Procurement and logistics in NGOs

7/18/2018 1
Ahmed M. Good (Professional Accountant
& Qualified Instructor)

1. Logistics in NGO’s
Definition of logistics: Planning, execution,
and control of the procurement,
movement, and stationing of personnel,
material, and other resources to achieve the
objectives of a campaign, plan, project, or
strategy.
It may be defined as the 'management of
inventory in motion and at rest.
7/18/2018 2
Ahmed M. Good (Professional
Accountant & Qualified Instructor)

Logistic officer
LO: Is any person who is responsible for
smooth running of logistics duties in an
organization.
Fleet Management
This means how to control and manage the
movement of the organizations transport
through log-sheet (where the movement,
fuel consumption and number of KM etc
can be obtained).
7/18/2018 3

Taking a Vehicle
• When departments want to take a vehicle
they should prepare and sign a request
which is called Transport Request Form
(TRF) prior to their mission in order to
book them for.
• Logistician should weekly check and
control over the log sheet to keep track of
the effectiveness of their drivers and
vehicles as well, where he can then
prepare the monthly vehicle performance
report.7/18/2018 4

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• Vehicle schedule and maintenance is
required for example when vehicles oil
exchange can take place (after each
800km), when it is to be garage check with
customer garage via service contract.
 When the mission is outside of the base
vehicles should have tools, fire extinguisher,
first aid kit, air bomb, communication
facilities and clean water and so on. Vehicle
performance and repair cost should be
prepared at the end of the month.
7/18/2018 5Ahmed M. Good (Professional

Staff Security
 To safe guard the safety and security of
the staff mainly expatriates, it is better to
prepare Escort Request form before the
missions due date and send it to the INGO
security focal point.
 File the requests correspondence and
sent it to the police commissions base on
due date to get escort from them. ERF
should contain the mission, staff name,
destination and number of days of the trip.

Procurement Process
PP: Is how to purchase the goods or services
you want in a cost effective way.
1. Specify the goods and services to be
purchased (check the budget, quantity,
price and standard).
2. Prepare purchase requisition form PRF;
description of the purchase and why it’s
required.
3. Authorize purchase requisition; PRF should
be checked and authorized the budget
holder.7/18/2018 7

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4. Prepare Quotation Request Form; request
QRF from list suppliers.
5. Obtain quotations; quotations from reputable
independent supplier are requested.
6. Make Summary Bid Analyses SBA and then
Select supplier; based on price, quality,
delivery time and after sales terms to ensure
value of money.
7. Issue purchase order PO; PO is sent to the
supplier with a copy kept in file with
quotation.
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8. Receive goods from supplier; when goods are
delivered GRN goods receiving note is usually
signed to confirm the receipt and copy filled for
later reference.
9. Receive and check supplier invoice; the invoice
should be checked and matched up with the
Quotation, PO, GRN usually by the finance
team.
10. Prepare and authorize payment authority; the
payment authority is attached t the invoice and
all the supporting documents including budget
line and accounting codes to the BH.7/18/2018 9

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11. Pay supplier invoice; payment should be
made within the specified payment terms.
12. Enter payment into the cash book; the final
state is to record the payment in the
organizations account books.
13. Monthly procurement overview should be
prepared at the end of the month.
14. Procurement track form PTF; should be
maintained during the month to check the
movement of the procured goods and
services.7/18/2018 10

Procurement committee
 Whenever the procured good or service is
above the limit ( for example $ 250) that a
procurement officer is allowed to handle it is
must to inform the PC to make the appropriate
decision about the purchase.
 PC is a committee contained of 3 to 7 persons
from the different departments of the
organization. They base their choice in the terms
of delivery, quality an price.
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Storage
 Stocks should be kept in a secure
place specially ware house, stocks can
have supporting documents (GRN, way
bill, certificate of donation, pin card
stock, card and stock release form),
clean-up materials and stationary, goods
in transit is part of your stock. Ware
house reports stock report should be
prepared monthly.
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Control of equipment and materials
• Asset is called materials having value
more than $ 500 I.e. vehicles,
computers, printers and all electronics.
Inventory is general program
equipment.
• All assets and inventories should be
kept in an asset register; asset and
inventory report can be prepared from
asset register.
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Asset Register
Asset register will record important information
about each asset such as;
• Where and when asset is purchased and how
much it cost.
• Where it is held or located and who is responsible
for it.
• How much it is insured for if it is possible.
• Repair history.
• Serial number.
• Details of guarantees and warranties.
• Depreciation rate and method where relevant.
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Public Tender
 This is for the dissemination of bids throughout the
public in a systematic manner. Tender committee
manages the bids, and they can include project manager,
finance officer, technical expert, area manager and line
ministry.
 Tender documents or bids can be obtained from the
admin office. Open tender through a span of time like a
month or so, to close the tender, preferred list should be
prepared shortly after the closing; list should be made on
the basis of the 10% above and under the sealed price.
Tender declaration day should be informed for the
stake holders and the successful candidate should be
called upon in a transparent way.7/18/2018 15

