ISG Bizerte

« Denim
Authority »

Cartage University

End of studies project with a view to obtaining a diploma

in Applied License in Accounting.

Purchase management within

“Denim Authority”

Developed by: Mohamed Mezzi

Professional supervisor: Academic supervisor:
Mr. Mehdi Ben Rejeb. Mr. Nacer Selini.

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College year: 2019/2020

Thanks

This thesis is the result of 2 month work at “Denim Authority” in a very qualified team which
helped me a lot and welcomed me to carry out this project.

First of all I want to thanks God the almighty and merciful.

With great pleasure I thank my supervisor Mr. Mehdi Ben Rejeb, professor at the Higher
Institute of Management in Bizerte, for his patience and support in ensuring the completion of the
end of study project in the best conditions.

Before any development on this experience, we would like to warmly thank Mr. Hatem Daoued,
managing director for welcoming us into his company “Denim Authority”and for opening the
doors of the company to us.

We thank Mr. NacerSelinifor his welcome and the confidence he has placed in us since my
arrival in the company, the help and advice concerning the mission mentioned in this report.

We thank Mr. FayselBouhdida, responsible for purchasing procurement.

We thank Mr. Hassan, Mr. Monir, Mr. Akrem, Mr. Ousssema, and Mr. Mohamed for their
good reception and their help to finish my research.

Likewise, I express my sincere gratitude to the member of the jury for accepting to judge this
work.

My deep goes to the teachers of the ISG Bizerte who have contributed to my training and to my
colleagues who encourage me.

Special thanks to Denim Authority.

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Dedications

From the bottom of my heart, I dedicate this work to all those who are
dear to me.

To my dear parents
May this work be the expression of my gratitude for your sacrifices, your moral
and material support which you have never ceased to lavish.

You did everything for my happiness and my success.

May god preserve you in good health and grant you a long life.

To my brothers
Abdou, Youssef, Ahmed and Ayoub

Were always there to help me and encourage me to know that you will always be
in my heart.

To all my friends
Who has not ceased to encourage and support me.
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To all my teachers and those who contributed to the

success of this work

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Summary

Thanks
Dedications
General introduction
Chapter N°1: presentation of the company “Denim Authority”
I. Description of the company
1. Identity :
2. The location of "Denim Authority"
3. History of Lee Cooper Tunisia (former company name)
4. "Denim Authority" organization chart
II. Activity and customer diversification
1. Company activity
2. Costumer diversification
III. The different services
1. Management control service
2. Quality department
3. Maintenance department
4. Subcontracting
5. Service supply
6. Informatic service
7. Sales department
8. Service method
9. Financial service
10. Accounting department
11. Human resource department
IV. Tasks performed within the company
Conclusion
Chapter N° 2: purchasing management

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Section 1: purchasing management (theoretical side)

I. Meaning and definition
II. Purchasing process
1. Definition of needs
2. Finding suppliers
3. The call for tenders
3. 1: The project team
3. 2: Documents to provide
3. 3: the case of electronic tenders
4. Analisis of offers
4. 1: The quality criterion
4. 2 : The overall cost of acquisition
4. 3 : The deadline criterion
4. 4: The other criteria
5. Negotiation
5. 1 : Information gathering
5. 2 : The technical preparation of the file
5. 3 : The definition of a negotiation strategy
6. contractualization
III. The objectives of Purchasing
IV. Categories of purchases:
Conclusion
Section 2: purchasing management (practical side)
I. Problems related to this department:
1. the position of the problem: scale: from 1 to 10
2. Problem identification from a WWWWHW model:
3. Identification of the causes
4. Ranking of causes in descending order: Pareto method
II. Possible solution
1. Possible solutions for the unavailability of goods from the supplier

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1.1 Procedure to be followed in the event that the customer impose his suppliers
1.2 Procedure to be followed in the event that the company chooses its supplier
2. Possible solution for late ordering
3. Possible solutions for customs-related problems
General conclusion

List of tables

Table 1: Company management (personal work)

Table 2: Main clients (personal work)
Table 3: problem analysis
Table 4: questionnaire
Table 5: classification in decreasing order
Table 6: comparative table of supplier choice

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LIST OF FIGURES

Figure 1: company identity sheet (personal work).

Figure 2: Geographical location of the Denim Authority (personal work)
Figure 3: Denim Authority organization chart (personal work)
Figure 4: purchasing process.
Figure 5: Cause analysis diagram
Figure 6: The different stock levels

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General introduction

As a part of my studies at the « Higher Institute of Management of Bizerte (ISG Bizerte) , and as a
part of the preparation of my graduation internship (PFE) , I am required to spend a three month
internship from 03/02/2020 to 31/04/2020.

This graduation internship took place within the company “Denim Authority”. It’s a totally
exporting company. It occupies a very importing place in the textile sector in Tunisia and is
classified among the first exporting companies in all Tunisia. Denim Authority employs a large
number of people and therefore, contributes in part to solving the unemployment problem in the
area.

