The document discusses several topics related to purchasing contracts and supplier selection for a company. It discusses the key elements that must be present in a valid purchase contract, including mutual consideration and agreement between parties. It also outlines factors to consider in total cost of ownership rather than just purchase price, and criteria for evaluating suppliers such as quality, location, and performance metrics. Establishing long-term supplier relationships can improve efficiency and communication.
Running head PURCHASING ORGANIZATION METRICS REPORT .docx
1. Running head: PURCHASING ORGANIZATION METRICS
REPORT 1
PURCHASING ORGANIZATION METRICS REPORT
3
Purchasing Organization Metrics Report
Zachary T. Trigger
UMCG
Purchasing Management
Professor James Swaim
February 23, 2020
To obtain suppliers for the muscles from turkey legs, heart of
pigs, alligator claws, corn leaves and Kelp from the Chesapeake
Bay, the company would need to consider the various legal
ramifications of purchasing. There is need for the company to
routinely sign purchase orders and contracts which commit them
to the specific terms and conditions of purchase orders and
contracts. There are several essential elements of a purchase
order and they include:
I. The two parties, both the company and the suppliers, must be
capable of delivering
2. II. The subject of the matter must be legal and valid
III. There must be mutual consideration
IV. The parties must reach an agreement by offer and
acceptance.
All four elements have to be present for the contract to be legal.
If any of the elements is missing it makes the agreement
unenforceable before a court of law.
The details of the purchase contract need to be well defined and
it should not be carried out in a hasty manner. This is because,
once the contract has been approved, there are no changes
which can be accepted. In addition to the purchase contract, a
purchase requisition should be made available as it specifies the
required parts. This is important because the five items which
are required by the company are part of a whole and hence the
need for the purchase requisition. These contracts are aimed at
binding the supplier and the company together and to provide
security to the company for a source of their raw materials.
Whenever the company requires the raw materials to be
supplied, a purchase order has to be created. This provides a
records of the details of the raw material to be supplied by the
suppliers.
Several elements need to be clarified in the contract to ensure
that there are no misunderstandings between the supplier and
the company. The first is the quality of the raw materials that
the suppliers will supply and this ensures consistency and surety
of products the company receives. The second component
highlights the cost of the raw materials, that is the price which
the suppliers will supply the raw materials per unit. The
duration before the raw materials are supplied should also be
specified to allow the company to calculate the lead time and
avoid running out of raw materials. Finally, the duration of
payment should also be outlined in the contract to stipulate the
time taken before payment is made.
REQUEST FOR PROPOSAL
Company name
Introduction
3. The company requests for proposals from qualified supplying
firms to supply the raw materials required in the manufacture of
products used in laboratory testing. For the production of the
end product, different quantities of the raw materials will be
required and this will be reflected in the request for purchase
forms. The result of this request for proposal will be a contract
for the supply of the raw materials as described below:
Purpose/anticipated results
The objective of the supply is delivery of the specific parts
which are required by the company. The quality of the raw
materials should be good as it would be determined by the
company.
Tasks
1.0. Delivery of:
· Muscle from turkey legs
· Heart from pigs
· Alligator claws
· Corn leaves
· Kelp from Chesapeake Bay
2.0. The corn leaf supplier will be required to take over the
processing of the material to produce enzymes that are mixed
with the other four materials.
Proposals from potential suppliers are welcome and they should
provide details on how the supply of the above mentioned tasks
can be achieved.
Any questions regarding the request for proposal should be
directed to the company before 30th February 2020.
The proposals should be made available to the company by 15th
March 2020.
5. Balanced scorecard
A balanced scorecard is a concept used by managers to analyze
their business using four different perspectives. It helps to
provide a customer’s perspective, the organization’s internal
perspective, the innovation and learning perspective and the
financial perspective. The advantage for this measure is that it
reduces the data overload by minimizing the number of required
measures.
