Description
procurement mgmt
Fundamentals of procurement
Presented by Sarita Das
Procurement Department
y Every business entity has got a procurement
y y y y
department or a executive who handles all purchases depending upon the size of the organization . Big organizations have multilocational purchase unit or in some case purchases are made from central unit . Purchase deptt plays a very critical and crucial role in smooth functioning of organization. The Head of Purchase deptt is called Chief Procurement Officer(CPO) . Purchase deptt primary role is to get material at right cost , from right buyer , of right quality and in right time.
y .
y Procurement or Purchasing y y y y
plays an important role
in any manufacturing industry . Saving can be achieved during procurement process. Suppliers/Vendors can also contribute in suggesting cost reduction' s ideas . Raw material, services constitutes major part of cost of product . Procurement department has now prime role in contributing savings in company
Few ideas which can result in savings
y BULK BUYING-The companies which have greater geographical presence or are multi
locational can achieve better price by buying bigger volumes instead of buying for individual units. Central buying policies are recommended for such unit .Bulk buying results in annual contracts for a period of six - twelve months for entire year requirement with prices being finalized for the entire period .
y
OPPORTUNITY BUYING-Most of the commodities and raw material has seasonal cycle of prices as they peak and fall in intervals .Hence we can book maximum amount of our requirement when prices are low .
y
LOCAL VENDORS -Vendors should be located in close vicinity of company which helps in keeping low inventory as well as low freight cost .
y
PARTNERSHIPS WITH MAJOR VENDORS-It is highly recommended to have partnership with vendors in either having equity or technical collaboration so as to pass on savings to the customer . Which results in cost reduction in manufacturing cost. Most of the Automobiles Majors has this kind of arrangement with their vendors .Vendors are assured of business .
y
y E PROCUREMENT-Putting up tenders and requirement on Internet and setting up
auction for requirement on web which helps in reaching out more numbers of vendor base . This also helps in cutting cost when we opt for conventional way of asking tender /quotation . Most popular way of procurement strategy is reverse auction , where the lowest price bidder takes away the order
y
BUYING MATERIAL FROM TAX EXEMPTED AREA .-In several countries the federal/ State govts provide tax heavens for manufactures for certain period say 10- 15 years .Hence buying from these area s helps in cutting cost .In common parlance it is called TAX HOLIDAYS . Look out for such places prior to placing orders.
.
ALTERNATE MATERIAL-Select high cost items and replace it by some low cost material . eg ; steel by plastic/aluminium .
y
y
Role of Procurement within an Organization
1) Support Operational Requirements. 2)Manage the Procurement Process and the Supply Base Efficiently and Effectively. 3)Develop Strong Relationships with Other Functional Groups 4)Support Organizational Goals and Objectives
Support Operational Requirements
y Supporting this flow requires purchasing to: y Understand business requirements y Buy products and services
y y y y y y
At the right price From the right source At the right specification that meets users needs In the right quantity For delivery at the right time To the right internal customer
y Internal customers of purchasing include: y Manufacturing y Physical distribution centers y Engineering and technical groups y Research and development y Information technology y Transportation and other services
Manage the Procurement Process and the Supply Base Efficiently and Effectively
y To manage the procurement process and supply base efficiently and effectively y y y y y
procurement must follow the following key steps: Identify opportunities Manage internal operations Achieve objectives Identify opportunities where the procurement team adds true value: Evaluation and selection of suppliers
y All purchases should go through the approved procurement processes y Engineering and other functional inputs are part of this process y Sales personnel should not be allowed to enter contractual agreements without
procurement·s involvement y Increasing use of sourcing teams
y Review of specifications or statement of work
y Review the requirements for the material or service being provided y May be able to suggest alternative standardized materials that can save the organization
money
y Acting as the primary contact with supplier y Determining the method of awarding contracts y Managing the supply base y Current suppliers are competitive y Identification of new potential suppliers and develop relationships y Improvement and development of non-competitive existing suppliers y Manage its internal operations efficiently and effectively, including: y Management of procurement staff y Developing and maintenance of policies and processes y Defining procurement strategy and structure y Developing plans and measures y Providing procurement leadership to the organization y Providing professional training and growth opportunities for employees y
y Achieve this objective through : y Leadership of procurement for the organization y Sourcing management y Ownership and accountability for sourcing processes y Collaboration and partnering y Teamwork
Develop Strong Relationships with Other Functional Groups
Support Organizational Goals and Objectives
y Develop integrated purchasing strategies that support y y
y
y y
organizational strategies. Effective purchasing strategies involve: Monitoring supply markets and trends (e.g., material price increases, shortages, changes in suppliers) and interpreting the impact of these trends on company strategies Identifying the critical materials and services required to support company strategies in key performance areas, particularly during new product development Developing supply options and contingency plans that support company plans Supporting the organization's need for a diverse and globally competitive supply base
Thank you
doc_210643100.pptx
procurement mgmt
Fundamentals of procurement
Presented by Sarita Das
Procurement Department
y Every business entity has got a procurement
y y y y
department or a executive who handles all purchases depending upon the size of the organization . Big organizations have multilocational purchase unit or in some case purchases are made from central unit . Purchase deptt plays a very critical and crucial role in smooth functioning of organization. The Head of Purchase deptt is called Chief Procurement Officer(CPO) . Purchase deptt primary role is to get material at right cost , from right buyer , of right quality and in right time.
