Procurement

Procurement is the acquisition of goods and/or services at the best possible total
cost of
ownership, in the right quantity and quality, at the right time, in the right place
for the
direct benefit or use of governments, corporations, or individuals, generally via a
contract.[citation needed

]Simple procurement may involve nothing more than repeat

purchasing. Complex procurement could involve finding long term partners – or
even 'co-
destiny' suppliers that might fundamentally commit one organization to another.
Contents
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1 Overview
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2 Procurement: Topics
o

2.1 Acquisition Process

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2.2 Procurement systems

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2.3 Shared services

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2.4 Procurement process

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2.5 Procurement steps

Overview
Almost all purchasing decisions include factors like delivery and handling, marginal
benefit, and price fluctuations. Procurement generally involves making buying decisions
under conditions ofscarc it y. If good data is available it is good practice to make use of
economic analysis methods such as cost-benefit analysis or cost-utility analysis.
An important distinction is between analyses made withoutrisk and those with risk.
Where risk is involved, either in the costs or the benefits, the concept of expected value
may be employed.
Based on the consumption purposes of the acquired goods and services, procurement
activities are often split into two distinct categories. The first category being direct,
production-related procurement and the second being indirect, non-production-related
procurement.
Direct procurement occurs in manufacturing settings only. It encompasses all items that
are part of finished products, such as raw material, components and parts. Direct
procurement, which is the focus in supply chain management, directly affects the
production process of manufacturing firms. In contrast, indirect procurement activities
concern “operating resources” that a company purchases to enable its operations. It
comprises a wide variety of goods and services, from standardised low value items like
office supplies and machinelubricants to complex and costly products and services like
heavyequip ment and consulting services.
Procurement: Topics
Acquisition Process
The revised acquisition process for major systems in industry and defense is shown in the
next figure. The process is defined by a series of phases during which technology is
defined and matured into viable concepts, which are subsequently developed and readied
for production, after which the systems produced are supported in the field.
Model of the Acquisition Process.
The process allows for a given system to enter the process at any of the development
phases. For example, a system using unproven technology would enter at the beginning
stages of the process and would proceed through a lengthy period of technology
maturation, while a system based on mature and proven technologies might enter directly
into engineering development or, conceivably, even production. The process itself
includes four phases of development:
1) Concept and Technology Development: is intended to explore alternative
concepts based on assessments of operational needs, technology readiness, risk,
and affordability.
2) Concept and Technology Development phase begins with concept exploration. During
this stage, concept studies are undertaken to define alternative concepts and to provide
information about capability and risk that would permit an objective comparison of
competing concepts.
3) System Development and Demonstration phase. This phase could be entered directly as
a result of a technological opportunity and urgent user need, as well as having come
through concept and technology development.
4) The last, and longest, phase is the Sustainment and Disposal phase of the program.
During this phase all necessary activities are accomplished to maintain and sustain the
system in the field in the most cost-effective manner possible.
Procurement systems
Another common procurement issue is the 'timing' of purchases. Just In Time is a
system
(commonly used by Japanese companies but widely adopted by many global
manufacturers from the 1990s onwards) of timing the purchases of consumables
so as to
keepinventor y costs low.
Shared services
In order to achieve greater economies of scale, an organization’s procurement functions may
be joined into shared services. This combines several small procurement agents into one
centralized procurement system.
Procurement process
Procurement may also involve abidding process i.e, Tendering. A company may
want to
purchase a given product or service. If the cost for that product/service is over
the
threshold that has been established (eg: Company X policy: "any product/service
desired
that is over $1,000 requires a bidding process"), depending on policy or legal
requirements, Company X is required to state the product/service desired and make the
contract open to the bidding process. Company X may have ten submitters that state the
cost of the product/service they are willing to provide. Then, Company X will usually
select the lowest bidder. If the lowest bidder is deemed incompetent to provide the
desired product/service, Company X will then select the submitter who has the next best
price, and is competent to provide the product/service.
Procurement steps
Procurement life cycle in modern businesses usually consists of seven steps:
1) Information Gathering: If the potential customer does not already have an
established relationship with sales/ marketing functions of suppliers of needed products and
services (P/S), it is necessary to search for suppliers who can satisfy the requirements.
2) Supplier Contact: When one or more suitable suppliers have been identified,
Requests for Quotation(RFQ), Requests for Proposals(RFP), Requests for
Information
(RFI) or Requests for Tender (RFT) may be advertised, or direct contact may be
made with the suppliers.
3) Background Review: References for product/service quality are consulted, and
any requirements for follow-up services including installation, maintenance, and
warranty are investigated. Samples of the P/S being considered may be
examined or trials undertaken.
4) Negotiation: Negotiations are undertaken, and price, availability, and
customization
Possibilities are established. Delivery schedules are negotiated and a contract to
acquire the P/S is completed.
5) Fulfillment: Supplier preparation, shipment, delivery, and payment for the P/S
are completed, based on contract terms. Installation and training may also be
included.

6) Consumption, Maintenance and Disposal: During this phase the company

evaluates the performance of the P/S and any accompanying service support, as
they are consumed.
7) Renewal: When the P/S has been consumed and/or disposed of, the contract
expires, or the product or service is to be re-ordered, company experience with the P/S is
reviewed. If the P/S is to be re-ordered, the company determines whether to consider other
suppliers or to continue with the same supplier
JOB SPECIFICATIONS & RECRUITMENT CRITERIA
JOB NAME : PURCHASING OFFICER JOB NO:
DIVISION : Adminstrative and General DEPARTMENT : Accounting
FUNCTION : Responsible for the Procurement of all requirement of the Hotel.
Report to Financial Controller
Supervise Purchasing Clerk
JOB DESCRIPTION:
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Attends Daily Morning Briefing and Weekly Department Heads Meeting.
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Attends Monthly Central Purchasing Meeting.
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Supervise, develop and trains an effective and efficient team to co-ordinate and handle the
various operational aspects of the Purchasing Department.
•
Co-ordinates with other departments concerning equipment and supplies needed.Ensure
that
goods and services are obtained from the right time and at the best and lowest price and
quality.
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Purchasing Food, Beverage, Dry Provision, Tobacco items and general and Engineering
Suppliers locally and overseas.
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Discuss with department Heads concerning new products, products substitutions, discounts
and package.
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Attends to the problems of unavailability of items, late deliveries, poor vendor service and
sudden price increases.
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Approve Purchase Requests based on quotations or bids obtained, submit to Financial
Controller
and General Manager for approval before issuing of Purchaes order.
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Prepares Purchase orders based on approved Purchase Requests and forwards to Financial
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Keeping records of Supplier history with the detailed information about previous orders, past
experiences with Supplier Service and product quality.
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Conducts interviews of candidates for the position in the purchasing department and taking
into account the Standards of personnel quality required by the Hotel.
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Conducts Department Orientation for new staff in the department.
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Appraises performance of subordinates every six months and recommends appropriate
action
based on the results of rating / performance.