Operational excellence : procurement
Inhoudsopgave
1 Procurement Management ............................................................................................................. 8
1.1 Procurement? Purchasing? ...................................................................................................... 8
1.1.1 The purchasing process model ........................................................................................ 8
1.1.2 Procurement vs. purchasing ............................................................................................ 8
1.1.3 Procurement management is about … ............................................................................ 9
1.1.4 Strategic – tactical – operational procurement ............................................................... 9
1.1.5 The 5R’s of procurement ................................................................................................. 9
1.2 Business context .................................................................................................................... 10
1.2.1 4 economic sectors ........................................................................................................ 10
1.2.2 Economic sectors ........................................................................................................... 10
1.2.3 Relationship economic sectors -> purchasing ................................................................ 11
1.2.4 B2B - B2C ....................................................................................................................... 11
1.2.5 My company map .......................................................................................................... 11
1.3 Importance of procurement (department)? .......................................................................... 12
1.3.1 Porter Value Chain model .............................................................................................. 12
1.3.2 What’s procurement’s place in the Value Chain? .......................................................... 13
1.3.3 The purchasing process model ...................................................................................... 13
1.4 Procurement roles / functions ............................................................................................... 13
1.4.1 Procurement role : isolated? ......................................................................................... 13
1.4.2 Interaction with others .................................................................................................. 14
1.4.3 DMU – Decision Making Unit ......................................................................................... 14
1.4.4 Decision Making Unit : roles .......................................................................................... 15
1.4.5 The future of procurement management ...................................................................... 16
2 Types of goods & types of procurement........................................................................................ 17
2.1 Groups and classifications...................................................................................................... 17
2.2 4 types of goods ..................................................................................................................... 17
2.2.1 Rival vs. Non rival ........................................................................................................... 17
2.3 Direct vs. indirect ................................................................................................................... 19
2.3.1 Direct vs. indirect purchase / spend .............................................................................. 19
2.4 Goods vs. services .................................................................................................................. 19
2.4.1 Goods vs. services .......................................................................................................... 19
2.4.2 Services .......................................................................................................................... 20
, 2.4.3 Service Level Agreements (SLA) ..................................................................................... 20
2.5 Investments ........................................................................................................................... 21
2.5.1 Investments ................................................................................................................... 21
2.5.2 3 frequently used methods to evaluate an investment ................................................. 21
2.6 Capex vs. opex ....................................................................................................................... 22
2.6.1 Capex vs. opex ............................................................................................................... 22
2.6.2 Capex (or Capital Expenditure) ...................................................................................... 22
2.6.3 Opex (or Operational Expenditure) ................................................................................ 23
2.7 Procurement categories ........................................................................................................ 24
2.7.1 Procurement categories ................................................................................................ 24
2.7.2 Category managers ........................................................................................................ 24
2.8 OEM – IAM............................................................................................................................. 24
2.8.1 OEM ............................................................................................................................... 24
2.8.2 OEM Examples ............................................................................................................... 25
2.8.3 IAM (Independent Aftermarket Parts) ........................................................................... 25
3 Procurement process (step-by-step) ............................................................................................. 26
3.1 Specifying ............................................................................................................................... 26
3.1.1 Identify needs ................................................................................................................ 26
3.1.2 Stakeholders : what?...................................................................................................... 26
3.1.3 Stakeholder analysis ...................................................................................................... 27
3.1.4 Stakeholders .................................................................................................................. 28
3.2 Selecting ................................................................................................................................ 28
3.2.1 Selection ........................................................................................................................ 28
3.2.2 Supplier assessment before contracting ........................................................................ 29
3.3 Contracting ............................................................................................................................ 29
3.3.1 Letter Of Intent (LOI)...................................................................................................... 29
3.3.2 Contracting .................................................................................................................... 29
3.3.3 Contents of a contract ................................................................................................... 30
3.3.4 Invoicing & payment Terms ........................................................................................... 30
3.3.5 Catering service … delivering to companies ................................................................... 31
3.3.6 Types of agreements...................................................................................................... 31
3.3.7 What is a Bank Guarantee?............................................................................................ 33
3.3.8 What is FAT & SAT? ........................................................................................................ 33
3.3.9 What is Final Acceptance? ............................................................................................. 33
3.4 Ordering................................................................................................................................. 34
3.4.1 Purchase Order (PO) ...................................................................................................... 34
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, 3.4.2 Additional terminology & concepts related to Purchase Orders ................................... 34
3.5 Deliveries / Follow up ............................................................................................................ 37
3.5.1 Deliveries ....................................................................................................................... 37
