outsource for purchasing & supply system training center

104/07/2023Almahi Suliman Adam - Towards Proactive

Procurement System

Outsource for Purchasing & Supply Systems Training Center

Towards Proactive Procurement SystemAlmahi Suliman Adam

Certified Trainer by ILLAF Train UKEx Shell Africa Co, P&G MIC Dammam

www.outsource-sd.com

http://www.outsource-sd.com/


Procurement System

Procurement isProcurement is an organization system

meant with specifying and acquiring goods, services and work of the required quality, of the right quantity, on the right delivery (Date & Place), at a reasonable price; and from the right third party considering the whole life cost of purchased goods/services and focusing on getting better value for money invested in procurement.


Procurement System

Why procurement is important?

Departments spend more than 50% of their Budget a year on procuring goods and services to deliver their core services. Failure to purchase them cost effectively can put the achievement of key objectives at risk. Procurement directly influences profit margin and sales volume.


Procurement System 4

The Major Procurement Problems Undesired Quality Of Goods/Services And inadequate

Quantity High Cost Of Purchased Goods/Services Increasing cost of maintenance Disastrous Delay In Delivery Of Goods/Services High Cost Of Inventory Increasing Cost Of Procurement Staff And Tools Safety Issues Bad Conditions Of Payment Unsecured Sources And Uncertainty Of Continuous Supply Absenteeism Of Suppliers Management Failure to Meet Customers’ Needs Failure To Get Rid Of Obsolete Assets And else …


Procurement System

What is the RADICAL

Solution for procurement Problems?


Procurement System

Effective Procurement Department?


Procurement System

As Procurement Department …

Can not stand alone and yet, has no magical solution for procurement problems!


Procurement System

Proactive Procurement System is the radical Solution;

Procurement Dept

You Get What you Pay for

Right Outputs

In theRight Time

Right Inputs In theRight Time


Procurement System

What’s right Inputs?Right Items’ Specifications and Predefined StandardsEfficient lead TimeRight Payment SystemSupportive Organizational StructureAdequate AuthorizationRight Material Planning SystemRight inventory Control systemRight support from Senior managersRight TechnologyRight, Enough and Qualified Personnel with ongoing training facilitiesRight Training for Clients (Initiators) Right Model of Decision making (Rational Model)


Procurement System

What’s Right Outputs?

Enough, Qualified, sustaining and well managed sources (Suppliers)Required quality and adequate Quantity of goodsJust In time (JIT) Delivery of Goods, Services and WorkBetter Value for Money invested in ProcurementZero Stock (Approach)Customer SatisfactionOptimal Payment termsAnd else …..


Procurement System

Environmentof

ProcurementSystem

Shareholders

Company

Credibility

Political & Legal Issues

Indu

stry

Company Mission

Tech

nolo

gyFo

rces

Competitive

Forces

Social Cultural &

Environmental

Globa

l

Chall

enge

s

Econ

omic

Fo

rces


Procurement System

Before We Cross or Blame Procurement Department?

Do We have Strategic Business Plan?


Procurement System

Overhaul The Operational Planning & Control System

Strategic Business Plan

Production Plan

Master Production Schedule

Material Requirement Plan

Production Activity Control

Planning

Master Planning

ImplementationProcurement


Procurement System

Before We Cross or Blame Procurement Department …

Has each unit involved in the procurement system given ….

The Right Required Inputs?In the right Required time?


Procurement System

Dear Procurement Manager

NEVER Keep Silent if you don’t get the right inputs in the right time

Otherwise …

Caution!!


Procurement System

You Will Be Responsible for any Procurement Failure that may cause bad consequences in the whole Company system


Procurement System

GetStarted:


Procurement System

Build Up a Dynamic Procurement Team Qualified Personnel With Accounting Background

and Give Them: Initial And Ongoing TrainingNeeded TechnologyNeeded AuthorizationNeeded ToolsClear Mission, Objectives, Principles, Policies And Code Of Practice.

And:Evaluate Their Performance progressively.


