In your company, you have a practice of preparing your own estimates of the items to...

In your company, you have a practice of preparing your own estimates of the items to be procured or services to be availed. This helps you conduct procurements to select seller. Is it a right action? Discuss?

subject : Project mangement

Expert Solution

Solution:

This is a case where the estimates are derived from bases that may or may not be relevant to actual requirements for the procurement. This can be seen as a case where a few select suppliers get the procurement orders based on the estimates that we have estimated.

This decision may be working in the company's favour so far but this pracice is not actually promoted because this makes theprocurement system myopic over the period of time because of doing business with only a few select suppliers. This makes the business relying on select suppliers and hence the business may be missing out on better suppliers that may actually be benefitial for the company. Hence, this is why it is very important to not rely on select suppliers and rather have multiple differetn suppliers to meet their needs.

Thus, this action will increase the risk to the business and hence the procurement should be done holistically considering all different suppliers for various procurement requirements to keep the supplier portfolio maintained with lower risk to the business. Hence, the right action would be to consider many suppliers and develop a big set of suppliers for different company needs.

Hence, this is how the procurement should be carried out in the company.

keosha answered 1 month ago

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