3.5.2 Additional terminology & concepts related to Deliveries .............................................. 37
3.5.3 Follow up ....................................................................................................................... 39
3.5.4 What is a “Backorder”? .................................................................................................. 40
3.6 Performance Follow Up ......................................................................................................... 40
3.6.1 Performance Follow Up ................................................................................................. 40
3.6.2 (Supplier) Performance Follow-up ................................................................................. 40
4 Task of a buyer / purchaser ........................................................................................................... 42
4.1 Strategic Procurement ........................................................................................................... 42
4.2 Tactical Procurement ............................................................................................................. 42
4.2.1 Typical activities ............................................................................................................. 43
4.2.2 Prerequisites .................................................................................................................. 43
4.2.3 Characteristics of a good supplier … .............................................................................. 43
4.2.4 Different ways to organize Tactical Procurement .......................................................... 44
4.2.5 Category managers ........................................................................................................ 44
4.3 Operational procurement ...................................................................................................... 44
4.3.1 Typical activities ............................................................................................................. 44
4.3.2 Distributor...................................................................................................................... 45
5 Group Purchasing Organizations (GPO) ......................................................................................... 46
5.1 Definition ............................................................................................................................... 46
5.2 GPO characteristics ................................................................................................................ 46
5.3 Selecting a GPO : factors to consider ..................................................................................... 46
5.4 Critical Factors for Success..................................................................................................... 47
5.5 3 types of GPO’s..................................................................................................................... 47
5.5.1 Type of GPO : vertical market ........................................................................................ 47
5.5.2 Type of GPO : Vertical GPO in Healthcare Industry ........................................................ 48
5.5.3 Type of GPO : Horizontal Market ................................................................................... 48
5.5.4 Type of GPO : Master Buyer........................................................................................... 49
5.6 Advantages and disadvantages of a GPO model .................................................................... 49
5.6.1 Advantages .................................................................................................................... 49
5.6.2 Disadvantages ................................................................................................................ 50
5.7 Membership fees ................................................................................................................... 50
5.8 Challenges.............................................................................................................................. 50
5.8.1 Digitalization impact ...................................................................................................... 50
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, 5.8.2 Challenges : Buyer Power vs. Supplier Power ................................................................ 50
6 Strategic Sourcing .......................................................................................................................... 52
6.1 Definition ............................................................................................................................... 52
6.2 Requirements / considerations .............................................................................................. 52
6.3 Outsourcing ........................................................................................................................... 52
6.3.1 Drivers for Outsourcing .................................................................................................. 52
6.3.2 Not always successful .................................................................................................... 52
6.4 Onshoring, nearshoring and offshoring ................................................................................. 53
6.4.1 Offshoring ...................................................................................................................... 53
6.4.2 Onshoring ...................................................................................................................... 53
6.4.3 Nearshoring ................................................................................................................... 54
6.4.4 Outsourcing vs. offshoring ............................................................................................. 54
7 Portfolio analysis & Toolkits ........................................................................................................... 55
7.1 Pareto Analysis....................................................................................................................... 55
7.2 Peter Kraljic Portfolio Matrix.................................................................................................. 56
7.2.1 Non-critical items ........................................................................................................... 56
7.2.2 Leverage items ............................................................................................................... 56
7.2.3 Bottleneck items ............................................................................................................ 57
7.2.4 Strategic items ............................................................................................................... 57
7.2.5 Peter Kralijic Portfolio Matrix ......................................................................................... 57
7.3 Day one analysis..................................................................................................................... 57
7.4 Pestel analysis ........................................................................................................................ 59
7.4.1 Elements to consider ..................................................................................................... 59
7.4.2 Technological factors ..................................................................................................... 59
7.4.3 Example ......................................................................................................................... 60
8 Pricing & discounts ........................................................................................................................ 61
8.1 2 points of views .................................................................................................................... 61
8.2 Common pricing models ........................................................................................................ 61
8.2.1 Dynamic pricing ............................................................................................................. 61
8.2.2 Common pricing models ................................................................................................ 62
8.2.3 Graduated Pricing (= staffelprijzen) ............................................................................... 62
8.2.4 Volume Pricing ............................................................................................................... 62
8.3 Discounts ............................................................................................................................... 63
8.3.1 Quantity Discount .......................................................................................................... 63
8.3.2 Preferred Customer Discount ........................................................................................ 63
8.3.3 Special / other Discounts ............................................................................................... 63
4