Like all companies in this sector, “Denim Authority” has a main objective which is carrying out a
good purchasing management to achieve a good stock management.

Purchasing management is a very important element of a production company. However achieving

satisfactory purchase management is not necessarily easy to do.

The problem that we will try to answer at the level of this project is as follows:hat is the
importance of the purchasing management in the company?

This report will be divided into 2 chapters:

 The first chapter is devoted to present “Denim Authority” company.

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This part of our work should allow us to present the company in a first section, and then we
will talk about the duties that we carried on during our traineeship.
 In the second part, we intend to present a practical case. This second chapter will be
dividing in two sections; the first one should present the theory field of our subject, and the
second part the practical case itself.

Chapter N°1: presentation of the company “Denim

Authority”

In this first chapter, we are interested in providing in a first section a presentation of the host
company through its activity and diversification, its clientele and its various services. In
addition to that, a second section will be devoted to of the different tasks carried out within the
company.

I. Description of the company

In the first section we will present its identity card, its geographical location, its history and its
organization chart.

1. Identity :
Denim Authority is one of the largest jeans development and manufacturing companies in
Tunisia. It isspecialized in different products categories, including pants, Denim and cotton
skirts.

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With more than three decades of existence, rich in an experienced and fully dedicated team,
Denim Authority offers the full range of services necessary to satisfy their partners. The
development of new products and the guarantee of a high level of quality and service are the
fundamental objectives of denim.

Here are the main information’s about the company:

Company identity card:

Legal from Public limited company

Tax registration number 003310A/A/M/000 a totally Exporting company

It is subject to the law 93-120.

Capital 3,000,000 Dinars.

The Head office Environnement boulevard Ras Djebel 7070

bizerta.

Téléphone number +216 .72.447.064.

+216 .72.447.600.

E-mail [email protected]

www.denimauthority.com
Web

Activity Company specializes in the manufacture of denim

and canvas pants, however other items can be
produced such other items can be produced such
as: jackets, shirts.
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Goal Quality first and meeting deadlines. These assets

have enabled him to retain his.

Number of employees 1800 people.

Production time Production time 4 to 7 weeks form material

availability.

Figure 1: company identity sheet (personal work).

2. The location of "Denim Authority"

Located in Ras Jebel, Tunisia, just 50 minutes from Tunis Carthage International Airport;

· A fully integrated factory.

· A fully mastered production process

· Modern equipment

· An independent research and development department

· Guaranteed timely deliveries anywhere in Europe

· The taking into account of working conditions for the control of risks for the personnel.

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· Work in cooperation with renowned designers such as Nigel, CABOURN, Tim BROWN and
Patrice CHESI

Figure 2: Geographical location of the Denim Authority (personal work)

3. History of Lee Cooper Tunisia (former company name)

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"DENIM AUTORITY" has been present in Tunisia for 41 years. The Ras Jebel plant was
established in 1973 and entered into operation two years later.

In reality, when the new investment law was published in 1972, which was initiated by the
former Prime Minister, Hedi NOUIRA, a few informed Tunisian businessmen smelled "the
right opportunity". One of them, Mr. Hassen Belkhodja, activist from Destour, parliamentarian,
president and managing director of a large National Bank, businessman and president of the
municipality of Ras Jebel, is concerned about the economic future of his region native. He
reconnects with an old acquaintance, a French businessman who chairs a large British
multinational operating in the jeans sector (Lee Cooper Ltd). In the midst of the Arab-Israeli
War, he offered to set up a clothing factory in Ras Jebel, which was still a rural region with
very poor standards and standards of living, by associating the Cooper family with a large
Tunisian family, the Djilani, which already have many companies in the textile sector. The
Djilani family already subcontracts Jean's clothing. She also has weaving workshops in
KsarHelal and in Tunis.

And for years and years Lee Cooper Tunisia sold his Jeans by the millions. All intended for
Europe. However, when labor became expensive in Europe in the 1980s and it had to relocate,
the Lee Cooper Group had a site in North Africa which had been running for almost twenty
years.

Today the company employs 1800 people; its structure is composed of:

●1 Managing Director

● 1 Plant Manager

● 1 Administrative Director

● 1 Financial Director

● 1 Commercial Director

● 26 executives

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● 102 Supervisors

● 1664 workers

Denim Authority was one of the first beneficiaries of the authorization issued under Law 72 on
fully exporting companies.

In 1973, during the construction of the factory there was a selection of 12 young girls and boys
for a 6 month internship in France.

This youth team later gave the company's first team leaders and mechanics. From this root, the
whole textile export industry developed. Today it is the largest industry in the country, the
largest employer, as well as the leading provider of currency.

Denim Authority is today one of the most efficient factories manufacturing Jeans.

