...PROCUREMENT DOMESTICALLY AND INTERNATIONALLY The case of companies A and B Francesca Xiaoying Zhang Bachelor’s thesis May 2012 Degree Programme in International Business Options of Supply Chain Management and Financial Management 2 ABSTRACT Tampereen ammattikorkeakoulu Tampere University of Applied Sciences Degree Programme in International Business Options of Supply Chain Management and Financial Management AUTHOR: Francesca Xiaoying Zhang Title of thesis: Procurement Domestically and Internationally The Case of Companies A and B Bachelor's thesis 45 pages, May 2012 This thesis aims to compare domestic and international procurement operations & business systems in company A and B. Company A is a multinational overseas company with domestic procurement and sales in China. Company B is a Finnish company with international procurement from Far East and sales in Nordic countries. Procurement is directly linked to business or organizations’ ability to deliver value in the market place. It is increasingly recognized by managers as a key business driver. Procurement decisions fundamentally affect business success because costs on purchased parts and services represent more than half of the sales revenues of most companies today. Companies having contacts of globally distributed supply base, are not necessarily limited to domestic purchase, moreover they can purchase internationally. Conducting and managing international procurement is more complex than undertaking domestic...
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...automation of the procurement process • Increased production flexibility by ensuring delivery of parts “just-in-time” • Improved quality of products due to increased cooperation among buyers and sellers, reducing quality issues • Decreased product cycle time due to the sharing of designs and production schedules with suppliers 4. Name and define the two distinct types of procurements firms make. Explain the difference between the two. The two types of procurements that firms make are for direct goods and indirect goods. Direct goods are directly involved in the production process such as the sheet steel used to produce an automobile body. Indirect goods are all other goods that are needed to carry out the production process, but are not directly involved in creating the end product. They include office supplies and maintenance products, which are often called MRO (maintenance, repair and operations) goods. 5. Name and define the two methods of purchasing goods. The two methods of purchasing goods are contract purchases and spot purchases. Contract purchases are long-term agreements to buy a specified amount of a product. There are pre-specified quality requirements and pre-specified terms. Spot purchases are for goods that meet the immediate needs of a firm. Indirect purchases are most often made on a spot purchase basis in a large marketplace that includes many suppliers. 6. Define the term supply chain and explain what SCM systems attempt to do. What does supply chain...
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...Case 4 The ARMS Procurement System at Tustin State University1 Christina Abrams angrily pushed the purchasing audit reports to the back of her desk. As director of purchasing for Tustin State University’s purchasing department, she knew she could not avoid studying the reports. But for a moment she needed to cool off before she had a meltdown. Walking across the campus, she remembered how, for the past two years, the consultants told her that the new Administrative Resource Management System (ARMS) procurement system would solve her procurement concerns. The ARMS procurement system went live at the beginning of May 2009. Since then, many problems have come to light from the various departments using the system. BACKGROUND With the start of the year in 2006, three administrative managers pulled together to work on improving the computer information system used by the university. The existing system was cumbersome and inaccurate. A new computerized information technology–based system was expected to reduce a significant number of errors in the process. It was decided that a supplier would be chosen through the competitive bidding process. Peoplesoft was awarded the contract to implement the new purchasing information system. Shortly after the human resources department implemented ARMS, the TSU purchasing department analyzed its computer systems. The purchasing department discovered that it was using at least seven different ways to purchase items. Purchasing realized...
