2.1 - Analyse the purpose of organisational procedures and processes in sourcing goods and/or services Flashcards
Internal stakeholder
A stakeholder within the organisation such as a department or function
Connected stakeholder
This is a stakeholder that has a strong interest in a companys activities. This is due to its contractual or commercial relationship with the company. This definition includes suppliers
External stakeholder
A stakeholder outside the buying organisation who has a direct role in the delivery of the contractual requirements
Value for money
The most advantageous combination of price and quality that makes a product or service fit for purpose and will achieve the buyers required outcomes. This needs to be reviewed in terms of whole life costs
What is value for money often described as
The 3 E’s
What does the National Audit office often say about the 3 E’s
That in some areas there is a fourth (Equity)
Name the 4 E’s
Economy
Efficiency
Effectiveness
Equity
Name 5 typical factors that CIPS make reference to when defining value for money
- Fitness for purpose
- Quality
- Whole-life costs
- Risk
- Environmental and sustainability issues
Name 6 added value elements that a supplier may include in their tender submissions
- Providing work experience opportunities
- Providing education and training opportunities
- Apprenticeships
- Supplier staff undertaking voluntary work on specific projects
- Donations of products/materials for community projects
- Sponsorship of events
What is value for money often described as
The 4 E’s
Economy
Efficiency
Effectiveness
Equity
What is value for money in the private sector related to?
Shareholder profit and business benefit
What is value for money in the public sector related to?
Ensuring tax payers money is spent wisely
Name 4 ways that lack of compliance with procurement processes can leak value
- Lack of contract coverage
- Maverick buying activity
- If no formal specification it may not be fit for purpose
- Procurement activity not assessed and managed in a consistent way
Name a key way that value for money can be ensured
Apply competition to business requirements
Name the 8 steps of a simplified cips procurement cycle where value can be added
- Requirement determination
- Source determination
- Vendor selection
- Order processing
- Order monitoring
- Goods receipt
- Invoice verification
- Payment
Make or buy
The action of choosing whether to manufacture a product or provide a service in-house or purchase it from an external supplier
Cross-functional team
Teams that involve individuals from different departments who work together towards a common goal. This could be a group of people working on a defined project who come from different functions or departments of the company. It can also include members who are from outside the company, such as suppliers
Value mapping
A process in which value is created by reducing or eliminating waste and operational inefficiencies
Ohno’s eight wastes
The eight wastes identified by Taiichi Ohno of Toyota, often remembered by the TIMWOODS acronym
Name 7 ways procurement can add value when defining the need of internal customers
- Consider the make or buy decision
- Support the formation of cross functional teams to develop the specifications
- Ensure the requirement is not over specified
- Review where branded products could be replaced with substitute non-branded products or materials to reduce costs
- Encourage standardisation of common products and services across a company to benefit from leverage possibilities
- Provide advice on whether a confirmance or performance specification would be most suitable
- Involve suppliers in this stage if this would be added value
Name 8 wastes (TIMWOODS)
Transportation
Inventory
Motion
Waiting
Over-production
Over-processing
Defects
Skills
Name 4 ways category management can allow procurement to leverage expertise and knowledge
- Spend reviews across various areas provide a fuller overview than reviewing spend on a contract-by-contract basis
- Following on from spend reviews procurement can aggregate demand and consolidate spend which can result in reduced costs
- SRM and improved risk management plans can be developed
- Specialist category and supplier knowledge regarding the market and potential sources of supply can be developed
Name 4 ways supplier relationships can result in value for money
- Being able to identify and use an appropriate approach to deal with supplier issues
- Innovation developed as part of collaborative projects with strategic suppliers
- Reduction of waste
- Resilience and risk reduction
Private sector
Organisations that are owned by private individuals and enterprises