4. "Denim Authority" organization chart 

The organization chart of the clothing company of Ras Djebel constitutes the structure
presentation tool which allows us to account for the different connections that may exist
between the different departments. In the company, there are the following personnel:

- Three general managers,

- Assistant directors,

- The manager of each service,

- A secretary and the corresponding workers

Direction Roles

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General direction Leadership

The Head of Management Control, who reports to the Chief

Financial Officer, has management controllers under his
Management control manager
authority. Its main activity relates to accounting and budgetary
operations.

The Director of Information Systems (DSI) is responsible for

IT and Organization director defining and implementing IT policy in accordance with the
general strategy of the company and its performance objectives.

Ensures customer portfolio management (order tracking,

Commercial management
customer response, etc.)

Organizes manufacturing processes

Organization direction
Monitoring information management in the company

Its role is to control the profitability and solvency of the

Financial director company, to anticipate its development strategy and the
necessary financing and investments.

Table 1: Company management (personal work)

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General
Manager

Price
RMI
manager

Manegment
control
manager

Factory IT and Financial HR Product

manager Commercial director director manager
organization director
director
Chief Responsib
accountant le HR
Senor Senior
manager manager Responsible
Custemor Custemors treasury
account account

Responsible Responsible
custemor custemors
account account

Responsible Responsible
custemor custemors
account account

Figure 3: Denim Authority organization chart (personal work)

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II. Activity and customer diversification

In this second section we present the activity of the company and the diversification of its
clientele.

1. Company activity

The company specializes in the manufacture of denim and canvas pants; however, other items can
be produced such as: jackets, skirts, shorts, pants court. . . The company offers its customers
various services:

- Full Package Service: from design to delivery of finished products

- Design: creation on behalf of the client, the designs of its own collection

- Modeling and Sampling: development of models and samples on behalf of the client

-Production: production on behalf of the client, based on their own designs, models and
prototypes

And much more, we make available to these customers:

- A fully equipped laboratory

- The most recent manual washing treatment techniques

- A highly experienced team

- A wide range of the most avant-garde washing treatments

-A range of the most innovative detergents

And much more a young and professional team to designate:

- A new collection developed every two months

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- Events geared towards the jeans and sportswear market

2. Costumer diversification

The change of name has introduced a new method of customer management. Indeed under the
old name of "Lee Cooper", the company in situation of single customer produced only its order
book for the British brand of jeans. She was the Lee Cooper Jeans Factory.

Today the company, legally independent, becomes "dependent" on other brands, and must
diversify its customers to mitigate the risks. These risks are mainly linked to the strong
competition from garment factories. At the local level, we note the competing companies MIC,
CRJ, SARTEX and MDF. And at the international level, we can cite Pakistan, Bangladesh,
China, Morocco and Turkey. In fact, Denim Authority seeks to seduce and attract several
customers in order to enrich its portfolio, and to vary its production in a balanced manner. The
table below shows the main customers of Denim Authority, with the date corresponding to the
start of each production:

Customers Country Production Start year

Lee Cooper UK 1974
Lacoste French 2005
Tommy Hilfiger Pays Bas 2006
Scotch &Soda Pays Bas 2008
Nudie Jeans Sweden 2009
Salsa Portugal 2009
Guess Italia 2009
Colin’s Turkey 2010
IKKS French 2010
Calvin Klein Pays Bas 2012
Le Temps des cerises French 2012
Benetton Italia 2014
ZARA Spain 2015

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Table 2: Main clients (personal work)

III. The different services

Like all other companies Denim Authority contain several services, for that, in the third section we
present all the services of the company.

1. Management control service

The main tasks performed by this service are as follows:

- Prepare activity reports

- Prepare investment orders (indicate the type of investment, the reason, etc.).

- Entry of physical inventories (fabric, haberdashery, etc.).

- Preparation of budgets (forecasts on staff, production, etc.).

- Detection of the various problems and failures that exist.

2. Quality department

The quality department is responsible for performing the following tasks:

 - Maintaining and making available the quality system.

- Ensure that the quality system complies with the ISO 9001 standard.

- Ensure the application of the provisions of the quality system.

- Set up and monitor the necessary indicators.

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- Follow corrective and preventive actions.

- Evaluate the quality system.

3. Maintenance department

This service is responsible for the maintenance of all of the company's industrial machinery and
equipment. The manager is responsible for repairing the machines that break down and for
reconfiguring them in the event that they are going to be reused in a different production. He is
also in charge of Extension Workplaces within the factory.

4. Subcontracting

Denim Authority uses subcontracting when it produces a quantity to determine its willingness to
complete the work when it cannot, for a certain quantity, exceed its production capacity.

The main subcontractors of Denim Authority are: SOBITEX and CRJ.

The subcontracting operation is carried out by drafting two contracts:

Submission contract with the administration and contract with the subcontractor, indicating the
price, quality, delivery and payment conditions.

5. Service supply

This service purchases all the needs of the factory, including spare parts, office supplies,
haberdashery, etc. It also prepares customs clearance invoices for imported products.

