Dillip Meher’s Post

Supplier management in simple way Supplier management is one of the most important and focused area of work with in Purchase / Procurement section. Purchasing personal keep looking for suppliers who have high potential in the areas of high performance in Quality, Delivery and Cost, and also have new technological Features. Then, after purchasing personal estimate their capability objectively, start working with them. However, while working with them, Purchasing personal should always keep focus on the affairs of their business. If supplier have any problem or issues in the areas of  Quality, Cost, Delivery and Features, Purchasing personal must review and offer some advice to improvement and review performance. As purchase section, Purchasing personal have a mission to handle any troubles, in order to not stop company or customers’ manufacturing activity.   Purchasing personal does not only show company expectation to the suppliers, but also support them to realize it if necessary. Purchasing personal offer positive VE/VA (Value Analysis), and involve them in product development projects in order to get their idea and cooperation to create firm Quality, Delivery, Cost, and Feature. To choose an excellent supplier through series of the activities and to create a WIN-WIN partnership and establish a stable foundation of purchasing. What strengthen buyer supplier relations It all start with Supplier Evaluation. Purchasing organization has to establish a system to evaluate a supplier company’s capability, like Supplier Evaluation Modules most company's may have. Evaluate the supplier objectively in the area's of: Q   = Quality C   = Cost D   = Delivery T   = Technique M   = Management S   = Safety E   = Environment The company’s capability not only means the performance, but their potential… how they can contribute to buyer organization, Is their business direction fits with the buyer organization ways and future plans. In order to strengthen the procurement foundation, buyer Organization objectively evaluates the suppliers through process called Supplier Evaluation.   

Procurement KPI concept: Supplier Performance: 1.On-Time Delivery: Measures the percentage of orders delivered on or before the agreed-upon delivery date. It is calculated as: \[(Number of On-Time Deliveries / Total Number of Deliveries) * 100\] 2.Supplier Lead Time: Refers to the average time it takes for a supplier to fulfill an order, from placement to delivery. It’s calculated as: \[Sum of all Lead Times / Number of Orders\] 3.Supplier Defect Rate: Measures the percentage of defective goods or services received from suppliers. The formula is: \[(Number of Defective Units / Total Number of Units Received) * 100\] Cost & Savings: 1.Cost Savings: Refers to total cost reductions achieved through negotiations, sourcing strategies, and supplier collaboration. The formula is: \[Baseline Cost - Negotiated Cost\] 2.Cost Avoidance: Savings realized by preventing price increases or mitigating potential cost overruns. It’s calculated as: \[Potential Cost Increase - Actual Cost\] 3.COGS Reduction: Represents the decrease in the cost of materials and services used in production. The formula is: \[(Baseline COGS - Current COGS) / Baseline Procurement Efficiency: 1.Procurement Cycle Time: Measures the time it takes from requisition creation to purchase order approval. It’s calculated as: \[Time of PO Approval - Time of Requisition Creation\] 2.PO Cycle Time: The time it takes to create, approve, and issue a purchase order (PO). The formula is: \[Time of PO Approval - Time of PO Creation\] 3.Invoice Processing Time: The time it takes to process and approve an invoice after receiving it from the supplier. The formula is: \[Time of Invoice Approval - Time of Invoice Receiving Compliance: 1.Contract Compliance: Measures the percentage of contracts that fully comply with the agreed terms and conditions. It’s calculated as: \[(Number of Compliant Contracts / Total Number of Contracts) * 100\] 2.Maverick Spend: Tracks the proportion of spending that occurs outside of the agreed-upon contracts. The formula is: \[(Non-Compliant Spend / Total Spend) * 100\] 3.Supplier Diversity: Refers to the percentage of total procurement spend allocated to diverse suppliers. It’s calculated as: \[(Total Diverse Spend / Total Procurement Spend) * 100\]

A reader asked what is the difference between a purchasing engineer and a buyer. The answer seems simple, the purchasing engineer is responsible for the technology, and the buyer is responsible for the daily management around the order. But at a deeper level, this issue involves the basic setup of the procurement and supply management department, which many companies have been exploring. Because positions and responsibilities (Roles and Responsibilities) are the cornerstone of the good operation of an organization. Supply management seems simple, but in fact it is very complicated, because it is necessary to manage all aspects related to suppliers: business, technology, production, inventory, ordering, delivery, quality, service, etc. It is actually operating or regulating a high-level A complete enterprise. How to clearly define the positions and responsibilities of each role is quite knowledgeable. There are three main roles to be introduced here: supplier business manager, supplier engineer, and buyer. These three roles form a basic supply management team. This setting is popular among some companies in the United States, especially in some large companies in the aerospace industry and semiconductor equipment manufacturing industry that the author knows. For example, in the author’s company, the supplier business manager is responsible for all business and overall supplier performance; the supplier engineer is responsible for technical aspects such as quality control, production process, supplier development, etc.; and the buyer is responsible for daily order management around orders. Such as placing orders, tracking orders, delivery, expediting, verifying prices, payment, etc. One of the purposes of this setup is to allow business managers to get rid of the day-to-day management of order management and focus on strategic levels, such as overall price (Cost), quality (Quality), delivery (Delivery), service (Service), technology (Technology), Asset (Asset), Process and People (Process and People), collectively referred to as the seven major contents of QCDSTAP. The logic is that day-to-day supplier performance, such as on-time delivery, quality and technical support, can only be ensured by addressing some of the most fundamental issues at an overall strategic level.

