Procurement is one of supply management’s most challenging responsibilities (Burt, 2010). Therefore relationship management is the key to procurement success (Zhang, 2011). The purchasing of services has the potential to turn into relationships with suppliers that tend to focus on trust instead of the transaction (Burt, 2010). With that in mind, procurement should focus on long-term supply sustainability rather than short-term cost-saving (Zhang, 2011). To nurture an organization’s supply base into a fully committed and fully supported external entity requires time, effort and a highly collaborated working relationship (Zhang, 2011). Effective communication within the relationship is indispensable for any procurement outsourcing strategy to prosper (Simchi, Kaminski, Simchi, 2008). Failing to establish and manage good relationships could cause irreversible and catastrophic damage to a procurement outsourcing strategy. One of the most common outsourcing relationship problems is that organizations tend to sit at opposite sides of the work-group table instead of next to each other (Vitasek, 2010). The application is that the two organizations are working against one another instead of work with each other to solve an
I ensured procurement requests, requisitions for supplies and services, training by means of coordination with the appropriate staff, contractors and other SI units; expedite and follow up with suppliers to schedule, purchase goods and services; ensure building access for SI staff, contractors, and interns in a timely process on behalf the unit to meet procurement contracts and requisitions needs in accordance with SI and NMAAHC regulations, policy, and automated procedures
To offset the changing trends of fierce competition, flattened sales, and decreased profits the following analysis will provide the Corporate Cost Reduction Team members with the needed resources and recommendations to make an informed decision in the corporate overhead reduction program. Outsourcing is a hot topic in corporate America. Companies have begun to look at outsourcing of non-core materials and services to achieve substantial cost reductions
Procurement also is the selecting from a range of options for acquisitions, and in analyzing and identifying the requirements for the purchasing, negotiating contracts, picking the suppliers, the creating of strategic alliances with suppliers, or the acting as a liaison between the user and suppliers. The current state of procurement practice reflects the dynamic interaction between the opposing forces, leaving the remaining in limbo. The two complementary process is involved in the procurement is vendor selling and customer buying. The best practice in the procurement process is the Exchange-Point Analysis. The exchange points highlight the opportunities for the process integration, which are noted for performance improvement opportunities. The process integration is to convert critical aspects for the supply chain process and procurement from one based on commercial norms about markets and current laws to the one that relies upon goal alignment and trust through the chain of command. The current best practices in industry or government project management include the belief based operations between vendors and customers (Morris & Pinto,
Strategic alignment occurs when the Information Technology (IT) and business strategies are in dynamic symmetry with the structures that support strategy execution, which include; organization framework and Information systems (Lapiedra, Alegre, and Chiva, 2006). Therefore, when this alignment exists IT can predict what the business future requirements are and set up a trajectory to meet those upcoming needs (Hu and Huang, 2007). Luftman (2003) noted that for over two decades IT to business alignment has been classified among the top management concerns in organizations. Although IT-business alignment has been identified as a promoter for IT investment to enhance organizational performance, fear prevails among management teams that the return of investment in IT will not be achieved. The main reason of failure to generate return from IT investment is the practice’s challenge faced by many implementers due to external forces, like transformation of IT (Luftman and Kempaiah, 2008), cost, and lack of understanding on alignment framework and models to use at different strategic planning levels (Oana, 2010).
In this assignment I will be writing a formal report that will explain a typical procurement process, I will outline a variety of methods of supplier reimbursement and contract relationships; I will also outline the pros and cons of each contract type. As well as this, I will explain a typical supplier selection process through the use of Carters 10 C’s and a typical selection process model.
It is quite challenging to discuss about procurement management without stating the importance of its strategies. There are four main basic procurement strategies that serve different functions within a procurement management. To begin with, a “Partnership” strategy focuses mainly on constructing mutual commitment in long term relationship with suppliers. While a “Secure Supply” strategy aims to secure short and long term supply while reducing risk from suppliers. In addition, a “Category Management and E-Procurement solutions” serves as a tool to reduce logistic complexity, improve operational efficiency, and attempts to reduce the number of suppliers. Lastly, a “Competive Bidding” strategy emphasizes on obtaining the “Best Deal” for short term transactions with suppliers.(van weele) Each of these four strategies involves a unique purchasing methodology, which implies that the complexity is embedded in an individual strategic implication. Therefore, it requires different tools to accomplish the specific strategical characteristics. A business entity may need to support and execute procurement decisions with other strategic apparatus with analytical methods, including market analysis, uncertainty analysis, price forecasting, supplier relationship and along with others.(Harvard)
Procurement management is the processes to purchase or acquire the products, services or results needed from outside the project team to perform the work. Project Procurement Management involves not just purchasing products, services or results, but also ensuring that those that are purchased are right for the project, meets standards and is based on project requirements. This life cycle includes tracking from order through deployment and completing with invoice reconciliation.
Check book system with authorization system for the release of indirect material were followed. This helps in reducing the overhead expenses. The respective team is responsible for this control. Also, the teams were given freedom to purchase indirect materials from suppliers through negotiation which help in controlling expenses. Teams got the expense report charged to their department which helps in monitoring the cost.
All projects involve the need to determine whether the project work will be done in-house, external to the organization (outsourced), or a combination of the two. This is called “make-or-buy analysis” and is an essential part of project planning, as well as a tool/technique integral to procurement planning
Upon analysis, it came to the fore that the current system had some obvious drawbacks which motivated the need for a new system. Under the old system, it was assumed that all customer orders placed the same demand on the resources of Kanthal. This was not accurate as customers differed by: the level of technical and commercial service they required, whether they demanded standard or non-standard products and by their ability to forecast their demand. Because of these discrepancies, under the old cost system an order which placed fewer demands on Kanthal's resources would be overcosted and appear to be unprofitable or less profitable than it was. This order would represent a hidden profit. Whereas, an order which placed a disproportionately large burden on the company's resources would appear to be more profitable than it was. This was a hidden loss order. Due to these hidden loss situations, many of Kanthal's resources were employed towards unprofitable products and customers.
Information Technology (IT) budgeting has become a constant struggle for companies, both big and small. The speed at which technology becomes obsolete, management’s expectations for quick deployment of new technology, and a supplier’s change of their operating model to focus on “as-a-service” (Feldman, 2015) recurring revenue, greatly affect how IT departments approach their budget these days. Other factors such as; lack of company vision or one’s inability to see how their IT department fits into the corporation’s goals and expectations are all huge pitfalls for the IT manager. The inability for IT and finance divisions to
In 1995, IBM reengineer and redesign its logistics and procurement and outsourced its activities if it could be done faster and cheaper. Within one year of reengineering, costs were down 20% and time needed to complete and confirm supply orders had decreased from average of 48 hours to 2.5 hours. By 2000, $370 Million were saved annually by procuring goods & services online (94%). Also, year-to-year growth in procurement volume increased by 60% between
Purpose: To study how innovation in procurement process under changing environment helps “Marico” improve information flow across supply chain with cost reduction with enterprise mobility management.
During the 1980s the limitations of traditional product costing systems began to be widely publicised. These systems were designed decades ago when most companies manufactured a narrow range of products, and direct labour and materials were the dominant factory costs. Overhead costs were relatively small, and the distortions arising from inappropriate overhead allocations were not significant. Information processing costs were high, and it was therefore difficult to justify more sophisticated overhead allocation methods.