From the purchase request, the purchasing service agents launch a price consultation while
respecting the constraints of quality and deadlines. This consultation leads to the preparation of
purchase orders from the suppliers chosen and the re-ordering remains necessary in all cases and
especially in the case of delay. The last task is the delivery then the receipt of the order.

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6. Informatic service

Computing is a technique which aims to facilitate the tasks of the users and to automate the
manual tasks.

Given the importance that society places on IT and communication, the IT department is very
rich and highly developed.

Indeed:

- He ensures coordination between the different departments.

- It facilitates the processing of data relating to their activity.

- He ensures the maintenance and the installation of IT fixed assets in the company and thus
avoids breakdowns which can affect the continuity of work.

7. Sales department

This service takes care of: Transfer of customer orders, the main customers are: Lee Cooper,
Tommy, Scotch, Kopeks, and YKK.

- Conquer customer levels.

- Preparation and management of order books.

- Calculation of the needs each week in order to achieve satisfying the customer's order,
(follow the stock status, the deadlines ...).

- Preparation of load plans according to the availability of materials, the capacity of the factory,
the rate of production lines.

- Confirmation of deadlines to the client.

- Updating emergencies (special customer orders and deadlines).

8. Service method

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It is a service that receives the models that will be manufactured. It essentially takes care of
calculating the time requirements, in terms of raw material for each model, the name: the
nomenclature which summarizes the assembly range.

9. Financial service

It represents the liquid asset par excellence. It includes coins, banknotes, as well as the balance of
bank accounts in terms of withdrawal of funds. As for the management of finance, it includes all
the decisions and actions allowing the company to have the capital necessary for its activities at the
right time and at the lowest cost and to derive an optimal return from the funds available.

The cash manager is responsible for:

- Cash management.

- Monitoring of commitments.

- Planning of operating and investment payments and financing operations.

The different types of payment are by check, bank transfer, cash and credit. Denim Authority has
relationships with 3 banks: BIAT, UBCI, and STB.

* The financial service ensures:

- The contract with the banks and the negotiation of banking conditions and ensures their
proper application.

- Optimal management of the company's resources by various means: Avoid idle cash flow
through placement in treasury bonds.

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* The payroll service:

- Payroll support: monitoring is control of payment of employees.

- Justification of staff accounts (advances, loans).

- Preparations for the periodic declaration of detainees.

10. Accounting department

Accounting is an information technique which aims to satisfy the external and internal needs of
financial information on Denim Authority. This service is responsible for the transmission of
accounting entries from purchase orders and invoices arriving from the purchasing department.

11. Human resource department

Given the large number of staff included in Denim Authority, human resources management is
a highly developed management. She is interested in the following tasks:

- Recruitment.

- Preparation of employment contracts.

- Loan management and opposition.

IV. Tasks performed within the company

My tasks in the company are lots, but these are the most important ones:
** Arrange bills:
We arranged bills by date and also by provider

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** Goods request:
Using a supplier’s website, I ordered a thread for swing according to our needs .

** Receipt of order:
When the goods arrive, I inspect them according to the quantity and colors.

** Divalto software:
Use the Divalto software to record the receipt of the order
** Arrange the goods in the mower:
I arrange the threads by the reference

Conclusion

The functional organization of Denim Authority is very well established, this due to the acquired
experience of this company, its organizational structure is very clear, the responsibilities are weel
distributed and the delegation of power is establish all functions.

Well established in Tunisia, “Denim Authority” is a company in continuous expansion, it is one of

the most important companies in the textile-clothing sector in Tunisia. The internship in this
company allowed me to strengthen my academic achievements and thus confront professional life.

During the internship period, I had the opportunity to master professional tasks such as planning
delivery times, order management. Some tasks are very complex and require years of experience to
be carried out correctly.

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My difficulties at the beginning of the internship taught me that it takes a lot of attention in order
to assimilate all the work rules and all the procedures. However, the work instructions were
sufficiently complete and clear to allow me to carry out all the tasks entrusted to me.

Chapter N° 2: purchasing management

The purchasing management is a department in an organization responsible for purchasing

activities; it is one of the most important functions within the company.

In this chapter; in the first section we have to defined purchasing management, their importance,
identify its processes, objectives and categories.

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Section 1: purchasing management (theoretical side)

I. Meaning and definition

Purchasing is the first phase of material management. Purchasing means procurement of goods and
services from some external agencies. The object of purchase department is to arrange the supply
of materials, spare parts and services or semi-finished goods, required by the organization to
produce the desired product, from some agency or source outside the organization.

The purchased items should be specified quality in desired quantity available at the prescribed time
at a competitive price. In the words of Alford and Beatty, “Purchasing is the procuring of
materials, supplies, machines, tools and services required for equipment, maintenance, and
operation of manufacturing plant”.

