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Procurement summary
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ProcurementProcurement
Semester 2
Table of Contents
1. Procurement management.............................................................................................4
Strategic – tactical – operational procurement.............................................................................4
Economic sectors..........................................................................................................................4
B2B vs B2C....................................................................................................................................5
.....................................................................................................................................................5
Porter value chain model.............................................................................................................6
Importance of procurement.........................................................................................................6
Difference between role & function.............................................................................................6
Decision making unit (DMU).........................................................................................................7
2. Type of Goods & Types of Procurement.........................................................................8
Difference between services & goods...........................................................................................8
Direct vs indirect spend................................................................................................................9
Procurement categories.............................................................................................................10
Category managers.....................................................................................................................10
OEM/IAM...................................................................................................................................10
Capex vs Opex............................................................................................................................10
Calculate return of an investment..............................................................................................11
3. Procurement process...................................................................................................11
Stakeholders...............................................................................................................................11
Selection process........................................................................................................................12
Types of agreements..................................................................................................................12
Purchase order...........................................................................................................................13
MOQ...........................................................................................................................................13
MOV...........................................................................................................................................13
Purchase order cost....................................................................................................................13
Stock replenishment...................................................................................................................13
Economic order quantity (EOQ)..................................................................................................13
Call-off contract..........................................................................................................................13
Deliveries....................................................................................................................................13
Distributor..................................................................................................................................14
Backorder...................................................................................................................................14
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, Procurement
Escalation..................................................................................................................................14
4. tasks of buyer/purchaser..............................................................................................14
Difference between tactical & operational procurement............................................................14
Distributor..................................................................................................................................15
Category management...............................................................................................................15
5. Group purchasing organizations..................................................................................16
3 types of GPO’s.........................................................................................................................16
Vertical market.............................................................................................................................................16
Horizontal market.........................................................................................................................................17
Master buyer................................................................................................................................................17
Pro/cons of a GPO model...........................................................................................................18
Buyer power vs. supplier power.................................................................................................18
6. strategic sourcing.........................................................................................................19
Strategic sourcing.......................................................................................................................19
Outsourcing................................................................................................................................19
Offshoring:..................................................................................................................................20
Onshoring:..................................................................................................................................20
Nearshoring:...............................................................................................................................20
7. Portfolio analysis and toolkits.......................................................................................21
Peter Kraljjc Portfolio Matrix......................................................................................................21
Pareto analysis...........................................................................................................................22
Day One Analysis........................................................................................................................23
Pestel Analysis............................................................................................................................24
Which analysis for what.............................................................................................................24
8. Pricing..........................................................................................................................24
2 different points of view...........................................................................................................24
Common pricing models.............................................................................................................25
Volume pricing..............................................................................................................................................25
Graduated pricing (tiered)............................................................................................................................25
Dynamic pricing............................................................................................................................................25
Difference between volume pricing & graduated pricing............................................................................26
Discount types............................................................................................................................26
Quantity discount.........................................................................................................................................26
Preferred customer discount........................................................................................................................26
Special/other discounts................................................................................................................................26
10. contract management................................................................................................27
introduction................................................................................................................................27
Contract management: definition...............................................................................................27
Stages of contract management.................................................................................................27
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Software & AI possibilities..........................................................................................................28
Legal terms & conditions............................................................................................................28
Terms and conditions.................................................................................................................29
11. SLA (service level agreement).....................................................................................29
Purpose......................................................................................................................................29
Typical domains for SLA..............................................................................................................30
SLA contents: 4 information groups............................................................................................30
General..........................................................................................................................................................30
Service elements...........................................................................................................................................30
Management elements.................................................................................................................................30
Additional details..........................................................................................................................................31
Service level management cycle – 2 cycles.................................................................................31
12. Supplier relationship management.............................................................................31
Definition...................................................................................................................................31
Relationships..............................................................................................................................32
Supplier segmentation................................................................................................................32
Segmentation 1.............................................................................................................................................32
Segmentation 2: supplier segmentation......................................................................................................33
13. E-procurement............................................................................................................35
Business trends...........................................................................................................................35
E-procurement...........................................................................................................................35
e-business.....................................................................................................................................................35
e-commerce..................................................................................................................................................36
E-procurement...........................................................................................................................36
Example of E-procurement.........................................................................................................37
........................................................................................................................................38
E-transacting...............................................................................................................................39
e-sourcing.....................................................................................................................................................39
e-tendering...................................................................................................................................................39
e- reserve auction.........................................................................................................................................39
e-payment (self biliing/e-invoicing)..............................................................................................................40
e-ordering.....................................................................................................................................................40
Web-based ERP.............................................................................................................................................41
Blockchain..................................................................................................................................41
Blockchain (technically)................................................................................................................................41
Blockchain usage...........................................................................................................................................42
Blockchain: application during bidding & contracting..................................................................................42
Blockchain: application during logistics........................................................................................................42
Blockchain: application for finance & accounting........................................................................................42
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, Procurement
1. Procurement management
Procurement= broader context including the strategical elements including sources, supplier
management etc. it’s the process of finding an acquiring all of the goods, services, and
works an organization needs to operate and fulfill its business model.
Strategic – tactical – operational procurement
Strategic level= long term decision frequency: quarters- years trends: digitalization
Activities:
- supplier score carding
- Strategic sourcing
- Network redesign
- Long-range planning
Tactical level= medium term decisions frequency: days-months trends: E-tools
Activities:
- Negotiation
- Trend detection
- Predictive analysis
- Tracking activities to plan
Operational level= day-to-day operations frequency: minutes – days trends:
automation
Activities:
- Exception detection
- Notification & resolution
- Shop floor control (expediting, invoice, clearance, returns)
Economic sectors
Primary sector:
-Extracts/harvest products from the earth such as raw materials and basic foods.
-not only the site of production but also natural resources above or below the soil
-it tends to make up a larger portion of the economy in developing countries than it does in
developed countries.
-in developed countries the primary sector has become more technologically advanced, enabling
mechanization for example.
Examples: mining, fishing, mineral extraction, forestry, agriculture
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