The mission statement of the organization is used to determine
the customer perspective. This is helps to frame how the
customer views the organization. The mission for the
organization is to become a leader in delivering products used
in laboratory testing. The concerns of the customer deal with
time, quality, cost and performance and service. The company
has been able to deliver orders made by customers within a
short lead time except for few instances when suppliers had
failed to deliver the raw materials within the stipulated time.
The quality of the products it delivers has been undisputed. The
cost of the products is also competitive in the market when
compared to those of the competitors. This has helped the
organization to gain a substantial market base. Convenience has
been created for the customers by carrying out delivery to their
preferred destination. Under this goals and achievements, it can
be concluded that the organization is preferred by many
customers (Kaplan & Norton, 1992).
Company based measures are important as they dictate how the
organization meets the customer’s needs. Quality is the main
concern for the organization’s customers and therefore,
measures should be put in place to ensure that the final products
are of good quality. This can be achieved through the selection
of the best suppliers based on the quality of their raw materials
rather than the price. This was achieved in the process of
supplier selection and the continuous evaluation of the suppliers
to ensure that they maintain the quality. The processes
6. undertaken to produce the products used in laboratory settings
are also meticulously monitored and improvements made over
time. This means that the quality increases with time and this
ensures that the internal metric of quality is achieved (Kaplan &
Norton, 1992).
Innovation and learning is part of the culture within the
organization. There is a research and development department
within the organization whose sole purpose is to carry out
research and come up with new and improved products. These
are aimed at meeting the ever changing needs of the consumer.
The financial perspective of the organization is also promising
since the profitability has increased. The company has
experienced growth and this has placed it in a better position to
bargain for lower supply costs. It has been able to enjoy the
benefits of economies of scale (Kaplan & Norton, 1992).
Total cost of ownership
Total cost of ownership (TCO) is different from the
procurement approach because it does not account for the
purchase price only. Other costs associated with the supply
include storage, taxes, shipping, insurance and disposal. The
raw materials that are purchased some of them are perishable
such as the hearts of pigs. Although there might be an
advantage in buying bulk, it is advisable to buy in small
quantities that are required in the manufacturing process. This
prevents any losses from being incurred in the form of
deterioration when the raw material is purchased in large
quantities (Plues, 2012).
There are several other factors to be considered in TCO model.
First is the supply partner development costs. There are costs
associated with the development of the partnership and this
should be proportional to the value that the supplier brings to
the organization. An example is for the turkey legs; it is
advisable to look for a supplier that will supply the muscles
only rather than the whole leg for the organization to obtain
muscle from it. This reduces the manufacturing costs associated
with the product. The location of the supplier is also important
7. as it determines the shipping cost and time. Although a supplier
may have quality products at a lower price, their location may
disqualify them because the shipping cost and time taken to
transport them ultimately makes the product expensive.
Therefore, it is advisable to source for raw materials in a nearby
location (Lancione, 2018).
There are various costs associated with the quality of the raw
materials. Low quality raw materials lead to low quality final
products and disappointment by the customer. There are also
costs associated with returns when the quality is not good. Low
quality also presents safety issues. It is therefore advisable to
choose high quality suppliers to avoid the costs associated with
low quality. The payment terms should also be clearly outlined.
Payment to the suppliers should be done after delivery and not
before as this would hurt the cash flow and places the
organization at risk. The procurement department should also
protect the organization from potential cost fluctuations by
choosing to purchase a position in the foreign currency for the
price at that point in time (Lancione, 2018).