According to Walters, purchasing function means “the procurement by purchase of the proper
materials, machinery, equipment and supplies for stores used in the manufacture of a product
adapted to marketing in the proper quality and quantity at the proper time and the lowest price,
consistent with quality desired”.

Thus, purchasing is an operation of market exploration to procure goods and services of desired
quality, quantity at lowest price and at the desired time. Suppliers who can provide standard items
at the competitive price are selected.

Purchasing is an enterprise has now become a specialized function. It was experienced that by
giving the purchase responsibility to a specialist, the firm can obtain greater economies in
purchasing. Moreover, purchasing involves more than 50% of capital expenditure budgeted by the
firm.

According to Westing Fine and Zenz” Purchasing is a managerial activity that goes beyond the
simple act of buying. It includes research and development for the proper selection of materials
and sources, follow-up to ensure timely delivery ; inspection to ensure both quantity and quality ;
to control traffic, receiving, storekeeping and accounting operations related to purchases”. The

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modern thinking is that purchasing is a strategic managerial function and any negligence will
ultimately result into decrease in profits.

II. Purchasing process

The Purchasing process can be broken down into six essential phases defining the need, finding
suppliers, launching tenders, analyzing offers, negotiating and contracting. Each phase must be
approached with rigor and methodology.

Throughout this process, the buyer must listen to his internal prescribers in order to identify their
needs. It must also monitor and manage relations with its suppliers effectively and anticipate
possible risks.

1. Definition of needs

This first step amounts to correctly defining the product or service that we want to buy, in the line
with the needs of the company. The drafting of specification makes it possible to specify
expectations with regard to this product or service.

The specifications are written either in detail or functionally. In the first case, suppliers simply
answer it point by point. In the second case, the client calls on their ability to propose solutions.

Several headings can appear in the specifications. The context of the purchase allows suppliers to
have a clear vision of the issue. A description of the characteristics of the product or service must
be included. The specification also specify the commercial conditions (cost, objective, payment
condition, billing currency, etc.) and indicate the criteria that suppliers must meet to respond to the
call for tenders, in order to better manage the risks. The more precise the terms of the
specifications and cover all the problems likely to arise, the more the risks are reduced.

The internal prescribers concerned must be associated with the drafting of these specifications.
This is also a good opportunity to improve internal communication. The buyer must ask himself
the question of just need. Has the internal customer defined a fair need?

Is there a risk of over-quality, which translates into high and unnecessary costs?

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If this is the case, to buyer must work with his internal prescriber to better define the need, without
accepting exaggerated requirements and motivated by an expectation of absolute security.

2. Finding suppliers

At this stage of the purchasing progresses are possible. In the first, suppliers who can meet needs
are already part of the company’s panel. In this case, they are known, evaluated and the risks are
controlled.

In the second hypothesis, the need has evolved and new suppliers have to be sought. In this case,
methods of sourcing and approving new suppliers must be used.

Sourcing takes place in three main stages:

*The first is to look for macroeconomic data. This research is characterized by the identification of
a geographic area to be explored, by the quality of the product (or service) from the definition of
operational objectives and, finally, by the product (or service) itself. All these aspects must be
crossed and will allow the identification of potential suppliers by country.

*The second step is collecting information. Potential suppliers are contacted and respond to
requests for information (RFI). If the sourcing is international, the embassies abroad as well as the
customs can bring information on the products of the suppliers.

*The third stage is the realization of a cartography starting from all this information. But this work
can be extremely long and delicate. Once the suppliers are targeted, they must be approved before
they can be consulted. Approval goes through additional RFI and supplier audits. The purpose of
this certification is to minimize financial risks, risks of technical reliability or logistical capacities.

3. The call for tenders

3. 1: The project team

In a traditional tendering process, it is necessary to determine which employees will be responsible

for the launch. Depending on the situation, this team is composed differently. In the case of a
centralized purchasing organization, the specialized buyer concerned by the product ot the service

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launches the call for tenders. As part of a strong decentralized organization, the call for tenders will
be led by the leading buyer. In the case of non-strategic purchases delegated to users, the call for
tenders may remain under their responsibility.

3. 2: Documents to provide

Several documents make up the tender dossier:

- A letter of introduction which presents the context of the consultation and the objectives
sought.
- An acknowledgment that suppliers must return.
- A guide to the invitation to tender which gives the specific principals governing its conduct.
- The product or service specifications.
- The terms and condition for establishing a business relationship.
- A questionnaire to collect general information about the supplier.
- A response guide which specifies the media to be used, standard forms, response times …

All of these documents are in most cases, sent electronically.

3. 3: the case of electronic tenders

The call for tenders can also be launched via an e-sourcing solution. Publishers and services
providers are offering increasingly effective tools. The p reselected suppliers are consulted online
and submit their offers on a dedicated portal. By this automated process, the buyer saves
considerable time to analyze its offers and keeps traceability.

4. Analisis of offers

Once the supplier’s responses have been received and validated, the buyer proceeds to a multi-
criteria analysis of the offers received to arrive at a short-list.

