to Business Services Support Limited 2011
  6. 6. Procurement Fundamentals Procurement Legislation v Organisational Impact   What is the underlying principles of the legislation  Ethics /code of conduct  copyright© to Business Services Support Limited 2011 What is the underpinning legislation Where to get information
  7. 7. Procurement Fundamentals Tactical Focus Nine Steps of a Purchasing Process- Procurement Cycle: 1 2 Determining a need 4 Finding potential suppliers 7 Formalizing the commitm ent copyright© to Business Services Support Limited 2011 Communicating the need Conducting bidding 5 and/or negotiatio n 8 3 Reviewing the need 6 Selecting a supplier 9 Following up Closing out the transactio n
  8. 8. Determining Your Organisation’s Needs Key controls and strategic objectives of procurement activities   Ordering time is critical- lead time v safety stock  Formal write up of needs via specification document- functional, performance, design , chemical, drawings, brand/trademark  Component of specification- what is needed & acceptance criteria  copyright© to Business Services Support Limited 2011 Purchase should never be made without an appropriate budget Controls should underpin purchasing activities
  9. 9. Determining Your Organisation’s Needs The importance of specification and how to design them  Description of what is required by buying organisation to ensure potential buyers bid for opportunity with absolute clarity  Must be clearly understood and contains terminology known by industry supplier- avoid internal jargons  Contains functional, performance, design , chemical, drawings, brand/trademark  Includes acceptance criteria Lets now review some examples and work through a case study copyright© to Business Services Support Limited 2011
  10. 10. Communicating Needs To Procurement Department The creation of a document called a requisition kicks off the procurement process Requisitioning is defined as the process that users initiate to convey to the buyer their wants, needs, parameters Different Reqs- standard and electronic, Bill of materials, automatic reqs. Reqs should be issued in line with corporate policy for – proper authority, approved limit, social responsibility, green buying copyright© to Business Services Support Limited 2011
  11. 11. Procurement Fundamentals Reviewing Needs  When requisitions arrive in the purchasing department, they are generally distributed to buyers for further processing.  Purchasing departments usually have a predetermined scheme to guide which buyer gets which requisition. Here are some of the most common schemes: REQUISITION ROUTED BY Category Of Pro duct Or Ser vice copyright© to Business Services Support Limited 2011 Supplier Requisitioning Dep art men t Workload Of The Bu yers
  12. 12. Procurement Fundamentals Finding Potential Suppliers   Sourcing methods-directories, B2B directories, trade associations, internet, chambers of commerce, trade show, telephone books etc  Some organizations assign various internal classifications to their suppliers.  copyright© to Business Services Support Limited 2011 Know your market- very important The purposes for such classification include:  to communicate the desirability of the supplier  to encourage the use of certain suppliers  eliminate costly inspection processes when unneeded
  13. 13. Procurement Fundamentals Conducting Bidding and/or Negotiation Competitive Bidding VS Negotiation (caveat) Bid Where:  lot of suppliers, you have time, value of savings justify costs, specification is clear, selection criteria is clear, no likelihood of changes... Negotiate Where:  few suppliers, not enough time, lack of clear specification and selection criteria, strong likelihood of changes... Soliciting quotes or proposals from suppliers requires:  copyright© to Business Services Support Limited 2011 RFI, RFQ, RFP, ITB or ITT
  14. 14. Procurement Fundamentals Conducting Bidding and/or Negotiation Competitive Bidding VS Negotiation (caveat) Bidding Format: Sealed bidding  Two-step bidding  Online bidding  Internet Reverse Auctions Your solicitation document should be comprised of at least the following sections: An overview of the need for the product or service A description of the evaluation and award process Response instructions, including a deadline A specification Your quantity requirements The delivery location and schedule Terms of both the solicitation and the order copyright© to Business Services Support Limited 2011
  15. 15. Procurement Fundamentals Selecting A Supplier A system of evaluating or scoring suppliers  Financial & Non Financial  Financial:   Non Financial:   resource capacity, operational capacity, reliability More checks:  copyright© to Business Services Support Limited 2011 price analysis, total cost analysis, total cost of ownership & financial stability site visits, financial statements, references etc
  16. 16. Procurement Fundamentals Finding Potential Suppliers Here are a few internal supplier classifications:      Approved Suppliers Preferred Suppliers Single Source Suppliers Certified Suppliers Barred Suppliers SUPPLIER STRATEGY Make or Buy, Manufacturer or Distributor, Multiple Source or Single Source, Currently Used Suppliers or New Suppliers, Domestic or Foreign, Diversity or not, national or local, Large or small suppliers etc copyright© to Business Services Support Limited 2011
  17. 17. Procurement Fundamentals Finding Potential Suppliers Pre-Qualification Questionaire (PQQ) v Invitation to tender (ITT)       copyright© to Business Services Support Limited 2011 What is PQQ Why is PQQ important What is ITT Why is ITT important When/how to produce PQQ When/how to produce ITT
  18. 18. Procurement Challenges formalising, follow up & closing transactions NEGOTIAT ION CONTRACT WRITI NG copyright© to Business Services Support Limited 2011

×