Terminology to be memorized
• Authorization: process of approval over transactions,
the decision to purchase or commit expenditures.
• Budget holder: the individual who holds the authority
and has the responsibility for managing a budget for a
specified activity, project, program, department or
organization.
• Cost centers: a system used in an accounting system to
distinguish between different activities or project to
define where costs are incurred or income is earned.
• Conflict of interest: if board members where to benefit
financially from their membership of the board they
engaged in a conflict of interest.
• Authorization limit: the extent to which a job holder
can exercise his power.
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Duties of Logistics procurement
officer
• A logistic procurement officer
identifies and evaluates suppliers,
arranges for transportation of
purchased goods, identifies and
develops strategies for addressing
logistical barriers, monitors use of
materials and resources, and ensures
quality record keeping.
7/18/2018 17

Evaluating Suppliers
 The logistic procurement officer ensures the
organization works with competent and reliable
suppliers. To do this, he collaborates with other
senior procurement officials to evaluate all potential
suppliers before entering into supply contracts.
 This process usually involves interviewing the
managers of the supply firms, making site visits and
measuring other aspects such as quality assurance,
organizational structure and financials. Based on
the gathered information, the logistics procurement
officer awards a score to each vendor for approval
and rejection purposes.7/18/2018 18

Coordinating Purchases
 The logistic procurement officer organizes for
transportation of purchased goods. For example, if
a company buys desktop computers from an
overseas manufacturer, the officer may hire a
cargo airline to deliver the products.
 For local purchases, the logistics procurement
officer can dispatch the company’s cargo vehicles
to transport the goods from the supplier's store to
a warehouse. She also oversees maintenance of
these vehicles and handles other logistical issues
such as fuel supply, driver management and
insurance coverage.7/18/2018 19

Identifying Barriers
A logistic procurement officer identifies and
addresses barriers that decrease operational
efficiency in the procurement department. For
example, if a logistics procurement officer
working in a construction company identifies
that the firm has poor working relationships with
contractors and service providers, he can
develop a strategy to improve communication
between the parties, such as setting up a
dedicated communications office for suppliers to
make inquiries on unclear orders or delivery
time lines.7/18/2018 20

Monitoring Use
 It’s the job of a logistic procurement
officer to monitor use of purchased goods
and materials. This helps to protect the
company from incurring losses by
minimizing fraud and waste.
 If a pharmaceutical company hires you for
this position, for instance, you can monitor
stock of drugs by keeping good records of
products received from manufacturers and
those sold to health facilities and retail
distributors.7/18/2018 21

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 When necessary, you can organize
training for store managers and other
procurement officials to update their
records management knowledge and
skills
 Training and development helps your
organization to become technically and
technologically updated, so enhance the
skills of your staff.
7/18/2018 22

2. Procurement
 Now that we have a budget, we want to
spend the money that we have. However,
spending money requires a careful procedure
also, especially when we are buying things.
Procurement means purchasing.
 It is important to have a procurement
policy so that your organization uses the
same procedure every time it buys something
and so that you are sure to get a fair price
and good quality.
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The people involved in procurement are:
1. Requisitioner (person who wants
something)
2. Procurement Officer
3. Executive Director or Chairman
4. Vendor / Supplier
5. Bid Committee
6. Storekeeper
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Procurement Forms
The forms needed for procurement are:
1. Procurement Request Form (PRF)
2. Quotation Request Form (QRF)
3. Summary Bid Analysis (SBA)
4. Purchase Order (PO)
5. Receiving Report (RR)
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1. Procurement Request Form (PRF)
1. The person who needs something
(Requisitioner) should fill in a Procurement
Request Form (PRF). The PRF states what you
want, how many, and for what project. The
requisitioner may not be the Procurement
Officer.
2. The Executive Director approves the PRF if
it is below $500 (although your organization
may use a higher or lower amount), and by the
Board of Directors if it is more than $500. The
person who approves it should check that:7/18/2018 26

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o The procurement is necessary. There is enough
money in the budget for this item.
o The procurement is according to the
agreement with the donor.
3. The person who approved the PRF gives it to
the Procurement Officer. The Procurement
Officer should check that:
o The correct person approved the PRF.
o The information on the PRF is complete and
correct.
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4. If the item costs more than $500 (although your
organization may use a higher or lower amount),
then the Procurement Officer completes at least
three copies of the Quotation Request
Form(QRF),, which the Procurement Officer will
give to the different vendors who sell that item.
The Executive Director approves them. The QRF
asks the vendor to tell the NGO its price for the
item(s) on the form. The QRF should include the
specific details of the item(s) that you want to
purchase (what size, what make/model,
condition, etc.).7/18/2018 28

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5. When the QRFs have been returned to the
Procurement Officer by the vendors, the
Procurement Officer should prepare a
Summary Bid Analysis (SBA).
• The SBA is a sheet where all the quotations
are compared. The Procurement Officer
will submit the SBA and the original QRFs
to the Bid Committee.
 Neither the Procurement Officer nor the
Requisitioner may be a member of the Bid
Committee.7/18/2018 29