References
Kaplan, R., & Norton, D. (1992). The Balanced Scorecard—
Measures that Drive Performance. Retrieved 7 February 2020,
from https://hbr.org/1992/01/the-balanced-scorecard-measures-
that-drive-performance-2
Lancione, T. (2018). 6 TCO Considerations When Choosing a
Supply Partner | IndustryStar
8. Solution
s. Retrieved 7 February 2020, from
https://www.industrystarsolutions.com/blog/2018/07/6-total-
cost-ownership-considerations/
Pluess, J. (2012). What Total Cost of Ownership Offers
Sustainable Procurement | Blog | BSR. Retrieved 7 February
2020, from https://www.bsr.org/en/our-insights/blog-view/what-
total-cost-of-ownership-offers-sustainable-procurement
Running head: SUPPLIER SELECTION REPORT
1
SUPPLIER SELECTION REPORT
5
9. Supplier Selection Report
Zachary T. Trigger
UMCG
Purchasing Management
Professor James Swaim
February 2, 2020
The criteria for the selection of suppliers has significantly
changed over the years. In the past, price was utilized as the
primary criteria for the selection of suppliers together with
location and preferences. However, there has been a greater
emphasis on food safety and quality hence the need to improve
on the quality of raw materials supplied. Choosing the right
suppliers can help an organization to meet and supersede the set
regulatory standards while increasing consumer demand and
building the brand reputation. The supplier that is chosen has to
be able to deliver quality and safe ingredients which will
translate to quality and safe end products for the consumer
(Eldridge, 2012).
Identifying the appropriate supplier is a costly affair but has
significant results if done in the correct manner. The opinions
10. of the stakeholders are sought to determine the appropriate
criteria to follow in selecting a supplier. Some of the
stakeholders include members of the research and development,
processing, quality assurance, marketing and purchasing among
others. After the identification of the appropriate criteria
potential suppliers are identified and their capabilities and
pricing is compared. This stage involves working with the
potential suppliers and maintaining open communication where
the manufacturer explains to the supplier the manufacturing
process. While cost is a significant driver, value is paramount
and it should be key in selecting the appropriate supplier. Some
of the factors which contribute towards value include delivery
commitments, responsiveness and reliability, hard and soft
resource savings and customer service (Eldridge, 2012).
The raw materials that are being sought are highly perishable
and one criteria for the supplier is that it should be able to reach
the company in a fresh state. This should be one of the factors
to look for when sourcing for the supplier. Because of the
sensitive nature of the raw materials that are required, it is
paramount that the supplier is able to assure of the quality of
the raw materials they will be supplying. For example, the
supplier for hearts from pigs should have a pig farm rather than
outsourcing from another farm. This way, they are able to raise
the pigs to standard and consequently they will have good
quantity hearts to serve the purpose aimed at by the company.
11. This is carried out on all of the other required raw materials.
Before signing the contact, there is need to carry out an audit on
the suppliers to determine whether or not they have the capacity
to deliver. The audit is carried out to enable the determination
of whether the supplier is compliant or has some significant
compliance or quality system failures. These shortcomings have
a significant impact on the supplier’s capability to produce top
quality products. This procedure is carried out on the best
suited supplier since it is a costly process and it aims at
protecting the manufacturers from contracting a supplier that
may be good in the books but this does not match the actual
situation of the company. The audit also aims at helping the
company to understand the weaknesses and strengths of the
supplier before the relationship is made official. Therefore, by
carrying out an audit of the suppliers, the company is able to
determine the capability of the supplier to meet the company’s
requirements (Assemblymag, 2001).
Evaluating the performance of a supplier is important to grade
them and determine whether or not the partnership will
continue. Evaluation can be carried out through a self-
assessment questionnaire by the suppliers. This helps the
supplier to identify any existing gaps ad take the appropriate
measures towards covering them. It also helps the company to
understand how the supplier understands its operations and
whether or not they are willing to make improvements on
12. existing discrepancies. The company should also set up
appropriate metrics with which the measurement of performance
can be carried out. Some of the metrics which can be used
include lots that are rejected, documentation errors and perfect
shipments among many others. The metrics allows for the
categorization of the supplier as either full partner, associate
partner, high risk or incapable. A full partner is a supplier that
has been able to meet all the company’s expectations and can be
trusted to supply quality raw materials to the manufacturer. An
associate partner is a supplier that falls short of the expectations
and needs to put in more effort so as to attain the status of a full
partner. High risk supplier is utilized for current production but
it is advised not to award them with future business. An
incapable supplier does not meet the needs of the manufacturer
and hence they should be let go as soon as possible. These
categorizations help the company to know which supplier they
need to replace and which one they need to retain. It plays a
significant role in the continuous process of assuring quality in
the raw materials that they are supplied with (Assemblymag,
2001).
