THE PROCUREMENT PROCESS
THE PROCUREMENT PROCESS
Discuss the strategic issues in a large multisite company with a single corporate centralized purchasing department versus a decentralized multiple sites purchasing group.
GSCM440 Supply Chain Procurement Management & Global Sourcing
Week 2 Discussion
Objectives of Supply Management
What type of supply management structure is required for a company that has two separate locations in one industrial park located two blocks apart, compared to a company that has locations in two cities?
GSCM440 Supply Chain Procurement Management & Global Sourcing
Week 3 Discussion
MAKE VERSUS BUY
In terms of quality, what are the most common reasons for deciding to make something versus buying the item? When would you buy something instead of making it?
GSCM440 Supply Chain Procurement Management & Global Sourcing
Week 4 Discussion
FUNCTIONS OF INVENTORY ON QUANTITY
What are the functions and forms of inventory? What are the operational advantages and disadvantages of each one? How does this impact quantity?
GSCM440 Supply Chain Procurement Management & Global Sourcing
Week 5 Discussion
COST MANAGEMENT TECHNIQUES
What is meant by cost management? How do we go about validating and using this process? Explain your answer.
GSCM440 Supply Chain Procurement Management & Global Sourcing
Week 6 Discussion
SUCCESSFUL GLOBAL SOURCING
Discuss the behavioral and cultural issues that a purchasing agent needs to be aware of in order to ensure a successful global sourcing program. Explain how best to manage these issues.
GSCM440 Supply Chain Procurement Management & Global Sourcing
Week 7 Discussion
ETHICAL BEHAVIOR OF PROCUREMENT PROFESSIONALS
What should a buyer consider to make certain that he or she is not exposing his or her company to excessive legal risks?
GSCM440 Supply Chain Procurement Management & Global Sourcing
Week 2 Homework
Week 2: HW 2 Paper outlining procurement alternatives for different organizational structures. What are the alternatives for different sizes, types of organizations?
Week Two Paper Deliverable – Detail Strive for 500 Words
Format is as follows:
Background Information about the Subject matter. What are some different types of organizations?
Body of Paper – Detailed explanation of the types of organizations? What procurement alternatives fit for different size and organization types.
Summary or Conclusion – Summarize your thoughts and findings
Chapter 3 and 4
GSCM440 Supply Chain Procurement Management & Global Sourcing
Week 4 Homework
Week 4 HW Paper on technologies needed to support procurement and supply chain
Week Four Paper Deliverable – Detail Strive for 500 Words
Format is as follows:
Background Information about the Subject matter. Technologies that support the Supply Chain.
Body of Paper – Detailed explanation of the types of technologies their description of use.
There are many technologies that automate choose three major ones. Examples could be but are not limited to the internet, tracking software, RFID etc. Also discuss Buy versus Build trends. Discuss the criteria that would force you to Make the solution.
Summary or Conclusion – Summarize your thoughts and findings
Chapter 8 and 9
GSCM440 Supply Chain Procurement Management & Global Sourcing
Week 5 Homework
Week 5 HW Develop a Vendor Questionnaire and supporting document that supports the following:
Format Brief Background in a word document then build the Questionnaire. (Strive for 200 words in the document)
Summarize the value and content of the Questionnaire.
Week 5: Paper with a questionnaire on vendors/suppliers quality qualifications. List out the questions and criteria that a prospective Vendor must meet in order to engage in business.
Deliverables – Brief Paper with Background and Summary
Populated Questionnaire
Readings Chap 11 and 12
GSCM440 Supply Chain Procurement Management & Global Sourcing
Week 3 Quiz
Question 1 What kinds of decisions does a typical supply manager make?
Strategic
operational
both A and B
No answer text provided.
Question 2 Differentiate between purchasing, procurement, materials management, logistics, supply management, and supply chain management.
Question 3 How can the expectations of supply differ for private versus public organizations?
Private organizations are not out to make a profit,
Public organization are profit driven
public organization support maintenance of facilities and
Question 4 What role can (should) supply play in determining a firm’s strategy in the area of social issues and trends?
Question 5 What are the levels of a Strategic Plan
Corporate, Business Unit, Function
Quality Management
Managing Inventory
Question 6 What are the challenges faced by a supply manager working in a highly centralized structure? In a highly decentralized structure?
Question 7 What are some advantages of centralization of your supply structure?
Strategic focus
Lack of business unit focus
excessive cost
No answer text provided.
Question 8 What are examples of steps in a robust supply management process?
Large number of items
Need for an Audit Trail
recognition of need
A and B correct
Question 9 When would you issue an RFQ rather than an RFP and why?
RFQ has a clear description of need
RFP is more complex
RFQ is more standardized
all of the above
Question 10 What should be considered before switching from an existing EDI system to a Web-based system?
GSCM440 Supply Chain Procurement Management & Global Sourcing
Week 6 Quiz
Question 1Why should an organization switch from making to buying?
Make is typical less expensive,
make is faster implementation
buy is faster implementation and often has been tested
No answer text provided.
Question 2What is outsourcing?
keeping the function in house
going outside to have another firm support the process
is a core competence
No answer text provided.
Question 3Why would an organization outsource its logistics?
Better pricing
utilize expertise in the field,
both A and B
No answer text provided.
Question 4How could a quality philosophy be applied to a supply department?
Question 5Why was Deming so insistent on single sourcing?
Question 6What does it mean if a supplier is ISO 9000 certified? ISO 14000 certified?
Certified internationally
respect of potential vendors
no value to supplier
both A and B
Question 7Why is it expensive to carry inventories?
inventory is not wasteful
inventory does not take up physical space
Inventory carries a cost of holding expense
Question 8 What is a Kanban and why is it used?