Why SLA Monitoring of PR's is important in Procurement ? (Procurement) SLA (Service Level Agreement) tracking of buyers is important because: 1. Ensures timely purchasing processes: SLA tracking holds buyers accountable for meeting agreed-upon timelines, preventing delays. 2. Monitors buyer performance: Tracking SLAs helps procurement teams evaluate buyer performance, identifying areas for improvement. 3. Enhances procurement efficiency: SLA tracking streamlines purchasing processes, reducing cycle times and increasing productivity. 4. Supports strategic procurement initiatives: Accurate SLA tracking data informs procurement strategies, enabling teams to optimize processes and supplier relationships. 5. Encourages accountability: SLA tracking promotes buyer accountability, ensuring they meet agreed-upon service levels. 6. Improves procurement metrics and KPIs: SLA tracking data contributes to key performance indicators (KPIs), enabling procurement teams to measure success and progress. 7. Enhances supply chain visibility: SLA tracking provides real-time insights into procurement operations, enabling data-driven decisions. 8. Mitigates procurement risks: Effective SLA tracking helps procurement teams identify and mitigate potential risks in the purchasing process. 9. Supports internal customer satisfaction: By ensuring buyers meet SLAs, procurement teams can better meet internal customer needs and expectations. 10. Encourages continuous improvement: SLA tracking promotes a culture of continuous improvement, driving buyers to optimize their performance. By prioritizing SLA tracking of buyers, procurement teams can optimize purchasing processes, enhance efficiency, and drive business success. #procurement #supplychain #jobs

Here's an overview of SCM Purchasing, including the process, key objectives, and KPIs: *Process of SCM Purchasing* 1. *Need Identification*: Identify the need for a product or service. 2. *Sourcing*: Identify potential suppliers and evaluate their capabilities. 3. *Request for Quotation (RFQ)*: Send RFQs to selected suppliers. 4. *Bid Evaluation*: Evaluate bids from suppliers. 5. *Contract Negotiation*: Negotiate contracts with selected suppliers. 6. *Purchase Order (PO) Creation*: Create POs for approved purchases. 7. *Receiving and Inspection*: Receive and inspect goods or services. 8. *Payment*: Process payments to suppliers. *Key Objectives of SCM Purchasing* 1. *Cost Savings*: Minimize procurement costs. 2. *Quality Assurance*: Ensure high-quality goods or services. 3. *Delivery Reliability*: Ensure timely delivery of goods or services. 4. *Supply Chain Risk Management*: Mitigate risks associated with suppliers. 5. *Compliance*: Ensure compliance with regulatory requirements. *KPIs for SCM Purchasing* 1. *Purchase Price Variance (PPV)*: Measures the difference between actual and expected purchase prices. 2. *Supplier Lead Time (SLT)*: Measures the time taken by suppliers to deliver goods or services. 3. *Supplier Quality Rating (SQR)*: Measures the quality of goods or services provided by suppliers. 4. *Purchase Order Cycle Time (POCT)*: Measures the time taken to process purchase orders. 5. *Supplier Compliance Rate (SCR)*: Measures the percentage of suppliers that comply with regulatory requirements. 6. *Cost Savings*: Measures the cost savings achieved through procurement initiatives. 7. *Supplier Retention Rate (SRR)*: Measures the percentage of suppliers retained over a specified period. 8. *Inventory Turns*: Measures the number of times inventory is sold and replaced within a specified period.

