Question

Conduct Procurements is the process of obtaining seller responses, selecting a seller, and awarding a contract. It's important the team takes the necessary time to evaluate the potential sellers for the project.

Provide your answers to the following questions:

3. What are three potential problems that can be faced with a seller (i.e., vendor) who is working on the project? What actions can be taken to overcome these problems?

Answer 1

answer-

the three potential problems would be-

1-lack of information about seller -

This is the first potential issue which comes to company when they procure raw materials for project from sellers because if company has not proper information about their seller then it can create risk of loss like if supplier has bad reputation of providing low quality materials by saying it high quality then it leads to loss to our company because we would purchase that low grade material and our products will be poor in quality.

this situation can be overcome by due dilligence or proper investigation of seller on their websites, past projects and sales of the sellers, past customer's reviews etc which will help us to give information about seller.

2- Dark purchasing

Purchases that are made outside the defined procurement process fall under dark purchasing. Such uncontrolled spending can ultimately be expensive for businesses. When items purchased cannot be justified using capital outlay or material inventory, the resulting loss of revenue and control is a significant challenge for organizations of all sizes to tackle.

the inability to track where a company's expenditures are going, is a very real and damaging aspect of most indirect procurement processes .

this situation can be overcome by making document which state the amount of materials required and have copies of such document and communicated with seller so that unencessary purchases are not made and seller will deliver required goods with right price and quantity to purchaser.

3-Long process cycle

Most often, products and services are procured with a sense of urgency in the last minute. As a result, the actual lead times and the procurement cycle tends to be considerably longer than that anticipated or scheduled. Listed below are the common reasons for delays in the procurement process:

• Delays in preparing technical specifications/TOR/SOW
• Overlooking the procurement schedule
• Extending the timeline to submit bids/proposals
• Failure to start the evaluation process on time

this can be overcome by preparing specification document of materials required, make proper scheduling of materials required so that raw materials level is at optimum quantity. Company can also adopt EOQ tool to maintain its inventory.