carlijnvanc
Inhoudsopgave
1 Procurement Management ............................................................................................................. 8
1.1 Procurement? Purchasing? ...................................................................................................... 8
1.1.1 The purchasing process model ........................................................................................ 8
1.1.2 Procurement vs. purchasing ............................................................................................ 8
1.1.3 Procurement management is about … ............................................................................ 9
1.1.4 Strategic – tactical – operational procurement ............................................................... 9
1.1.5 The 5R’s of procurement ................................................................................................. 9
1.2 Business context .................................................................................................................... 10
1.2.1 4 economic sectors ........................................................................................................ 10
1.2.2 Economic sectors ........................................................................................................... 10
1.2.3 Relationship economic sectors -> purchasing ................................................................ 11
1.2.4 B2B - B2C ....................................................................................................................... 11
1.2.5 My company map .......................................................................................................... 11
1.3 Importance of procurement (department)? .......................................................................... 12
1.3.1 Porter Value Chain model .............................................................................................. 12
1.3.2 What’s procurement’s place in the Value Chain? .......................................................... 13
1.3.3 The purchasing process model ...................................................................................... 13
1.4 Procurement roles / functions ............................................................................................... 13
1.4.1 Procurement role : isolated? ......................................................................................... 13
1.4.2 Interaction with others .................................................................................................. 14
1.4.3 DMU – Decision Making Unit ......................................................................................... 14
1.4.4 Decision Making Unit : roles .......................................................................................... 15
1.4.5 The future of procurement management ...................................................................... 16
2 Types of goods & types of procurement........................................................................................ 17
2.1 Groups and classifications...................................................................................................... 17
2.2 4 types of goods ..................................................................................................................... 17
2.2.1 Rival vs. Non rival ........................................................................................................... 17
2.3 Direct vs. indirect ................................................................................................................... 19
2.3.1 Direct vs. indirect purchase / spend .............................................................................. 19
2.4 Goods vs. services .................................................................................................................. 19
2.4.1 Goods vs. services .......................................................................................................... 19
2.4.2 Services .......................................................................................................................... 20
, 2.4.3 Service Level Agreements (SLA) ..................................................................................... 20
2.5 Investments ........................................................................................................................... 21
2.5.1 Investments ................................................................................................................... 21
2.5.2 3 frequently used methods to evaluate an investment ................................................. 21
2.6 Capex vs. opex ....................................................................................................................... 22
2.6.1 Capex vs. opex ............................................................................................................... 22
2.6.2 Capex (or Capital Expenditure) ...................................................................................... 22
2.6.3 Opex (or Operational Expenditure) ................................................................................ 23
2.7 Procurement categories ........................................................................................................ 24
2.7.1 Procurement categories ................................................................................................ 24
2.7.2 Category managers ........................................................................................................ 24
2.8 OEM – IAM............................................................................................................................. 24
2.8.1 OEM ............................................................................................................................... 24
2.8.2 OEM Examples ............................................................................................................... 25
2.8.3 IAM (Independent Aftermarket Parts) ........................................................................... 25
3 Procurement process (step-by-step) ............................................................................................. 26
3.1 Specifying ............................................................................................................................... 26
3.1.1 Identify needs ................................................................................................................ 26
3.1.2 Stakeholders : what?...................................................................................................... 26
3.1.3 Stakeholder analysis ...................................................................................................... 27
3.1.4 Stakeholders .................................................................................................................. 28
3.2 Selecting ................................................................................................................................ 28
3.2.1 Selection ........................................................................................................................ 28
3.2.2 Supplier assessment before contracting ........................................................................ 29
3.3 Contracting ............................................................................................................................ 29
3.3.1 Letter Of Intent (LOI)...................................................................................................... 29
3.3.2 Contracting .................................................................................................................... 29
3.3.3 Contents of a contract ................................................................................................... 30
3.3.4 Invoicing & payment Terms ........................................................................................... 30
3.3.5 Catering service … delivering to companies ................................................................... 31
3.3.6 Types of agreements...................................................................................................... 31
3.3.7 What is a Bank Guarantee?............................................................................................ 33
3.3.8 What is FAT & SAT? ........................................................................................................ 33
3.3.9 What is Final Acceptance? ............................................................................................. 33
3.4 Ordering................................................................................................................................. 34
3.4.1 Purchase Order (PO) ...................................................................................................... 34
2
carlijnvanc
, 3.4.2 Additional terminology & concepts related to Purchase Orders ................................... 34
3.5 Deliveries / Follow up ............................................................................................................ 37
3.5.1 Deliveries ....................................................................................................................... 37