The analysis of offers generally takes place in two stages:

- A first stage of preselection is carried out on the basis of criteria of an eliminatory nature. It
may be a specific technical skill, specific industrial equipment, geographic location, etc. it is

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thus obvious that a catering service provider based only in Sfax will be excluded for a
service in Bizerte. Suppliers who have passed the first stage offer solutions that are a priori
in accordance with the specifications.
- The second step consists in carrying out a multi-criteria analysis of the remaining offers, in
order to make a final choice. This analysis must be formal and explicit. It will make it
possible to communicate on the final choice not only internally but also vis-a-vis
unsuccessful suppliers so that they are more competitive in the future.

4. 1: The quality criterion

The first selection criterion is the quality of the product or sevice purchased, provided, of course
that the specifications are always well respected. It is therefore necessary to perfectly master the
product or service purchased. Especially since companies appreciate working with suppliers whose
management systems and quality practices are well defined. Certification to an ISO standard is
often sought after because it demonstrates the company’s ability to respond to the needs of its
customers in the best possible way.

4. 2 : The overall cost of acquisition

The second selection criterion is the overall cost of acquisition and the commercial condition. The
buyer must master the cost structure of his suppliers by requesting detailed costing. The supplier
must offer a competitive price compared to its competitors. The payment conditions requested
must be acceptable and the incoterms (terms of the transaction) offered advantageous depending
on the geographic location. The overall acquisition cost must also be competitive.

4. 3 : The deadline criterion

The third aspect is the delay. It must comply with the need and be controlled. In a context where
business schedules are more and more tense, delivery times, availability, commissioning are key
criteria for selecting suppliers. The chosen supplier therefore has a logistics system allowing him
to deliver on time and, if necessary, be able to store.

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4. 4: The other criteria

Certain criteria such as the ability to adapt, financial security, the sustainability of the company
and the innovation provided are also to be taken into account. Once the offers have been analyzed
on the basis of these criteria, a few suppliers stand out and the buyer can enter into commercial
negotiations with those who best meet these criteria.

5. Negotiation

The preparation for negotiation can take place in three phases; gathering information on the
supplier, technically preparing the file, and developing a negotiation strategy.

5. 1 : Information gathering

Before proposing a negotiation, it is necessary to collect information on the supplier, the product,
the service and the weight of the purchase to be made. For an approved supplier, the buyer has
upstream elements on the latter such as its market, the history of previous purchases, evaluations
and audits carried out. For a new supplier, the main points to analyze are its economic situation, its
competitive positioning, its activity forecasts and its means of production. Concerning the product,
it is necessary to analyze the main characteristics, the performances and its final positioning. It is
also necessary to know the share of the company’s purchases in the supplier’s turnover. This will
assess the balance of power and integra0te this information into the negotiation.

5. 2 : The technical preparation of the file

The technical preparation of the file consists of determining the clauses to be negotiated and the
objectives to be achieved. The buyer must identify the clauses on which he can make concessions
to the seller. Priorities should be prioritized in the negotiations and goals that are both realistic and
ambitious should be set. For each point of the negotiation, the buyer must prepare arguments to
convince the supplier to improve its offer. To be effective, arguments must be based on facts, data
and demonstrations.

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5. 3 : The definition of a negotiation strategy

Several possibilities are available to the buyer either he chooses to approach the negotiation in
block, by treating all the clauses at the same time. Either he negotiates sequentially or the clauses
to be negotiated are addressed one after the other. This latter approach is easier to master because
the buyer does not move on to the next clause until he has reached his objective. It is advisable to
start with the easiest points and to finish with those likely to cause difficulties.

Concerning the negotiation itself, the buyer must lead the debates and intervene first, in order to
take in hand the conduct of the interview that he will not have to let go. The conclusion allows him
to summarize the negotiated agreements in order to obtain an explicit assent from the seller. He
then proceeds to write a report that the two parties sign.

6. contractualization

This phase of the purchasing process is the result of negotiation and occurs after the final choice of
supplier. It is a relatively simple step if the other phases have gone well. But we must remain
vigilant in order to avoid surprises after the signing of the contract. Contractualization consists in
establishing a purchase contract or an order from between the company and the supplier. It is a
legal link between the two parties. This contract includes all the terms of the agreement agreed
during notation.

Any contract must contain essential information. The parties or contractors must be mentioned at
the beginning of the document: the name of the company buying, that of the supplier and their
addresses. The object of the contract, that is to stay the good or service purchased, must appear
there. The required quality is also specified there, often by annexing a file which includes the
specifications (materials, size, etc.) the price, quantity, delivery dates, late penalties, incoterms
(terms of the transaction) and warranty are subject to a specific clause. A jurisdiction should be
chosen to settle any disputes. If applicable, it should be clarified whether there is a post-order
follow-up procedure. In the case of a long contract, the duration must be specified as well as the
conditions for termination or renewal of the contract.