Establishing long term supplier relationships has many
advantages on the company. It leads to a reduction is costs since
there is a significant amount of resources that is associated with
searching for a supplier including months of determining the
appropriate one and setting up a relationship with them. With
13. long term suppliers, there is an increase in communication and
efficiency hence a smooth operation unlike in instances where
the supplier is regularly changed. With the long term
relationship, there is also room for continued improvement and
the supplier is able to better understand the needs of the
manufacturer and hence they are able to satisfy them better
(Figues, 2020). Long term suppliers are those that have been
able to achieve the metrics of full partnership and the two
entities have been able to establish a level of trust and by
working together, the company has been able to achieve and
supersede the required quality.
References
Assemblymag. (2001). Retrieved 2 February 2020, from
https://www.assemblymag.com/articles/82672-how-to-evaluate-
suppliers
Eldridge, B. (2012). Supplier Management: Six Steps to
Selecting the Right Supplier. Retrieved 2 February 2020, from
https://www.foodsafetymagazine.com/magazine-
archive1/augustseptember-2012/supplier-management-six-steps-
to-selecting-the-right-supplier/
Figues, R. (2020). Retrieved 2 February 2020, from
http://www.academia.edu/8304256/CHAPTER_4_QUALITY_IN
_CUSTOMER_SUPLLIER_RELATIONSHIPS
14. 3/4/2020 Rubric Assessment - BMGT 375 6380 Purchasing
Management (2202) - UMGC Learning Management System
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Criteria Excellent Good Developing Needs Improvem
Identification
and discussion
of any ethical
considerations
in purchasing
15. activities
5 points
Identification of possible
ethical considerations
were made.
The importance of
societal concerns in
business purchasing was
discussed in an
insightful and thorough
manner. Any possible
ethical conflict were
identified and if none
16. were found a strong
argument was made to
explain why that was
the case. All conclusions
drawn were reasoned
logically and
application of the class
material and case study
facts resulting in a
demonstration of an
excellent understanding
of the ethical
17. considerations for
purchasing materials.
( 4.5-5.0)
4.25 points
Identification of possible ethical
considerations was made.
The importance of societal concerns
in business purchasing was
discussed in an competent
manner. Most possible ethical
conflicts were identified and if none
were found an argument was made
to explain why that was the
18. case. Most conclusions drawn were
reasoned well with exception of one
of the products under discussion.
(4.0-4.49)
3.75 points
Identification of
possible ethical
considerations was
made. However the
discussion was too
general.
The importance of
19. societal concerns in
business purchasing
was satisfactory. Most
but one or
two possible ethical
conflicts were missed
or vaguely discussed.
A general discussion
as to why none were
found rather than a
strong argument was
made to explain why
that was the
20. case. Most
conclusions drawn
were reasoned well
with exception of one
of the products under
discussion. Use of
class material and
case study facts was
sufficient but added
to the feeling that
3.25 points
Identification and
21. discussion was
attempted but
reasoning with us
of class material a
case study facts w
sparse.
Conclusions were
underdeveloped
lack sound
reasoning suppor
by the class mate
and case study
facts.
22. (3.0-3.49)
3/4/2020 Rubric Assessment - BMGT 375 6380 Purchasing
Management (2202) - UMGC Learning Management System
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groupId=0… 2/6
Identification
of Sustainable
Issues both
eco and
financial for
the items to
23. be purchased
Content of
only a general
understanding of the
ethical issues resulted.
(3.5-3.99)
5 points
Identification of
Sustainable Issues both
eco and financial for the
items to be purchased
were
complete. Conclusions
24. drawn in
discussion show
insightful understanding
of the possible issues
surrounding supply
purchasing both in terms
of money and planet. All
products were
addressed. Explanation
of the possible issues
surrounding the
products reflect a strong
25. level of analysis,
synthesis,
evaluation with
reasoning for
conclusions
supported by the case
material and case study
facts.