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...history. • Explain the procurement process, the supply chain, and collaborative commerce. • Identify the main types of B2B commerce: Net marketplaces and private industrial networks. • Explain the four types of Net marketplaces. • Identify the major trends in the development of Net marketplaces. • Identify the role of private industrial networks in transforming the supply chain. • Explain the role of private industrial networks in supporting collaborative commerce. Key Terms total inter-firm trade, p. 770 B2B commerce, p. 770 Internet-based B2B commerce (B2B e-commerce), p. 771 automated order entry systems, p. 771 seller-side solutions, p. 771 electronic data interchange (EDI), p. 772 buyer-side solutions, p. 772 hub-and-spoke system, p. 772 vertical market, p. 772 horizontal markets, p. 772 B2B electronic storefronts, p. 772 Net marketplace, p. 772 private industrial networks, p. 773 procurement process, p. 775 supply chain, p. 775 direct goods, p. 776 indirect goods, p. 776 MRO goods, p. 776 contract purchasing, p. 776 spot purchasing, p. 776 multi-tier supply chain, p. 777 legacy computer systems, p. 778 materials requirement planning (MRP) system, p. 778 enterprise resource planning (ERP) system, p. 778 supply chain management (SCM), p. 779 tight coupling, p. 779 supply chain management (SCM) systems, p. 782 collaborative commerce, p. 783 e-distributor, p. 790 e-procurement Net marketplaces, p. 791 value...
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...Conducting and Closing Procurements NAME;BRIAN TONY Institution; USIU Conducting and Closing Procurements Introduction For any project to be implemented, goods and services must be availed to be utilized. This is achieved through procurement whereby interested external suppliers are contracted to provide the goods and services needed. The procurement process ought to be planned in order to establish a formal and working relationship with the external suppliers. At the end of a project the procurement has to be closed and the formal relationship with the external supplier for that project then ends. Project procurement has a number of processes including planning and research, conducting the procurement, administration of the procurement and closing the procurement. Each of these components has a role in the success of the procurement process. (Sanghera, 2014) High-level process steps for conducting project procurements The process of conducting project procurements incudes an exercise whereby responses are obtained from sellers, selection of a seller who the project finds suitable and awarding the contract to this seller. This process involves utilization of various inputs, tools and techniques to obtain desirable output. The process of conducting project procurement is multistep and the process includes five major steps as follows: Specification is the first step whereby a decision is made on which products required...
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...1. Discuss the concepts of centralized vs. decentralized purchasing authority, identify their relative advantages and disadvantages, and provide examples of when each may be appropriate. | | Centralized authority occurs when the supply management decision-making authority is the responsibility of a single person who is held accountable by top management for the proper performance of all purchasing activities. In a single-site operation, centralization of the purchasing function is necessary in order to attain both operating efficiency and to maximize profit. Some advantages of centralized purchasing include: ***Reduction of potential duplication of effort. ***Leveraging of volume purchases: The potential for volume discounts exists when all of the firm's orders for the same and similar materials are consolidated. ***Consolidation: With consolidation, the opportunity to standard and simplify parts is gained. ***Decrease in transportation costs: With the consolidation of orders and delivery schedules, money can be saved. ***Specialization: Purchasing specialists buy more efficiently than less trained individuals. ***Reduction of suppliers' costs: With consolidation, suppliers have fewer expenses (less shipments, less calls, less orders) and can offer better prices and better service due to the reduction. ***Improved inventory control: Because of company-wide knowledge of stock levels, material usage, lead times and prices, it is possible to have more effective inventory control...
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...Chapter Four Review Notes 1. Discuss the real value of marketing research and marketing information and how that value is attained. The real value of marketing research and marketing information lies in how it is used—in the customer insights that it provides. Based on such thinking, many companies are now restructuring and renaming their marketing research and information functions. They are creating “customer insights teams,” headed by a vice president of customer insights and made up of representatives from all of the firm’s functional areas. For example, the head of marketing research at Kraft Foods is called the director of consumer insights and strategy. Customer insights groups collect customer and market information from a wide variety of sources—ranging from traditional marketing research studies to mingling with and observing consumers to monitoring consumer online conversations about the company and its products. Then, they use the marketing information to develop important customer insights from which the company can create more value for its customers. 2. Discuss the sources of internal data and the advantages and disadvantages associated with this data. Internal databases are electronic collections of consumer and market information obtained from data sources within the company network. Information can come from many sources. For example, information on customer transactions, demographics, psychographics, and buying behavior can come from the...