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6. The Bid Committee will review the
bids and select which item to purchase
based on the quality of the products
and the price. They will complete the
SBA and tell the Procurement Officer
which items they selected for
purchase.
 A member of the Bid Committee
will approve the completed SBA.
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7. The Procurement Officer will complete two
copies of the Purchase Order and give one to the
vendor that the Bid Committee selected. The
other copy of the purchase order should be kept
in the organizational procurement file.
 The Purchase Order tells the vendor what the
organization wants to buy. and it should include
the type, quantity, unit price, and total cost of the
items. Nobody needs to approve the Purchase
Order because the Bid Committee has already
approved the purchase from that vendor.
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8. If the item is less than $500 and there
was no need for a QRF or SBA, the
Procurement Officer will send the Purchase
Order to the organization’s usual vendor to
purchase that item.
9. When the items arrive in the office,
someone besides the storekeeper and the
Procurement Officer should count the
supplies and check that they received what
was ordered.7/18/2018 32

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10. The person should complete a Receiving
Report (RR) to tell what arrived in the office.
The RR tells the item, quantity, unit price, and
total price of the items received. The Executive
Director should compare the Purchase Order and
the Receiving Report. If they are exactly the same,
then the Executive Director should approve the
RR and give it to the Procurement Officer to file in
the procurement file.
11. The Storekeeper should register the supplies
on the fixed asset register, supply control card, or
inventory register, according to what they are.7/18/2018 33

Follow Up
Once the organization has agreed on a
procedure for purchasing items (such
as who will be the Procurement
Officer, who will be the members of
the Bid Committee be, and what the
price limit is for getting bids), then the
procedure should be written down and
approved as an official organizational
policy.7/18/2018 34

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 The procurement forms should all be
kept together. If you set up an
Administration file, then make a sub-file for
Procurement and put all of the blank and
completed forms inside it.
 All of the forms for each procurement
can be stapled and kept together. This will
make it easier for an auditor to check your
organization’s procurement system.

Making PRF
 Procurement Request Form (PRF)- The Procurement Request
Form is completed by the person who needs something (not the
Procurement Officer), either for the office or for a project. The
PRF is used so that different people are not buying different
things for the organization and the procurement is done in a
systematic way.
 The form includes the employee’s name, date of the request,
item(s) that are to be procured, the quantity needed of each,
the unit price (if known), total price, and name of the project. If
there are any special instructions, such as the time that it is
needed, or a specific type that is needed, that should be written
in the last section.
• Requested by: The person requesting the item
• Approved by: Executive Director, if the cost is less than $500;
the BOD if more than $5007/18/2018
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Making QRF
 Quotation Request Form (QRF)- The Quotation
Request Form is sent by the NGO to the vendors
who sell the item(s) to ask them how much that
item costs. At least three QRFs should be distributed
for each item that needs to be purchased.
 The QRF includes the vendor’s name, date, and a
request for a price for the listed items. Include the
description for each item, such as the make, model,
size, quantity, style, etc. Leave the price column
blank because the vendor will complete that part.
The vendor should then stamp the form and return
it to the Procurement Officer.
• Prepared by: The Procurement Officer
• Approved by: Executive Director
7/18/2018 Ahmed M. Good (Professional
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Making SBA
 Summary Bid Analysis (SBA)- Once all of the Quotation
Request Forms have been returned, the Procurement Officer
completes the top of the Summary Bid Analysis form. The SBA
form which is a list of all of the prices that have been received
so that they can be compared easily. The names of the
vendors should not appear on the SBA.
 The Procurement Officer presents the Completed
Quotation Request Forms and the SBA to the Bid Committee
(of which the Procurement Officer and Requisitioner may not
be members). The Bid Committee discusses the SBA and
decides which item to purchase, depending on the price and
quality of bids received. They complete the second half of the
form (Recommendations/findings and Contract awarded to)
and return it to the Procurement Officer.
• Prepared by: The Procurement Officer signs it after s/he
has completed the top half only
• Approved by: A member of the Bid Committee
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Making PO
 Purchase Order (PO)- The Purchase Order tells
the vendor that the organization is really wants to
buy that item. After the Bid Committee decides
which item to purchase, the Procurement Officer
completes a Purchase Order.
 It includes the item, description, quantity, unit
price, and total price, which should be known now
that the QRF has been returned to the organization.
The PO is then sent to the shop where the item(s) is
to be purchased. After the shop receives the order,
the goods are sent to the NGO with an invoice.
• Prepared by: The Procurement Officer
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Making RR
 Receiving Report- The Receiving Report tells what
items (fixed assets, non-expendable, or expendable
supplies) have come into the office. A Receiving Report
is completed after purchasing something or after
receiving an in-kind contribution.
 Someone who is not the Procurement Officer and
not the Storekeeper should complete the Receiving
Report. Across the top, the vendor (or donor) and date
are recorded. Then for each item received, write what
it was, how many there are, what the unit price was,
what the total price was, and any remarks.
Received by: Anyone except the P officer & storekeeper
Approved by: The executive director
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If There Is Any Q Plz Feel Free
46

Procurement and logistics in NGOs

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