(4.5-5.0)
4.25 points
Identification of Sustainable Issues
both eco and financial for the items
to be purchased were
26. complete. Conclusions drawn in
discussion show a
good understanding of the possible
issues surrounding supply
purchasing both in terms of money
and planet. All products were
addressed but the explanation of
the possible issues surrounding the
products while strong, showed
areas of weak application of the
case material and case study facts.
(4.0-4.49)
27. 3.75 points
Identification of
Sustainable Issues
both eco and financial
for the items to be
purchased were
complete. Conclusions
drawn in
discussion show
a general
understanding of
the possible issues
surrounding supply
28. purchasing both in
terms of money and
planet. All products
were addressed but
the explanation of the
possible issues
surrounding the
products was
overbroad thus
showing weakness in
the application of the
case material and case
29. study facts. More
detail needed.
(3.5-3.99)
3.25 points
An attempt was
made to discuss
sustainability issu
but the conclusio
drawn reflected
a weak level
of reasoning and
support from the
case material and
30. case study facts.
(3.0-3.49)
6 points 5.1 points 4.5 points 3.9 points
3/4/2020 Rubric Assessment - BMGT 375 6380 Purchasing
Management (2202) - UMGC Learning Management System
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slide
presentation
and summary
of
32. minor and major.
Conclusions and link
description
discussion demonstrated
excellent application of
critical thinking skills as
well as strong support
from the class material
and cases study facts.
Research was evident
when appropriate.
(5.4-6.0)
33. Demonstrates a good understanding
of how the assignments form the
purchasing link of a supply chain.
Presentation addressed
completely the major points of the
assignments but one or two minor
points were missed. Conclusions
and link description
discussion demonstrated
competent application of critical
thinking skills as well as strong
support from the class material and
cases study facts. Research was
35. assignment. Use of
the class material and
case study facts was
sufficient but not as
evident in the
explanation of the
connection purchasing
to supply chain.
(4.2-4.799)
Fails to show a fir
understanding of
requirements;
missed two key
36. elements or seve
minor aspects of
assignments in th
discussion. Use o
class material,
research if
appropriate and
case study facts w
minimal and not
evident in the lin
connection
discussion.
37. (3.60-4.199)
3 points
Presentation flows well
and logically; transitions
are smooth, interesting,
persuasive and enhance
presentation. The slides
are bulleted, contain
intext citation were
appropriate and notes
explain the slides while
supporting the
conclusions drawn.
38. Reference list was
2.55 points
Presentation flows well; smooth
transitions; use of persuasiveness
was underdeveloped in some areas;
slides were bulleted and contained
APA intext citations where
appropriate, notes mostly explained
the slides. Reference list was
included in a separate slide at the
end of the presentation.
(2.4-2.69)
39. 2.25 points
Presentation mostly
flowed smooth
transitions used were
missing in one or two
slides; no use of
persuasive language;
slides were bulleted
but the intext
citations were missing
one or two times;
notes were generally
instructive of the
40. 1.95 points
Presentation is
unorganized; ve
few transitions
and/or they distr
from presentatio
persuasiveness w
generally
undeveloped. Sli
contained all
discussion rathe
than the notes
41. Support for th
3/4/2020 Rubric Assessment - BMGT 375 6380 Purchasing
Management (2202) - UMGC Learning Management System
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groupId=0… 4/6
Attention to
Instructions
Writing
Mechanics
included in a separate
slide at the end.
(2.7-3.0)
43. understanding of
requirements
responding completely
to each aspect of
assignment including
minor aspects of the
assignment such as
using third person
writing, required use of
course readings, and
assignment format.
(2.7-3.0)
2.5 points
44. Demonstrates excellent
understanding of requirements;
missed one minor aspect of
assignment.
(2.4-2.69)
2.3 points
Demonstrates
satisfactory
understanding of
requirements; missed
a key element or two
minor aspects of
45. assignment.
(2.1-2.39)
1.95 points
Fails to show a fir
understanding of
requirements;
missed two key
elements or seve
minor aspects of
assignment.
