CIPS L4M8 Chapter 2

CIPS L4M8 Chapter 2 Sourcing involves - ANS identifying and vetting those suppliers who are able to supply the product or service, as required in a specification from a procurement professional Different stages of Ordering - ANS - User need - Raise requisition - Approved process - Issue PO - Receive goods/service - Approve invoice Different stages of Sourcing - ANS - Understand the need - Develop strategy - Raise requisition - Source suppliers - Issue ITT/RFQ - Negotiate and award contract - SRM/contract management Sourcing can take place in the following locations - ANS - Localised - Regional - National - Global Localised sourcing - ANS conducted with suppliers who are near to the buying organisation Regional sourcing - ANS conducted with suppliers in the same area, but slightly further away than the localised choices National sourcing - ANS conducted throughout an entire country. EG suppliers may be hundreds of miles away from the buying organisation but they are still controlled by the same legislation and regulations Global sourcing - ANS conducted worldwide. This type of sourcing often involves different legislation and regulations to those of the buying organisation The buyer needs to think about the following factors when deciding which type of sourcing is best - ANS - Urgency of need: local suppliers shorter lead times - Volume of need: larger quantities for economies of scale better for global sourcing - Quality of need: high quality may need further than local - Budget allocated to need: low budget may need global sourcing Contracts can either be - ANS Verbal or Written The five stages of forming a contract - ANS 1. Intention 2. Capacity 3. Offer 4. Consideration 5. Acceptance Stages of a contract: 1.Intention - ANS the contracting parties must intend to enter into a legal contract. If there is no intention to create a legal relationship, the contract is not legally binding