y .
y Procurement or Purchasing y y y y
plays an important role
in any manufacturing industry . Saving can be achieved during procurement process. Suppliers/Vendors can also contribute in suggesting cost reduction' s ideas . Raw material, services constitutes major part of cost of product . Procurement department has now prime role in contributing savings in company
Few ideas which can result in savings
y BULK BUYING-The companies which have greater geographical presence or are multi
locational can achieve better price by buying bigger volumes instead of buying for individual units. Central buying policies are recommended for such unit .Bulk buying results in annual contracts for a period of six - twelve months for entire year requirement with prices being finalized for the entire period .
y
OPPORTUNITY BUYING-Most of the commodities and raw material has seasonal cycle of prices as they peak and fall in intervals .Hence we can book maximum amount of our requirement when prices are low .
y
LOCAL VENDORS -Vendors should be located in close vicinity of company which helps in keeping low inventory as well as low freight cost .
y
PARTNERSHIPS WITH MAJOR VENDORS-It is highly recommended to have partnership with vendors in either having equity or technical collaboration so as to pass on savings to the customer . Which results in cost reduction in manufacturing cost. Most of the Automobiles Majors has this kind of arrangement with their vendors .Vendors are assured of business .
y
y E PROCUREMENT-Putting up tenders and requirement on Internet and setting up
auction for requirement on web which helps in reaching out more numbers of vendor base . This also helps in cutting cost when we opt for conventional way of asking tender /quotation . Most popular way of procurement strategy is reverse auction , where the lowest price bidder takes away the order
y
BUYING MATERIAL FROM TAX EXEMPTED AREA .-In several countries the federal/ State govts provide tax heavens for manufactures for certain period say 10- 15 years .Hence buying from these area s helps in cutting cost .In common parlance it is called TAX HOLIDAYS . Look out for such places prior to placing orders.
.
ALTERNATE MATERIAL-Select high cost items and replace it by some low cost material . eg ; steel by plastic/aluminium .
y
y
Role of Procurement within an Organization
1) Support Operational Requirements. 2)Manage the Procurement Process and the Supply Base Efficiently and Effectively. 3)Develop Strong Relationships with Other Functional Groups 4)Support Organizational Goals and Objectives
Support Operational Requirements
y Supporting this flow requires purchasing to: y Understand business requirements y Buy products and services
y y y y y y
At the right price From the right source At the right specification that meets users needs In the right quantity For delivery at the right time To the right internal customer
y Internal customers of purchasing include: y Manufacturing y Physical distribution centers y Engineering and technical groups y Research and development y Information technology y Transportation and other services
Manage the Procurement Process and the Supply Base Efficiently and Effectively
y To manage the procurement process and supply base efficiently and effectively y y y y y
procurement must follow the following key steps: Identify opportunities Manage internal operations Achieve objectives Identify opportunities where the procurement team adds true value: Evaluation and selection of suppliers
y All purchases should go through the approved procurement processes y Engineering and other functional inputs are part of this process y Sales personnel should not be allowed to enter contractual agreements without
procurement·s involvement y Increasing use of sourcing teams
y Review of specifications or statement of work
y Review the requirements for the material or service being provided y May be able to suggest alternative standardized materials that can save the organization
money
y Acting as the primary contact with supplier y Determining the method of awarding contracts y Managing the supply base y Current suppliers are competitive y Identification of new potential suppliers and develop relationships y Improvement and development of non-competitive existing suppliers y Manage its internal operations efficiently and effectively, including: y Management of procurement staff y Developing and maintenance of policies and processes y Defining procurement strategy and structure y Developing plans and measures y Providing procurement leadership to the organization y Providing professional training and growth opportunities for employees y
y Achieve this objective through : y Leadership of procurement for the organization y Sourcing management y Ownership and accountability for sourcing processes y Collaboration and partnering y Teamwork
Develop Strong Relationships with Other Functional Groups
Support Organizational Goals and Objectives
y Develop integrated purchasing strategies that support y y
y
y y
organizational strategies. Effective purchasing strategies involve: Monitoring supply markets and trends (e.g., material price increases, shortages, changes in suppliers) and interpreting the impact of these trends on company strategies Identifying the critical materials and services required to support company strategies in key performance areas, particularly during new product development Developing supply options and contingency plans that support company plans Supporting the organization's need for a diverse and globally competitive supply base
Thank you
doc_210643100.pptx