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    A-Z Procurement Cycle, Sourcing Strategies & Commercial Negotiation including Real Life Case Studies
    A-Z Procurement Cycle, Sourcing Strategies & Commercial Negotiation including Real Life Case Studies
    A-Z Procurement Cycle, Sourcing Strategies & Commercial Negotiation including Real Life Case Studies
    Ebook146 pages1 hour

    A-Z Procurement Cycle, Sourcing Strategies & Commercial Negotiation including Real Life Case Studies

    By Sarfu

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    About this ebook

    This book is an educational book and falls under category of business management/ business strategy type . The intended audience for this book can be person working in any organization in any field who wish to learn about procurement function, a business owner who wish to understand and control procurement function of his organization or a student who wish to start a career in procurement for whom this book can lay strong basic foundation .This book is about the complete Procurement Cycle (Purchasing Cycle) and the sourcing strategies which are used globally by any organization whether profit or non profit type. Procurement is considered as one of the key strategic functions in all organizations around the globe and this book helps explore the methodology, techniques and strategies used by procurement professionals like Buyers, purchase executives, procurement managers and others with similar job profile This book also comprehensively explains about the Commercial Negotiation which forms a key tool of a procurement function. This book has 4 chapters : Pre-purchasing activities, Purchasing Activities, Post Purchasing activities and Commercial Negotiation and supplier relationships thus covering A-Z of the Procurement cycle. The book also includes Seven Real Life Case Studies which shall help readers co-relate the concept with practical situations

    LanguageEnglish
    PublisherSarfu
    Release dateJun 11, 2024
    ISBN9798892220736
    A-Z Procurement Cycle, Sourcing Strategies & Commercial Negotiation including Real Life Case Studies
    Author

    Sarfu

    SARFARAZ CHIKTE is a B. Tech Electrical Engineer  from Mumbai University and an active Member of Chartered Institute of Procurement and Supply -U.K (CIPS). He has vast and rich experience of 10 years in Procurement and Sourcing in Private Manufacturing Sector as well as Public procurement in a Government Sector. During his experience, he has been tasked with various crucial responsibilities pertaining to sourcing of Raw materials, Fixed Assets and Machineries, Spare parts and routine items including consumables, Service, Outsourcing and others. He is greatly skilled in Procurement, Sourcing Strategies, Commercial Negotiation, Risk Management, Logistics, Inventory Management, Supplier relationship management, Contract management and others.   The book has been based purely on the rich experience which the author possess and which he wishes to share with other people who can benefit from it.  

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    A-Z Procurement Cycle, Sourcing Strategies & Commercial Negotiation including Real Life Case Studies - Sarfu

    AUTHORS NOTE

    This book has been fruition of my 10 years of hard work and dedication towards my profession in procurement. I am an engineering graduate in electrical major. However, in spite of my technical education, I have always been attracted towards commercial & business strategies and global trade. Hence, after graduating from the college, I joined a firm in procurement department. Since that time, I have always strived to excel in my profession and keep learning new things about my profession.

    My honest focus along with my passion and hard work helped me achieve significant success and helped me achieve excellent acumen towards Procurement & Supply. Gradually I realized the crucial role the Procurement and Supply department has in success of any organization around the globe and hence I felt the need to share my rich experience with the whole world and would be very happy if the people around the globe learn more about the procurement through my book.

    This book explains in detail the complete procurement cycle from basic definition to advanced strategies used in most organization around the globe. The book also comprehensively covers the Commercial negotiation and supplier relationship management  in most simple language possible, which every readers can very easily and practically apply in their commercial jobs or businesses.

    The language of this book is a simple English without many jargons so that readers from any field and any education background can most probably understand the concept thoroughly.

    ––––––––

    This book can be found valuable by multiple types of audiences like business school students, professionals working in procurement department or supply chain department, professionals working in a manufacturing sector in fields like planning, production, maintenance etc., business owners who wish to understand procurement best strategies, Information technology professionals who work in ERP or similar and wish to understand how the procurement functions.

    I can assure my readers of getting best explanation of each topics in details since I have used examples for each topics and subtopics. The bonus for my readers is real life case studies pertaining to all topics to get practical understanding of the subject.

    I wish my readers happy learning and assure that there will not be any disappointments as they will definitely learn a fresh professional lesson of their life.

    Also I request my readers to excuse any grammatical errors in the book if any as the focus of my writing was more on content of this book.

    CHAPTER 1——INTRODUCTION

    Many of the reader of this book will be Students who wish to aspire a career in procurement and many of you must be working in some other field and are eager to know the basics of procurement.  Some of you must be an entrepreneur who wishes to understand the basics of Procurement since it form the Top line of any business activities (the bottom line is Sales). This book will cover 100 % of all the basic activities & terminology used in Procurement Field.

    To begin with, we need to answer the most important Question ‘What exactly is the role of Procurement?’

