Samenvatting Trade for SME

Trade for SME


L1 – procurement management
The purchasing process model




 Sourcing & Supply : mostly used in production environment
 Buying : mostly used in retail
 Purchasing : mostly associated with the Operational activities

Procurement vs. purchasing
Procurement:
 Broader context incl the stategical elements, incl Sourcing, incl supplier mgt
 “the process of finding and acquiring all of the goods, services, and works an
organization needs to operate and fulfill its business model”
 Activities include
o Identify goods and services required
o Approve purchase requests
o Procurement
o Identify suppliers
o Sending inquiries (RFQs and RFPs)
o Receipt of quotes from suppliers
o Negotiate pricing and terms
o Select vendors

Purchasing:
 Focus on the Operational activities
 “set of tasks involved in buying goods and services. Purchasing involves tasks such as
ordering, raising purchase orders, receiving, and arranging payment”
 Activities include
o Acknowledge purchase orders
o Advance shipment notice
o Receive goods
o Inventory management
o Invoice recording
o Three-way match
o Payment to supplier

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,Procurement covers different aspects :
 Strategic elements (single supplier vs multi supplier)
 Operational (…steps to buy)
 Technology (e Procurement)
 Contract (almost legal)

Strategic - tactical - operational procurment




The 5 rights of procurement:
 At the Right Time.
 In the Right Quantity,
 At the Right Quality
 At the Right Price
 In the Right Place

 Extensions to 6R, 7R, ….
o To Acquire the right material
o From the Right Supplier

Business context
4 economic sectors:




2

,Colin clark sector model:
-> Evolution of Economic Sector
-> Western Economic world (3-4th)




Relationship economic sectors -> purchasing




 Economic Sector drives the procurement strategy
 Business strategy drives the procurement strategy
o Cost Leader (Colruyt, Aldi, Mediamarkt, ..) …everything with small margins
o Product / Differentiation (Apple, Tesla, …)

Type of business
 B2B – B2C is less important for procurement strategy
 Marketing much more impacted
 We will try to focus on B2B

Importance of procurement (department)
Porter value chain model
 A typical company structure..including supporting services




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, What’s Procurement’s place in the Value Chain?
 Although Procurement departement is typically as ‘supporting service’, it is of
strategic importance
 A well-organized procurement department will be the source of intelligence to
know:
o Who you are sourcing and procuring goods/services from?
o How those goods/services are being produced or delivered?
o Why you are procuring from those particular suppliers?
o When to eliminate defective/non-compliant suppliers?

 Purchasing is seen as an area for adding value, not simply reducing costs.
 Reducing price and availability risks in the supply chain
 Awareness that active supplier involvement can increase efficiency and
effectiveness.
 A developing recognition that concern with strategic costs of supply and total cost of
ownership (TCO), rather than short-term price, is important.

Procurement Roles / functions




Procurement role: Isolated?
 Not an isolated role/function
 Interaction with many colleagues/departements INSIDE the company
 Interaction with suppliers OUTSIDE the company

Interaction with others:
 A procurement role/functions is never working at its own
 Does she/he knows al the details of the goods to be purchased ?
 Typically working for an ”Internal Customer”
o Defining the “needs” & the details (see Specifications”)
 For significant purchases, a DMU (Decision Making Unit) is composed

DMU (Decision Making Unit)
 What?
o Team of individuals who participate in a buyer decision process.
o Relates to business or organizational buying decisions.
 Why?
o Minimalise the risk by involving as many people
as possible in the decision making process.
 Who?
o Typical Roles (see scheme)




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