A magnum opus work by Business Pointers: Procurement System

Procurement planning is about deciding what items are to be procured under which conditions.  Sometimes there is an option of procuring items required for a project by making the items internally within the organization.  Additionally, deadlines of the projects are affected by the project schedule and are needed by certain times to ensure timely completion of the project. Items must be listed, and the conditions must be set along with the important technical information.

Until recently procurement was a required, but seldom implemented and managed, component of multinational corporations.

But I must say times have changed. These days, procurement organizations are playing crucial roles in the triumph of global organizations in ways that old-fashioned purchasing managers could never have imagined. Procurement keeps costs down, manages suppliers, and introduces opportunities for innovation through market and category research which are then used to give the business a competitive edge. The procurement function has become distinguished in this competitive global environment, as companies use it to obtain supplies of vital goods and can use it to alleviate risks.


Various tasks to be covered under procurement

  • Vendor management.
  • Timelines of items to be procured.
  • Understanding business requirements.
  • Managing overheads, cost accountings.
  • Decision criteria.
  • Performance metrics.

Vendor Management
Vendor management is used to describe the roles and actions the project team and the purchasing and contracts department will take to ensure that the selected vendors provide all of the products/services agreed upon and that the appropriate levels of quality are maintained.

Problem: The system would not allow us to maintaining various vendors according to the variety of materials or product they provided and we were unable to track new vendors and the range of product variants available on the market. We also had trouble with getting up-to-date deliveries and delivery information.

BP’s Procurement System has the facility to maintain the vendor master data where you can divide your vendors into groups and classes. It also gives you the ability to create a customized vendor hierarchy. As a manager, it’s is my responsibility for managing vendors, and instead of wasting my time in managing the data, I can utilize my time in negotiation and finding better vendor in the market.




Timelines of items to be procured
Getting materials on time is a very critical part of procurement because production and inventory is completely dependent on that material.

BP’s Procurement System has the facility to track the delivery and reminders on dashboards to verify whether the delivery is being on time or late and if late. If the deliver is late, it can be used to verify how late it will be and what impacts it will cause to the production process. In order to ensure the timely delivery and high quality of products from vendors as a Procurement Manager, I met weekly with the contract and purchasing department and each vendor to discuss the progress for each procured item. The customized and auto-generated reports helped a lot in the meeting which gave us a clear idea of procurement and delivery, giving us extra time to work on other functional aspect of the department making our team more productive. The purpose of these meetings was to review all documented specifications for each product as well as to review the quality test findings.  This system has provided an opportunity to review each item’s development or the service provided in order to ensure it complies with the requirements established in the project specifications.



Understanding Business Requirements
Understanding the requirement of the business processes is the function of all managers no matter what vertical they may be a manager of. When the processes of the system are not self-integrated and it has to integrate on a manual basis, it takes a lot of effort by the manager, reducing the efficiency of the management.

BP’s Procurement System has provided the much required integration, increasing synergy between the different departments and functions which helped me feel like I was being active around the organization.



 

Contract Management
Contract administration is an imperative part of contract management. It includes those activities performed to ensure files are properly maintained and that the contractor meets the requirements of the contract with compliance.


  • Awarding contracts
  • Keep on checking it’s fulfillment
  • Keep track of expiry and it’s renewal

Phases in contract management can be categorized as:

  • Pre-contractual
  • Contracting
  • Post-contracting

This is where the BP’s Procurement System has helped our organization in minimizing the efforts along with increasing the productivity of the organization. Administrating contracts is something we used to find difficult with our self, but Business Pointers’ Procurement System has the feature of managing contracts which has the feature of tracking the contracts and giving notifications on the workbench of the system.  Renewing contracts and making


  • Tracking Previous payments
  • Scheduling Final payments
  • Proof of delivery
  • Auditing
  • Addressing Contractor claims
  • Receive the contractor performance
  • Client satisfaction
  • Ensure your file is properly documented
  • Put away your file

Managing overheads, cost accountings
Overhead: Overheads is the cost centre in the organization. An organization has to compare the overhead to the profit and try to minimize it in order to increase the profit share of the organization.

Cost Accounting: Cost accounting is what makes the organization more efficient and cost effective. It was done on manual basis, which used to make the business slow and less efficient.

BP’s Procurement System has helped me and the management in minimizing the overhead and simplifying the processes for all types of accounting and calculations. It has given us the ability to do all functions starting from raising the invoice till the credit memo. It has also provided useful in all procurement activities under this project. It gives various options for the contracts and purchasing department like firm-fixed price, time and materials (T&M), cost-reimbursable, and others. As a manager of the procurement department, I work with the project team to identify all items to be procured for the successful completion of a project.  On the basis of reports and forecasts given by BP’s Procurement System, the Project Management Office (PMO) also helps in the reviewing the procurement list prior to submitting it to the contracts and purchasing department.



Documentation
Business documentation is one in all the foremost frequent "forgotten" and underutilized a part of business improvement and analysis. Corporations usually "don't have the time" to form, publish and maintain a comprehensive set of business documentation.

In my absence, the authorization of work used to stop along with all procurement processes. I have always wanted to have some sort of authority hierarchy where I can designate the authority of performing the documentation task so that procurement and the organization doesn’t stop in the absence of manager


Some of the practices I wanted and this system gave me are:

  • Standard documentation practices
  • Structuring documentation for company-wide implementation
  • Documentation standardization and presentation
  • Maintaining documentation
  • Process Documentation
  • Documentation integration with modeling tools
  • Documentation and metrics
  • External documentation delivery
  • Documentation compartmentalization and management

Decision Criteria
In my absence, the authorization of work used to stop along with all procurement processes. I have always wanted to have some sort of authority hierarchy where I can designate someone to approve and authorize the purchase orders and requisitions for me. The procurement management plan must define the hierarchy through a set of criteria chosen by the company. This plan may also give purchase approval authority to individuals in the company.
BP’s Procurement System has defined the criteria for authorization hierarchies can be implemented in my absence and prevents the halt of the procurement process. The criteria for the selection and award of procurement contracts under this project will be based on the following decision criteria:


  • Designation of the individual
  • Current authority level of that individual
  • Cost of order to be approved
  • Priority of the requirement
  • Ability of the vendor to provide all items by the required delivery date
  • Past performance

These criteria will help the department in making decisions and continuing the procurement process even in my absence. The final decision will be made based on these criteria as well as available resources.


Performance Metrics
Without a systematic and authentic metric it is very difficult for the purchasing and contracts department to measure and evaluate any process. BP’s Procurement System has metrics established for vendor performance for project procurement activities which give the purchasing and contracts department full knowledge for measuring the performance indicator of various entities in the business. Following is just an example of vendor performance where each metric is rated on a 1-3 scale as indicated below:



Vendor Product Quality On Time
Delivery
Documentation Quality Development
Costs
Development
Time
Cost per
Unit
Vendor #1            
Vendor #2            

1 - Unsatisfactory
2 – Acceptable
3 - Excellent


In addition to rating each vendor, actual values are collected in order to build a past-performance database for selecting vendors for future procurement activities.

 
 
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