(1.8-2.09)
2 points
Strictly adheres to
46. standard usage rules of
written English,
including but not limited
to capitalization,
punctuation, run-on
sentences, missing or
extra words, stylistic
errors, spelling and
grammatical errors. No
errors found. No
1.7 points
Excellently adheres to standard
47. usage of mechanics: conventions of
written English, including
capitalization, punctuation, and
spelling. One to three errors found.
(1.6- 1.79)
1.5 points
Satisfactorily adheres
to standard usage
rules of mechanics:
conventions of
English, including
capitalization,
punctuation, and
48. spelling. Four to 10
errors found.
(1.4- 1.59)
1.3 points
Minimally adhere
to standard usage
rules of mechanic
conventions of
written English,
including
capitalization,
punctuation, and
49. spelling.
(1.2-1.39)
3/4/2020 Rubric Assessment - BMGT 375 6380 Purchasing
Management (2202) - UMGC Learning Management System
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groupId=0… 5/6
Total / 26
Overall Score
APA Format
contractions or jargon
used.
(1.8- 2.0)
50. 2 points
No APA style or usage
errors; Proper citation of
source material is used
throughout paper;
Reference titles follow
APA with only the first
word, the first word
after a colon and proper
nouns capitalized.
(1.8-2.0)
1.7 points
51. Attempts in-text citations and
reference list but one or two APA
style errors noted or fails to use
APA citations when appropriate 1-2
times.
(1.6-1.79)
1.5 points
Attempts in-text
citations and
reference lists; APA
style errors are noted
throughout document;
Fails to use APA
52. citations when
appropriate 3 times in
document.
(1.4 -1.59)
1.3 points
Attempts in-text
citations and
reference lists; Fa
to use APA citatio
when appropriate
5 times; or prese
only 1-2 in-text
53. citations and
reference list in a
paper that requir
APA citations
throughout the
document.
(1.2-1.39)
Excellent
23.4 points
minimum
Good
20.8 points
minimum
Developing
55. Final Project - Project Control, Sustainability Policy and
PowerPoint Presentation.
Finalize your previous assignments by considering ethical and
sustainability activities. Specifically, add the following
information:
1. Ethical implications of purchasing materials for your
operation (2-3 pages) and must include in text citations. Are
you hurting any segments of society?
2. Sustainability issues related to your operation. Develop a
sustainability policy for buying the five materials. It should
discuss both eco and financial sustainability. This policy
should be one page double-spaced, 12-point font, one-inch
margins.
3. Create a PowerPoint Presentation report (7-10 slides) that
summarizes all four assignments that you can present to top
management. It should discuss the conclusions drawn about the
purchasing concerns in supplying the company with its various
creatures and reference the steps taken to make the purchasing
viable. It should also reflect the role of purchasing in the supply
chain link.
Third person writing is required. Third person means that there
are no words such as “I, me, my, we, or us” (first person
writing), nor is there use of “you or your” (second person
writing). If uncertain how to write in the third person, view this
link:
56. http://www.quickanddirtytips.com/education/grammar/first-
second-and-third-person.
Contractions are not used in business writing, so you are
expected NOT to use contractions in writing this assignment.
Use short bullet points on slides and talking points in the Notes
area. (Use “Click Here to Add Notes” for talking points)
The expectation is that you provide a robust use of the course
readings. No other books besides the course eBook can be used.
When using a source document, the expectation is that the
information is cited and referenced with a page or paragraph
number.
References:
http://louisville.edu/purchasing/sustainability/greenpurchasings
upplychain
http://www.naspo.org/green/index.html
https://learn.umuc.edu/content/enforced/487048-001039-01-
2202-OL1-
6380/Ethics%20&%20Procurement%20Integrity.pdf?_&d2lSessi
onVal=9fpdzDvP2BajUtn1gsuP5vOjo
https://www.thebalancesmb.com/ethics-in-purchasing-2221206
https://www.scmr.com/article/the_ethical_supply_chain
https://www.iisd.org/business/tools/bt_green_pro.aspx
https://learn.umuc.edu/content/enforced/487048-001039-01-
2202-OL1-