Question

A proactive strategic procurement operation can give the organisation it represents a competitive advantage by reducing waste in the value chain. For an organization of your choice, you are asked (a) to critically examine the procurement function, (b) by considering 2-3 areas below investigate how the procurement function can be improved and compensate external turbulences in the markets.

1. procurement strategy, 2. Strategic sourcing and outsourcing, 3. e-procurement, 4. sustainable procurement and 5. supply risk

Answer 1

Strategic Procurement means Long-range plans for ensuring timely supply of goods and services that are critical to a firm’s ability to meet its core business objectives.

I would choose Textile Company as an example. So in a textile industry the raw materials are cotton, jute, wool, raw silk and synthetic goods. Inorder to maintain an undisturbed production the stock of raw materials is essential. Based on the availability of the stock the production department can deliver the orders on time. This is very much needed to balance the market competition .

Steps to improve procurement strategy:

• Think Carefully Before Making a Purchase.
• Build Virtuous Supplier Relationships.
• Expand Your Network.
• Use Your Analytical Skills to Make the Right Decisions.
• Sharpen Your Negotiating Skills.
• Think Globally.
• Move Forward with Technology.

Strategic sourcing and outsourcing

Strategic sourcing is the process of developing channels of supply at the lowest total cost, not just the lowest purchase price. It expands upon traditional purchasing activities of all activities within the procurement cycle, from specification to receipt and payment of goods and services.

Strategic outsourcing is the process of engaging the services of a provider to manage essential tasks that would otherwise be managed by in-house personnel. Many people tend to associate outsourcing with small companies that operate with limited budgets.

Steps to improve strategy sourcing and outsourcing:

• Identify spend areas.
• Perform Supply Market Analysis.
• Analyze your current sourcing process.
• Outsourcing. Having suppliers provide goods and services that were previously provided internally
• In sourcing. Delegating a job to someone within the company.
• Near sourcing.
• Vertical integration.
• Few or many suppliers.

E-procurement is the process of buying and selling supplies and services over the Internet.

Steps to improve e - procurement are,

A) Planning: plan requires the following:

• Need for justification
• Budget approvals
• Review of applicable laws & regulations
• Identification of all personnel
• Coordination of the acquisition steps per organizational and/or governmental requirements
• Managing the purchase post acquisition.

b) Market Research - Market research will help with getting to know what vendors and suppliers can fulfill the product and/or service needed.

c) Preparing the Solicitation

The solicitation typically specifies the following:

• Organization background
• Current state/situation
• Preferred state
• Key dates (release date, questions due date, bid due date, anticipated contract award date, and more)
• Terms and conditions
• Clauses
• Payment terms and more

d) Selection Process - Procurement specialists and business users may review and compare responses from vendors, rate their qualifications, compare pricing, and evaluate how well they meet the terms and conditions of the solicitation.

e) Monitor Performance

It is important to set reminders to check in on key contract and performance terms. If applicable, set tasks to check in on budgets, rebates, volume discounts, milestones, and options to cancel and/or renew favorably.

f) Close Out

Once the performance term is complete and the contract or purchase is not renewed, ensure that the acquisition is closed out.