    Many of you must have come across various job categories like Purchaser, Buyer, purchase executive, Supply chain executive, Store keeper, Planner, Forecaster etc. and you must be unsure how this categories are related to Procurement. This chapter shall make it very clear to the readers how each of this roles are related to Procurement.

    The word Procurement is derived from the Latin word ‘Procurare’ which means to take care of or to look after. So does Procurement also mean to take care of something or to look after something? Yes, it is correct!

    Procurement is to take care of & to look after availability of all the necessary resources, tangible & non-tangible, to make the magic happen! The magic may be setting up new Office, constructing a building, running an NGO, running a school, making Production, manufacturing a product, providing skilled service etc.  Is the definition so simple just to take care of availability of resources used make the work happen?? No it is not! If the procurement definition was so simple than it could be done by any common person without any skillset and without any prior knowledge and formal education.

    The detailed definition of Procurement is to take care of availability of all necessary resources for the magic to happen at RIGHT TIME, RIGHT PRICE, RIGHT QUALITY, RIGHT PLACE.

    Now let us define what are different types of roles related to the Procurement. The field of Procurement is immensely Vast which comes under the Field of Supply Chain. Supply Chain refers to entire network of people, resources, network which are involved in creating a product or service and delivering it to the customer.

    The Procurement Field has various roles under its branch some of the major ones are as follows and this major role shall be covered in each of separate Chapters in this book:

    Purchasing cycle

    Collaborative Negotiation

    Sourcing Strategies

    Logistics Role.

    Inventory management.

    Supplier relationship Management

    Risk Management

    Before we move forward to next chapter, let us answer some of the doubts you have in your mind:

    ❖  Who is a Buyer/ Purchase executive?

    A person who undertakes the role of doing the purchasing activities is called a buyer or purchase executive.

    ❖  Who is logistics Executive/ Logistics Manager?

    A person who undertakes all Logistics activities.

    ❖  Who is storekeeper/ Inventory In charge/ Warehouse in charge/ Stores Manager?

    A person who undertakes roles related to inventory and stores activities.

    ❖  Who is a Contracts executive/ Contracts manager?

    A person who undertakes actions and activities only related to role of Contract management.

    ❖  WHO IS A PROCUREMENT MANAGER?

    A person who monitors all the above activities starting from Purchasing up to Costing, make necessary planning to Control all these activities, executive actions to control all these activities, measure and evaluate all the necessary parameters of the above  activities to ensure the correct definition of Procurement is fulfilled which is RIGHT TIME, RIGHT PRICE, RIGHT QUALITY, RIGHT PLACE !

    CHAPTER 2——PRE-PURCHASING

    Before we start learning about purchasing activities, we should learn about Pre-purchasing roles and activities which need to be undertaken. A Pre-purchasing activities and planning is extremely important to make the purchasing happen smoothly. A Pre-purchasing activity relates to comprehensive activities which has to be undertaken by a buyer to ensure correct selection of approved Vendors and to ensure material purchased is exactly what is needed by a buyer’s organization to do the work.

    It is a stage in consumer behavior where consumers compare and evaluate alternatives before acquiring the product. 

    Failure to do the Pre-Purchasing activities thoroughly may lead to severe risk for the company or organization in following ways:

    It may cause significant delays in Procuring a product or services in case of no approved supplier and may ultimately lead to stoppage in the operation

    It may increase purchasing cost significantly since the material or the sample may be required to bring on urgent basis by paying high freight charges.

    ––––––––

    Material with wrong technical specification can be purchased in absence of definite product specs.

    Failure to understand the type of technical specification whether performance type or Conformance type (Explained later in the chapter) can limit the innovation techniques of purchasing and may also lead to unfair price for product or service purchased.

    Improper investigation into supplier background may pose significant threat to the business operation while dealing with such suppliers.

    Improper Make or Buy decision can affect the brand value of the organization or may causes significant loss to the organization.

    Hence it is extremely important to study a Pre-Purchasing activities. A Pre-purchasing activities are the 1st step in any procurement role. It forms foundation stone of any procurement cycle.

    ❖  Deciding a Purchasing Method :

    One of the major activity to perform in a Pre-purchasing stage is finalizing the method of purchasing to be used. Below are 3 major purchasing method which are majorly used by any purchaser in any organization and in any industry:

    ›  Routine Purchase/ Non-strategic/Repeat purchase:

    Whenever there is a demand for an Item or services which has been brought before or which is a routine non-strategic item purchased on scheduled time frames without requiring any strategic thinking or special negotiation strategy, procurement department can adopt this method of Purchasing. Here a very simple Procurement process is followed. For example, a demand for routine items once received, RFQ is sent to the approved suppliers, quotations are compared and best price with suitable delivery is selected to proceed with the PO or may be a simple contract with a single supplier for an annual delivery of the routine items as and when the inventory level goes down, the system automatically places order with the contracted supplier without any need to involve procurement team.  Thus the buyer doesn’t need to spend any considerable time in such purchases.

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