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...E-procurement: Government, Private and Commercial Abstract With the rapid and emerging growth of technology, coupled with globalization and competitive market place, most businesses are re-modifying the way they transact business. Few decades ago a lot of companies went through their daily business manually. The use of manual procurement invoice, ordering, payments, catalogues, and requisitions was the order of the day. Times have changed and improved technology has changed the way businesses function. Many businesses have turned to electronic procurement (e-procurement) in the purchasing and supply of goods and services. In as much as there are many advantages ranging from cost saving, time saving and effectiveness, e-procurement also has it disadvantages; high cost of implementation and lack of readiness. More importantly a lot of businesses are not only concerned about cost saving advantage of e-procurement but also achieving high level of customer satisfaction through CRM. Electronic data interchange (EDI) enables the transfer and sharing of data and other forms of information electronically. This research paper will analyze the need for e-procurement, the IT tools and system involved, the advantages and disadvantages of e-procurement, factors inhibiting and supporting e-procurement. Questions such as: will e-procurement add value to my business? does it worth investing in? What IT tools, system and software...
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...1.What is the concept of procurement in the context of the public sector? Investopedia.com defines procurement as the act of purchasing. In the public sector, procurement is the acquisition of products and services on behalf of the government (2016). The Office of Federal Procurement Policy (OFFP), which was created by congress in 1974 to guide government-wide procurement policies to promote efficiency and effectiveness in the acquisition process. The OFFP states that it is very important for the government to ensure that it spends money wisely and eliminates waste and abuse of taxpayers’ dollars (OFFP, 2016). 2.What differentiates the concept of procurement in both the private and public sectors? Why is public sector procurement different from private sector procurement? Corporate procurement in the private sector can be a “complex and lengthy process”. Therefore, many major corporations hire a Chief Procurement Officer to deal with all major acquisitions for the company (Investopedia). The main difference between public and private procurement is that in the private sector they have a more flexible budget for the acquisition of products and services, whereas in the public sector the budget is limited due to the OFFP, which ensures that the government spend taxpayers’ dollars wisely. Rocheleau, states that if an organization agrees to purchase from outside vendors; they must request an RFP or related mechanisms to obtain detailed bids. Some of the approaches detailed...
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...1. PROCUREMENT • Review and understand the flow of activities in the Procurement department to get an overall understanding of the various stages and procedures involved in the purchase of goods and services. • Review the structure / organisation of the Procurement department. Inquire whether duties and vendors are rotated periodically among purchasing staff. • Enquire if standard purchase orders are used to order all goods from vendors. • Review the procedure for issuance of Purchase Orders (P.O.). Inquire if in addition to a P.O., there is also a written agreement with the vendors. If so, review the same for salient terms and conditions. • Is authorisation to issue or amend Purchase Orders given in writing, or electronically with password restrictions. • Ensure whether system user profiles and access rights are used to ensure that only authorised individuals have access to purchase orders. • Review the process of negotiation for contracts. Check whether tenders are invited, evaluated and that the most competitive tender was accepted. In cases where the most competitive has not been accepted, inquire into the reasons. Ensure the reasons are documented and have been duly approved by the Site Procurement Head. • Select a sample of atleast 50 Purchase Orders (P.O.’s) covering the purchase of: Major Raw Materials sourced by the site. Major Packing Materials Capital Assets Services (e.g. Transportation, AMC’s, etc.) • For the sample selected...
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...17 January 1984 PANEL ON VALUE-ADDED TAX AND THRESHOLD Report of the Panel adopted by the Committee on Government Procurement on 16 May 1984 (GPR/21 - 31S/247) I. INTRODUCTION 1. At the request of the United States delegation the Committee on Government Procurement established the Panel under Article VII:7 of the Agreement on Government Procurement, on 23 February 1983, with the following terms of reference: "To examine, in the light of the relevant provisions of this Agreement the matter referred to the Committee by the United States in GPR/Spec/18; to consult regularly with the parties to the dispute and give full opportunity for them to develop a mutually satisfactory solution; and to make a statement concerning the facts of the matter as they relate to application of the Agreement and make such findings as will assist the Committee in making recommendations or giving rulings on the matter." (GPR/M/7, paragraph 67). The composition of the Panel was as follows: Chairman: Members: Mr. K. Berger Mr. E. Contestabile Mr. S. Sivam 2. The Panel met on 27 April, 1 June, 13 July, 15 September, 5 and 31 October, 24, 29 and 30 November and 6 December 1983. 3. In the course of its work the Panel consulted with the delegations of the European Economic Community and the United States. Arguments and relevant information submitted by the parties, replies to questions put by the Panel as well as all relevant Committee documentation formed the basis for ...
