Transformation of procurement practices for Non-production & Indirect Functions
This paper will focus on the concepts of transformation in procurement practices for non- production & indirect functions while comparing & contrasting the impacts of the same in varied fields (Retail / Aerospace & Defense). The economic scenario since the late eighties forced companies to reduce costs to improve bottom-line profits. Although indirect procurement costs were considered as “fixed / insignificant” and much more inflexible than cost of direct good & working capital expenditures, they were one of the few areas in an organization that provided ample opportunities to reduce costs and improve bottom-line profits. The basic concept behind the works being compared here is that organizations all the while had underestimated the influence on the bottom line profits that the control on indirect spending functions can bring about. Both projects discussed here address the techniques, which resulted them in overlooking a golden opportunity to optimize indirect spending using technological tools such as purchasing cards to cut costs & strategic sourcing. The “Northrop Grumman Corporation” the well-known defense contractor implemented Corporate Purchasing Card to simplify payment, ordering, information processing and record keeping for the company 's low-dollar, nonproduction purchases in late eighties which later evolved as an integrated feature with the evolution of ERP systems & saturated
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.
Comparing to the option of upgrading the whole procurement system, my recommendation aligns with Russell Menere (National Procurement Manager of BAL)’s idea, which is to implement short term improvements based on current procurement system in
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.
In her short story “Sweat”, Zora Neale Hurston details the troubled lives of a married African American couple in the deep south. Born and raised in Florida herself, Huston had an excellent perspective on the culture of that time and area. She no doubt saw the situations and heard the strong dialect that she presents in the short story, in which Sykes constantly beats and demeans his wife Delia, who keeps her retorts minimal as to not provoke him further. Sykes is openly dating another woman, yet Delia takes no action, instead focusing on her work and religion. Delia retains her indifference when Sykes is in a dire situation, allowing him to suffer just as she had. Though her actions may seem justified, they present a major irony when considering her devoutness to religion. Delia’s refusal to modify her calm lifestyle despite Sykes’s constant torment reflects her cultural and religious backgrounds and is influenced by Hurston’s own experiences.
Research verifies that the trend in families with lesbian couples tends to have an egalitarian foundation where the roles under a traditional marriage are upheld: finances. decision-making, housework, and parenting (Dorman and Mixon, 2014). Upon the arrival of children, these relationships tend to mirror that of heterosexual couples, where the biological mother tends to do the entire child bearing/rearing roles.
Under the new cost system, two broad sources of costs were identified: manufacturing and SM&A. All costs within these categories were reclassified as either volume driven or order driven. Hence, four cost pools were set up.
The United States population is growing rapidly. At a rate of 0.7% per year currently, that equates to about 9 million new people a year, after the number of deaths are accounted for. With the number of people seen on the streets rising and the number of incarcerated criminals “dropping” to around 0.2%, it is difficult to see where all these new people are going to fit into society. As hard as it is to imagine a new baby born every eight seconds, that is the reality currently facing America. However, while this type of population growth is likely going to cause America’s demise, another country is currently populating at a rate even America cannot compete with: India. At an astonishing 1.7% increase per year, India is currently populated with almost 900 million more people than the United States. With less than half the land size and an undeniable need for more resources to survive, India has been faced with the largest increase of population within the last century. However, unlike the United States, India’s government has taken crucial steps towards helping to control their population. Albeit, their methods are a bit unorthodox and incredibly appalling by Western standards. Regardless, in order to maintain a
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)
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
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.
As a business evolves and grows continuous improvement becomes a necessity for continued prosperity. As a consequence, cost cutting becomes a necessity. Most firms evaluate production practices and look to bolster efficiency by integrating new technology. In this case Mr. Bury already has a relatively low overhead; however, with the acquisition of additional human resources he can facilitate the development of new technologies that will enrich his product line and possibly increase the market to include foreign trade. At this point, outsourcing would also present itself as a reasonable option. This alternative would lower fixed costs while only creating a docile increase in variable expenses. This would be an attractive approach to increasing production while simultaneously reducing per unit costs. Moreover, Will could negotiate
The traditional lump sum procurement or sometimes also referred to as conventional procurement is an approach that became standard practice in the construction industry in the 19th century following the emergence of the general contracting firm and independent client consultants.
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
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