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The signing of the contract can only take place after acceptance of the content by both parties.
This signature reflects their commitment to comply with all the clauses of the contract.

Definition of
needs

Finding
Contractu-
alization Purchasing suppliers

process
Nagotiatio The call of
n tenders

Analisis of
offers

Figure 4: purchasing process.

III. The objectives of Purchasing

The purchasing objectives are sometime understood as buying materials of the right quality, in the
right quantity, at the right time, at the right price, and from the right source. This is a broad

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generalization, indicating the scope of purchasing function, which involves policy decision and
analysis of various alternative possibilities prior to their act of purchase.

The specific objectives of purchasing are:

- To pay reasonably low prices for the best values obtainable, negotiation and executing all
company commitments.
- To keep inventories as low as is consistent with maintaining production.
- To develop satisfactory sources of supply and maintain good relations with them.
- To secure good vendor performance including prompt deliveries and acceptable quality.
- To locate new materials or products as required.
- To develop good procedures, together with adequate controls and purchasing policy.
- To secure high caliber personnel and allow each to develop to his maximum ability.
- To keep top management informed of material development which could affect company
profit or performance.
- To achieve a high degree of co-operation and co-ordination with other departments in the
organization.
- To achieve a high degree of co-operation and co-ordination with other departments in the
organization.

IV. Categories of purchases:

There are 3 categories of purchases:

- Impulse buying: the customer buys when he had not planned it; a product with little
financial involvement, highlighted (gondola head, promotion…)
- Thoughtful purchase: it often concerns anomalous products (requiring reflection before
purchase). We are also talking about responsible purchasing. These are, for example;
expensive products …
- Routine purchase: it concerns everyday consumer everyday consumer goods for which the

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customer must periodically renew the purchase (food, laundry, etc.…)

Conclusion

This chapter is dedicated to the presentation of the Purchasing department and to their proper use
to achieve a satisfactory result that we should use the correct processes to achieve our objective.
This is why Denim Authority uses to apply these processes.
In the next part we have to solve some problems related to this department

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Section 2: purchasing management (practical side)

I. Problems related to this department:

After questioning the purchasing unit staff, we were able to identify several recurring Problems:

- Late delivery
- Non-conformity of deliveries
- Work accidents
- Poor stock management
In this part of our report we will try to analyze these problems and identify the causes using a
simple methodology. And in the second part we will try to find some solution.

1. the position of the problem: scale: from 1 to 10

To find the main problems we ask the purchasing department director, we give him the topic and
one criterion (from 3 criteria) every time and he answers by a number from 1 to 10.

After that we collect points for every topic. The topic that has the highest total it is the main
problem.

Criteria Importance Frequency Gravity Total

Topic
Non-conformity of deliveries 6 1 4 11

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Late delivery 8 6 9 23

Works accidents 6 1 7 14

Poor stock management 7 2 6 15

Table 3: problem analysis

We note that the delay in the delivery represents the major problem of the purchasing
department.

2. Problem identification from a WWWWHW model:

WWWWHW model
Is a tool that quickly identifies a problem to determine its contours¸ actors, interfaces …
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its allows the exhaustive and rigorous collection of precise data by adopting a constrictive
critical analysis approach based on systematic questioning.
 The method consists of answering six questions to quickly present the problem.

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Questions Answers

The company and especially the purchasing unit ;

Who are concerned? -supply manager ;
-suppliers

What is the problem? Late delivery.

Where does the problem lie? In the purchasing and supply department,

When the problems develop? Since the structuring of the purchasing unit.

Very important because it has a direct

How to assess the importance of the problem?
impact on production.

Why deal with the problem? To reduce delivery delays.

Table 4: questionnaire

3. Identification of the causes

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To identify and analyze the causes of the delay in delivery problem, we must use a quality tool, we
chose *brainstorming.

*brainstorming tool

The brainstorming method is a semi-structured group creativity session; most often used in
business meetings to come up with new original ideas and is used to trace probable causes.

The purchasing department arranged a meeting to find the causes of this problem. After an hour of
negotiation they come out with these results:

● Late requirement request

● Non-availability of goods at the supplier

● Lack of information on suppliers

● Late ordering

● Very language supplier response time

● Technical problem with the means of communication

● Late payment to suppliers by the company

● Customs problems

4. Ranking of causes in descending order: Pareto method

The Pareto tool

The Pareto chart is a graph representing the importance of different causes of a
phenomenon. This diagram makes it possible to highlight the most important causes on the
total number of effects and thus to take targeted measures to improve a situation.