🌟 Order Processing vs. Procurement: Understanding the Key Differences 🌟 In the world of supply chain management, terms like order processing and procurement are often used interchangeably, but they represent distinct functions within a business. Here’s a breakdown to help you understand the key differences between these two critical processes: Order Processing Definition: Order processing is the workflow that involves receiving, handling, and fulfilling customer orders. It ensures that products or services are delivered to customers accurately and efficiently. Key Steps: Order Receipt: Capturing customer's order details. Order Confirmation: Verifying order details and confirming with the customer. Order Fulfillment: Picking, packing, and shipping products. Delivery: Ensuring order reaches the customer. Order Tracking: Monitoring status of the order until it is delivered. Importance: Efficient order processing is crucial for customer satisfaction, timely deliveries, and accurate order fulfillment. It directly impacts the customer experience and can influence repeat business. Procurement Definition: Procurement is the process of sourcing and acquiring the goods and services a company needs to operate. It involves identifying suppliers, negotiating contracts, and managing supplier relationships. Key Steps: Needs Identification: Determining what goods or services are required. Supplier Selection: Identifying and evaluating potential suppliers. Contract Negotiation: Negotiating terms and conditions with suppliers. Purchase Order Creation: Issuing purchase orders to suppliers. Receipt and Inspection: Receiving and inspecting the goods or services. Payment: Processing payments to suppliers according to agreed terms. Importance: Effective procurement ensures that a company gets the best value for its purchases, maintains good supplier relationships, and supports operational efficiency. It is essential for cost management and supply chain stability. Key Differences Focus: Order Processing: Fulfilling customer orders. Procurement: Acquiring goods and services for the company. Workflow: Order Processing: Involves steps like order receipt, confirmation, fulfillment, and delivery. Procurement: Involves steps like needs identification, supplier selection, contract negotiation, and purchase order creation. End Goal: Order Processing: Aims to satisfy customer orders efficiently and accurately. Procurement: Aims to source necessary goods and services at the best value and maintain supply chain continuity. Understanding the differences between order processing and procurement helps streamline operations and improve overall efficiency. Both processes are vital for a company’s success, but they serve distinct purposes and require different strategies. How do you manage order processing and procurement in your organization? #SupplyChainManagement #OrderProcessing #Procurement #BusinessOperations #Efficiency #CustomerSatisfaction

Procurement 365 Pty Ltd, is known as a sourcing or purchasing company. An organization that specializes in managing the sourcing and procurement activities for any businesses. The primary function of out company is to help its clients acquire goods, services, or works from external sources in the most efficient and cost-effective manner possible. Some of our key functions of our business include: 1. *Sourcing*: Identifying and selecting suppliers that can provide the required goods or services. This involves researching potential suppliers, evaluating their capabilities, negotiating terms and conditions, and establishing contracts. 2. *Supplier Management*: Once suppliers are selected, we work to manage these relationships effectively. This includes monitoring supplier performance, ensuring compliance with contracts, resolving disputes, and fostering long-term partnerships. 3. *Cost Management*: Assisting clients optimize costs by negotiating prices, terms, and conditions with suppliers to secure the best possible deal. They may also identify opportunities for cost savings and process improvements. 4. *Risk Management*: Help mitigate risks associated with the sourcing process. This includes assessing supplier reliability, ensuring compliance with regulations and quality standards, and developing contingency plans to address potential disruptions. 5. *Quality Control*: Ensure that the goods or services acquired meet the required quality standards. This involves setting quality criteria, conducting inspections, and addressing any quality issues that may arise. 6. *Logistics and Supply Chain*: Management: Involved in coordinating the logistics and supply chain activities related to the delivery of goods or services. This includes managing inventory levels, optimizing transportation routes, and ensuring timely deliveries. Overall, our function is to streamline the sourcing and procurement process for its clients, enabling them to focus on their core business activities while benefiting from cost savings, improved quality, and reduced risks in their supply chain.

what is the Difference between Procurement and Purchasing ? The terms procurement and purchasing are often used interchangeably but have distinct meanings within supply chain management. Here’s the primary difference: Procurement Procurement is a strategic and comprehensive process that involves more than just buying goods and services. It includes the entire process of identifying needs, sourcing suppliers, negotiating contracts, and managing supplier relationships to acquire goods or services that meet organizational goals. Key activities in procurement include: Strategic Sourcing: Finding and evaluating suppliers. Contract Negotiation: Establishing terms for price, delivery, and quality. Supplier Relationship Management: Building long-term partnerships. Risk Management: Minimizing supply chain and vendor-related risks. Cost and Quality Control: Ensuring optimal value while maintaining quality. Procurement aligns closely with organizational strategy, aiming to optimize costs, secure quality, and build value-added relationships with suppliers. Purchasing Purchasing, on the other hand, is a transactional process and a subset of procurement. It focuses specifically on the actual buying of goods and services and involves tasks like: Ordering: Placing purchase orders based on procurement plans. Receiving: Accepting goods or services from suppliers. Invoicing and Payment: Handling billing and payment processes. Purchasing is more focused on executing the order, processing invoices, and ensuring that the right products or services are delivered as required. Summary of Key Differences: In summary, procurement encompasses the entire strategic approach to acquiring goods and services, while purchasing is primarily concerned with the execution of buying activities within that broader framework.