3.5.2 Additional terminology & concepts related to Deliveries .............................................. 37
3.5.3 Follow up ....................................................................................................................... 39
3.5.4 What is a “Backorder”? .................................................................................................. 40
3.6 Performance Follow Up ......................................................................................................... 40
3.6.1 Performance Follow Up ................................................................................................. 40
3.6.2 (Supplier) Performance Follow-up ................................................................................. 40
4 Task of a buyer / purchaser ........................................................................................................... 42
4.1 Strategic Procurement ........................................................................................................... 42
4.2 Tactical Procurement ............................................................................................................. 42
4.2.1 Typical activities ............................................................................................................. 43
4.2.2 Prerequisites .................................................................................................................. 43
4.2.3 Characteristics of a good supplier … .............................................................................. 43
4.2.4 Different ways to organize Tactical Procurement .......................................................... 44
4.2.5 Category managers ........................................................................................................ 44
4.3 Operational procurement ...................................................................................................... 44
4.3.1 Typical activities ............................................................................................................. 44
4.3.2 Distributor...................................................................................................................... 45
5 Group Purchasing Organizations (GPO) ......................................................................................... 46
5.1 Definition ............................................................................................................................... 46
5.2 GPO characteristics ................................................................................................................ 46
5.3 Selecting a GPO : factors to consider ..................................................................................... 46
5.4 Critical Factors for Success..................................................................................................... 47
5.5 3 types of GPO’s..................................................................................................................... 47
5.5.1 Type of GPO : vertical market ........................................................................................ 47
5.5.2 Type of GPO : Vertical GPO in Healthcare Industry ........................................................ 48
5.5.3 Type of GPO : Horizontal Market ................................................................................... 48
5.5.4 Type of GPO : Master Buyer........................................................................................... 49
5.6 Advantages and disadvantages of a GPO model .................................................................... 49
5.6.1 Advantages .................................................................................................................... 49
5.6.2 Disadvantages ................................................................................................................ 50
5.7 Membership fees ................................................................................................................... 50
5.8 Challenges.............................................................................................................................. 50
5.8.1 Digitalization impact ...................................................................................................... 50
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carlijnvanc
, 5.8.2 Challenges : Buyer Power vs. Supplier Power ................................................................ 50
6 Strategic Sourcing .......................................................................................................................... 52
6.1 Definition ............................................................................................................................... 52
6.2 Requirements / considerations .............................................................................................. 52
6.3 Outsourcing ........................................................................................................................... 52
6.3.1 Drivers for Outsourcing .................................................................................................. 52
6.3.2 Not always successful .................................................................................................... 52
6.4 Onshoring, nearshoring and offshoring ................................................................................. 53
6.4.1 Offshoring ...................................................................................................................... 53
6.4.2 Onshoring ...................................................................................................................... 53
6.4.3 Nearshoring ................................................................................................................... 54
6.4.4 Outsourcing vs. offshoring ............................................................................................. 54
7 Portfolio analysis & Toolkits ........................................................................................................... 55
7.1 Pareto Analysis....................................................................................................................... 55
7.2 Peter Kraljic Portfolio Matrix.................................................................................................. 56
7.2.1 Non-critical items ........................................................................................................... 56
7.2.2 Leverage items ............................................................................................................... 56
7.2.3 Bottleneck items ............................................................................................................ 57
7.2.4 Strategic items ............................................................................................................... 57
7.2.5 Peter Kralijic Portfolio Matrix ......................................................................................... 57
7.3 Day one analysis..................................................................................................................... 57
7.4 Pestel analysis ........................................................................................................................ 59
7.4.1 Elements to consider ..................................................................................................... 59
7.4.2 Technological factors ..................................................................................................... 59
7.4.3 Example ......................................................................................................................... 60
8 Pricing & discounts ........................................................................................................................ 61
8.1 2 points of views .................................................................................................................... 61
8.2 Common pricing models ........................................................................................................ 61
8.2.1 Dynamic pricing ............................................................................................................. 61
8.2.2 Common pricing models ................................................................................................ 62
8.2.3 Graduated Pricing (= staffelprijzen) ............................................................................... 62
8.2.4 Volume Pricing ............................................................................................................... 62
8.3 Discounts ............................................................................................................................... 63
8.3.1 Quantity Discount .......................................................................................................... 63
8.3.2 Preferred Customer Discount ........................................................................................ 63
8.3.3 Special / other Discounts ............................................................................................... 63
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carlijnvanc