A card to give direction to pull materials through the system
Inventory
a manufacturing plan
No answer text provided.
Question 9 What is JIT?
A sign or light to provide direction
An inventory method the relies on forecasting to lower inventory levels
a Quality management certification correct
No answer text provided.
Question 10Why is the make or buy decision considered strategic?
Strategic is short term,
make or buy has no impact on the bottom line
Make or buy can be long term and impact the companies bottom line in both the near term and longer term
No answer text provided.
GSCM440 Supply Chain Procurement Management & Global Sourcing
COURSE PROJECT
Course Project: Sourcing Report
Objectives
The purpose of the Course Project is to enable a student to use the knowledge from the course to develop a full procurement model and supply chain strategy called a Sourcing Report. This report will contain all of the information that a Buyer would need in order to intelligently purchase a specific component. In selecting and presenting this data, you will assemble the recommendation about the source of supply and the cost to the company. Given a situation as described below, solicit a quote, evaluate technical abilities and the suppliers’ management team, negotiate the commercial terms, and enforce ethical policies. From this data, you will prepare a sourcing recommendation. There are elements of this project that require analysis and application of chapter materials in order to complete. There may be research required based upon student knowledge of the process, and you must cite your sources where appropriate.
Course Project – Overview
The Course Project will cover a fictitious component part known as a Hydraulic Cylinder Assembly End Block on the path to being released.
Purchasing as a BUY part to select, evaluate and decide on the source of supply for the company.
The company requires you to have the part made to print and in inventory at our factory in 100 days at production volumes. A timeline of activities is necessary for you to be able to track progress against and ensure that the correct processes are followed by you and the Supplier. You will categorize this part, find possible sources of supply in Juarez, Mexico to evaluate the suppliers you find, submit the specifications, and take a bid. You will evaluate the bid, negotiate the price, establish quality standards, pilot, build the part, and submit samples to the internal quality group for confirmation. Then, you may award the business, start production, and determine the mode of transportation, ensure regulatory compliance with import, and have inventory in place by Day 95 of the 100-day task.
The estimated usage for this part is 20,000 units per year. Cost Management has given you a budgeted target price based upon known elements of steel type and price per pound, the perceived standard machine shop processes and tolerances and clear zinc plating process, typical machinery, labor, and profit totaling a purchase price of $9.75 USD each. This spend is worth $195,000. Your approval level is $50,000, requiring you to present your sourcing decision to the vice president of procurement in order to place the business. You must present a case to the Vice President that supports your decision to work with a given supplier and why.
Grading Rubric
The Grading Rubric is in the Files section of the Course Menu. Print or refer to is as needed.
Best Practices
Start in Week 2 after you have read Chapters 3 and 4, and read through the lectures.
Work on this every week, one entire section at a time.You will want to work ahead. This paper will take you 5 or more weeks to complete.
You will need to be creative and fill in the blanks. It is okay to pretend and make up the company names, quotations, scorecards, and whatever else you will need to make the recommendation to the company.
It is expected that you might not have any experience or familiarity with this activity. This is meant to be fun, informative, and challenging. This will take you through the book and the lectures for information. You may want to share ideas with each other. Just remember, weekly progress is a necessity, but there is only ONE final submission in Week 8.
Build it as you go!
Guidelines
The content of the Sourcing Report should be divided into the sections corresponding to the Report Components shown below.
Title Page
Executive Summary
Note: Not to exceed 1 page single-spaced, 12-point font
Student is to realize that the bottom line is what the executive team is looking for. Their expectation from you is that you did your due diligence.
In the summary, you will explain the:
STRATEGIC FIT – Quality-Cost and Delivery
How this decision helps us achieve current CORPORATE OBJECTIVES
Allows us to meet BUDGET and MARGIN requirements
Any Critical Data and a Final Recommendation
Note now of any known issues that can impact the company in the future.
Milestone and Timeline of Activities
Internal
External
Sources of Supply
Outline an interview of prospective suppliers, including activities that will lead to a good decision.
Check References
– Understand testimonials.
Visit plants and distribution centers to access their true capabilities.
Review their Quality Standards.
Access Management Skills and Experience.
Review Basic Financials.
Review Quality Programs.
Review their Operations and Technology.
Supplier Evaluation Criteria and Scoring Matrix (Develop this as a table.)
Capability- Machinery, Labor, Knowledge
Financial Standing- Capacity and Hours of Operation
Location of Transportation and Labor to Facility
Testing Capabilities
Storage – Warehouse
Quote Submission
Your Quote Format can be fictitious, but it must include several elements.
Spec
Volume
Terms and Conditions
Confidentiality
Title Transfer
Warranty
Target Price (if you chose to share this)
Dates
Due Date of Quote
Due Date of Samples
Production Shipping Deadline
Date of Production
Supplier Quote should contain all of the above, plus
Price
Discounts
Packaging
Any Other Terms and Conditions
Lead Times
Production Lot Size and Quantity Breaks
Any Special Handling Needed
Supplier Selection and Product Acquisition
Completeness of Quality, Cost, and Delivery
Certifications and Practices
Agreements on Price of Cost Adjustments due to Raw Materials and Currency
Preliminary Award
Must Produce Sample Parts off of a Production Process
Submit Parts to the Buyer’s Company Quality Group for Validation of Specification
Notify the Vendor of any Non-Conformities if They Exist (up to the Student to Pursue)
Action Plan if There are Non-Conformities
Award the Business
Finalize Transportation and Packaging
Finalize Import Legal Documentation
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