Procurement System

Build Up a sustainable Vendor Database System & Never Be a Fireman

Scan the market with the predefined items and specifications to discover the most attractive opportunities of sourcingBuild up cross functional team for sources’ EvaluationSelect the valuable qualified suppliers and give them sufficient consideration.Build up Suppliers Relationship Management System (SRM).


Procurement System

Get the Clients Ready

Budget Owners:Inform them with procurement policies and code of processingHave a copy of their planned needs’ Specifications even before the ordering time to make the required preparation.Be aware of their S.O.P

Order Originator Any originator should be pre-qualified to Procurement systemAny originator should get full training in procurement system – originator SideAny originator should comply with the procurement system needs


Procurement System

Procurement for Primary and Supportive activities

Procurement

SupportiveActivities

Primary Activities

StoreroomItems

Non Storeroom

Items


Procurement System

Priorities vs CapacityKey Questions:

What are the Priorities?What is the Available Capacity?How can variance between priorities & Capacity Be resolved

Balance

Priority (Demand)

Capacity(Resources)


Procurement System

Working with Value/Quantity Parameter

Low Value Big Quantity

Low Value Small Quantity

High Value Big Quantity

High Value small Quantity

Value

Quantity


Procurement System

Sourcing Strategies according to Value/Quantity Parameter

Streamline & make JIT Delivery

Simplify & Decrease Purchasing Efforts

Partnership & Alliances Long-termRelationship

Continuous Searching for Alternatives

Value

Quantity


Procurement System

Procurement should be based on

Better Value for Money (VFM) = Optimum [whole life cost + quality] Better Value for money (VFM) ≠ initial lowest price cost

Better Value for Money (VFM)


Procurement System

How to Achieve Better Value For MoneyGetting an increased level or quality at the same cost.Avoiding unnecessary purchases.Ensuring that user needs are met but not exceeded.Specifying the purchasing requirements in output terms so that suppliers can recommend cost-effective and innovative solutions to meet the needs.Sharpen your approach to NEGOTIATION to get a good deal from suppliers.Cut of the mediators and reach the direct suppliers.Optimizing the cost of delivering a service or goods over the full life of the contract rather than minimizing the initial price.aggregating transactions to obtain volume discounts.Collaborating with other Companies to obtain the best prices and secure better discounts from bulk buying. Developing a more effective working relationship with key suppliers to allow both departments and suppliers to get maximum value from the assignment by identifying opportunities to reduce costs and adopt innovative approaches.Reducing the cost of buying goods or services by streamlining procurement and finance processes.Reducing the level of stocks held.


Procurement System

Key Principles To Follow:Adopt a strategic approach to procurement;Make appropriate use of TechnologyManage procurement risks;Develop contract strategies and manage supplier relationships;Develop partnerships and longer term collaboration with suppliers when appropriate;Ensure there is reliable procurement financial management information;Measure and evaluate procurement performance.


Procurement System

Competitive Procurement Policy

Goods and services should be acquired by competition, unless there are convincing reasons to the contrary. The form of competition should be appropriate to the value and complexity of the procurement; suppliers should be given equal opportunities to participate.


Procurement System

Key information on suppliers’ performance & Prices

Procurement units advise end users on procurement methods & contracts & appoint suppliers

End users identify demand for goods and services and manage and evaluate suppliers’ performance

Suppliers provide goods & services

Typical Stages in Competitive Procurement


Procurement System

The Conclusion!

Regard Procurement as a SYSTEM rather than a department. Consider the whole life cost (WLC) in procurement process rather than the initial price. Get Better value for money (VFM) invested in procurement.


Procurement System

Procurement SystemWLCVFMInfodat Training & Business Development Center


Procurement System

Procurement

S.W.VOutsource for Purchasing & Supply Systems Training Center


Procurement System

How can we Serve Procurement System

Establish & Develop New procurement Divisions & Entities.Run Researches & Studies in particular procurement Issues.Train Initiators & BuyersManage group discussion & Seminars for Procurement Authors.Audit, Evaluate Procurement Entities Performance and Advise.


Procurement System

For More

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Outsource for Purchasing & Supply Systems Training Center

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outsource for purchasing & supply system training center

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life cost

initial price