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...12 Introducing Project Procurement Management 2 Chapter 12: Introducing Project Procurement Management P rojects routinely require procurements. Projects need materials, equipment, consultants, training, and many other goods and services. Project procurement management is the process of purchasing the products necessary for meeting the needs of the project scope. Procurement management involves planning, soliciting sources, choosing a source, administering the contract, and closing out the contract. Procurement management, as far as your PMP exam is considered, focuses on the practices from the buyer’s pointof-view, not the seller’s. The seller can be seen as a contractor, subcontractor, vendor, or supplier. When buying anything from a vendor, the buyer needs a contract. A contract becomes a key input to many of the processes within the project. The contract, above anything else, specifies the rules and agreements for the project. Here’s a neat twist: when the seller is completing its obligations to supply a product, PMI treats those obligations as a project. In other words, if ABC Electricians were wiring a building for your company, ABC Electricians would be the performing organization completing its own project. Your company becomes the customer of their project—and is, of course, a stakeholder in their project. In the scenarios described in this chapter, the seller will be outside of the performing organization. The buyer will be managing a project and procuring...
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...implies that a firm is more efficient at aligning resources with outputs than is the market. As Harold Demsetz (1983) observes, “it is a mistake to confuse the firm of economic theory with its real world namesake. The chief mission of neoclassical economics is to understand how the price system coordinates the use of resources, not the inner workings of real firms.” Similar to Coasian economics, procurement can be arranged through the market and regulated by the price mechanism with all of its attendant hidden costs to the procurement official, or the exchange transactions of procurement can be vertically integrated and ordered through the firm in a hierarchy where purchasing is integrated with the needs for the same products by other principals (and as we shall see, their agents). This theory is relevant in decision making process among the FOs which eventually affect the effectiveness of the IPP of the...
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...Study Guide for Chapter 4: 1. Which of the following are considered outcomes of implementing a supplier evaluation and selection criteria? |a. |Allows firm to screen out poor performing suppliers in its present supplier base. | |b. |Allows firm to screen out undesirable suppliers that they may be considering for future purchases. | |c. |Allows firm and its suppliers to develop a better corporate relationship | |d. |All of these | 2. An outsourcing program can result in all of the following positive outcomes, except: |a. |Reducing staffing levels | |b. |Decreased need for supplier management | |c. |Cost reduction | |d. |Gains in manufacturing flexibility | 3. According to the textbook, collaborative relationships place a relatively lower importance rating on which of the following competitive priorities: |a. |Speed of Delivery ...
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...Understand how business and consumer purchase transactions differ 2 1.1 Describe the purchasing process used in b2b and b2c 2 1.2 Explain how use of professional buyers affects the buying process 3 1.3 Analyze variables in purchasing 5 2 Understand EDI and Electronic transactions 6 2.1 Explain how electronic transactions can reduce paperwork and delay 6 2.2 Examine how EDI has developed and laid the foundations for b2b e-business 7 2.3 Evaluate the use of different Electronic Payment Systems 8 3 Be able to demonstrate the benefits of electronic transactions to supply chain management 10 3.1 Create a diagram for an e-business supply chain 10 3.2 Write a report on the advantages of e-procurement 11 3.3 Present an analysis on the flow of information in a typical logistics operation 13 3.4 Demonstrate the benefits of electronic processes in integration of supply chain management 14 4 Understand issues in e-business including quality recruitment and security decisions in an organization 15 4.1 Explain how the issues of trust and security apply to supply chain management and other e-business operations. 15 4.2 Evaluate how the internet can be used for communication with prospective/current employees 18 4.3 Assess the issue of quality for an e-business 19 4.4 Review the development of the internet technologies on b2b industry networks and b2c markets 21 References 22 1 Understand how business and consumer purchase transactions differ 1.1 Describe...
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