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*brainstorming tool:
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To use the Pareto tool, I ask the purchasing staff again to have the information in percentage (

Frequency). And that what I get:

Causes frequency Cumulative frequency

Non-availability of goods at the supplier 25% 25%

Late ordering 23% 48%

Costumers related issues 20% 68%

Very long supplier response time 12% 80%

Late requirement request 9% 89%

Lack of supplier data 6% 95%

Late payment to suppliers by the company 4% 99%

Technical issues 1% 100%

Table 5: classification in decreasing order

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Figure 5: Cause analysis diagram

From the figures found in the previous tables and represented on the diagram, we can see that the
largest percentages are dedicated to the causes related to: Non-availability of goods at the
supplier, late ordering and problems related to customs (25%+23%+20%=68% > 50%).

II. Possible solution

In the last part, we have identified and analyzed the various causes relating to late delivery, using
reliable methods such as the Pareto method. In this part we will propose corrective actions whish
make it possible to deal with the delay in delivery.

1. Possible solutions for the unavailability of goods from the supplier

Working with a supplier is not a choice in the company but rather an obligation because it is the
customer who imposes his supplier; in this case we speak of a purchase obligation. If there is no
obligation to purchase, the supplier can be selected.

1.1 Procedure to be followed in the event that the customer impose his suppliers

Step1 Receipt of an order from the customer.

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Step2 Contact the supplier who will inform of the unavailability of thegoods at thus
precise moment but it will be available in a few days.

Step3 Contact the customer and inform them of the unavailability of goods from their
supplier and that they will be available in a few days.

Step4 If the customer accepts the delay caused by his supplier, the purchasing manager
makes his schedule and informs the customer of the date when the finished product will be
available. If the customer refuses this delay, the order is automatically canceled.

1.2 Procedure to be followed in the event that the company chooses its supplier

Step 1 Identify the needs (current product /investment)

Step 2 Establish tenders (fax, tel…)

Step 3 compares the offers (comparison table for easier reading).

Step 4 selections of suppliers (based on commercial arguments)

Commercial arguments according to the purchasing demand situation :

 The price after commercial reduction

 Product quality
 Deadline and payment conditions
 Quality of after-sales service, guarantee

Model of a comparative table of the choice of supplier:

The following table can be used to optimize the choice of supplier.

criteria
supplier 1 supplier 2 supplier 3
Suppliers

Price

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Quality

Delivery time

Payment deadline

Guarantee and after-sales service

Table 6: comparative table of supplier choice

2. Possible solution for late ordering

Late ordering is a problem related to mismanagement of stock. It is essential to manage your
stocks well and to set up an organization adequate to avoid this problem. So Denim Authority must
have the 4 levels of following stock: Maximum stock, Minimum stock, Safety stock, Alert stock.

To identify when the order will be sent.

 Maximum stock: level of stock not to be exceeded for a given item. It is defined
according to the storage capacity.
 Minimum stock: level from which a replenishment order should be triggered. It is
delivery time (time between the date of issue of the order and delivery date of the
item).
 The safety stock (buffer stock): this is the quantity consumed in the event of late
delivery.
 Alert stock: this is the level at which the company releases a new order (order
launch point).

To find a solution to this problem we use this method to know the date of placing an order.

We use information from the last year (2019). Denim Authority uses a lot of materials like the
jeans, button, ticket pocket, sewing thread, needle …

We see that between those materials the thread had the main problem; because the client imposes
the supplier of this article and the suppliers unfortunately are outside the country.

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Denim Authority, consumes around 1 440 000 meter of the black thread per year, delivery time at
a rate 9 days, days late at most 2 days , consumption acceleration; 10 days.

Minimum stock: consumption per day*delivery time = (1 440 000/360)*9 = 4000*9 = 36000m

Safety stock: days late + consumption per day * consumption per day

= (2 + 10) * 4000 = 48000m

Alert stock: minimum stock + safety stock = 36000+48000 = 84000m

On 31/12/2019, Denim Authority has a final stock around 125 000m of thread.

We must determine the date of placing the first order for the year (2020).

The date of placing the first order: (final stock - alert stock) / consumption per day =

= (125 000- 84000) / 4000 = 41000 / 4000 = 10.25 days ≈ 10 days

The company should place an order at 10/01/2020.

As a solution to the late delivering Denim Authority should place an order every 10
days

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Figure 6: The different stock levels

3. Possible solutions for customs-related problems

This problem is related to the state, so Denim Authority can do nothing to deal with this constraint
which is part of the uncontrollable environment of all companies.

Customs procedures, as long and slow as they are a constraint inevitable for leaders.

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General conclusion

We would like to express ourselves concerning this experience which allowed us to enter the
professional world.
This internship enriched our theoretical knowledge and allowed us to get to know the real world of
business up close.
This experience allowed us: to improve our way of communication in order to facilitate our task, to
build a good network of contacts with different organizations, to deepen and enrich our knowledge
in the field of textiles.
Based on an interview with the purchasing managers, we noted and identified real problems with
the delivery of goods, which is carried out with great delay.
So to know the causes of this delay we used several methods which led to the priority causes for
which a panoply of recommendations was proposed.
We hope that these solutions will be applied by managers to improve delivery and thus receive
goods on time to meet customer needs.

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