2.2 - Analyse each stage of the CIPS Procurement Cycle in relation to adding value Flashcards
What is the purpose of defining the business needs and develop specification
To ensure the need is as per the consumers requirements and is clearly defined to potential suppliers
What is the value of defining the business needs and develop specification
Ensures quality standards are met and reduces the need for requotes due to lack of information or misinterpretation. this helps save time iver the whole procurement process
What is the purpose of market analysis and make or buy decisions
To assess the marketplace and what options are available; if necessary, may analyse whether it would be preferable to make or buy
What is the value of market analysis and make or buy decisions
Scope out the dynamics of the marketplace to assess market options; you might decide to do a make versus buy analysis
What is the purpose of developing a strategy or plan?
To evaluate the competition and decide on which tyoe of suppliers to approach
What is the value of developing a strategy or plan
Saves time and ensures conformance by using suppliers that fit with the organisations strategy
What is the purpose of pre-procurement market testing
To review demographics and trends and evaluate the life-cycle stage of the need
What is the value of pre-procurement market testing
Reduces the chances of goods or services not being well received or the agreed contract price being uncompetitive
What is the purpose of developing documentation and a detailed specification
To set out the criteria against which an offer is to be submitted. To assess which suppliers meet the buyer’s criteria prior to conducting further evaluation
What is the value of developing documentation and a detailed specification
Ensures potential suppliers are fully briefed on the terms and conditions and eliminates, at an early stage, suppliers who cannot conform
What is the purpose of supplier selection to participate in tender
To evaluate the short-listed suppliers to ensure they fit with the buyer’s organisation and that they can fulfil the need
What is the value of supplier selection to participate in tender
Evaluation of suppliers removes unethical and unsuitable suppliers, in addition to those in financial difficulties
What is the purpose of issuing tender documents
To give the suppliers the chance to provide an offer with a view to being awarded a contract
What is the value of issuing tender documents
Increases the number of suitable suppliers by opening up the need with a view to receiving the most cost effective response
What is the purpose of bid and tender evaluation and validation
To assess the best cost and value for money to meet the need
What is the value of bid and tender evaluation and validation
Evaluation and comparison of suppliers’ offers results in selection of the most cost effective option
Name 2 components of procurement agreement
- Offer
- Acceptance
Unconditional acceptance
Acceptance of an offer exactly as it is presented
Counter offer
A response to an offer that is different from the original, including amended details, such as price
Name 8 types of information that should be included in a detailed offer from a supplier
- Price
- Delivery
- Packaging
- Frequency
- Lead time
- Quality
- Minimum order quantity
- Payment terms
Express terms
Anything which is said or written that is agreed between the two parties
Implied terms
Assumed to exist and are linked to common law
Name 2 aspects of implied terms
- Legislation
- Regulations
Name 2 aspects of express terms
- Price
- Specification
Name an advantage of adding KPIs in early
It communicates clear concise expectations of the supplier at the point of the tender
What should KPIs be?
SMART
How do KPIs fit into an organisations strategy (5)
- Monitoring
- KPIs
- Objectives
- Strategy
- Vision
How does the public sector approach supplier evaluation
They are regulated and generally have the most stringent policies and procedures to follow when seeking and evaluating suppliers
How does the private sector approach supplier evaluation
They are unregulated about which suppliers they choose to work with and can approach and evaluate any supplier for any contract
Public sector
A sector of the economy that is owned, financed and run by the government or state owned enterprises
Private sector
A sector of the economy that is owned, financed and run by private individuals
Name 5 problems that could be caused due to failure to correctly conduct the pre-contract award stages of the CIPS Procurement cycle
- Wrong product supplied
- Wrong prices agreed
- Too few or too many products ordered
- Incorrect suppliers selected
- Legal action
What is the purpose of contract award and implementation
To state the requirements of the buying organisation and give the supplier visibility of the expected performance
What is the value of contract award and implementation
Saves time compared with spot buying. Ensures goods are sourced against ongoing needs
What is the purpose of warehouse, logistics and receipt
To check goods/services are as required
What is the value of warehouse, logistics and receipt
Ensures goods received are managed and processed correctly, to prevent any later defects from being found, or product damage or loss from occurring once goods are the responsibility of the buyer
Whats the purpose of contract performance and improvement
To ensure the efficient and effective running of the contract, ensure the contractual performance is as expected in accordance with agreed KPIs, and discuss plans for continuous improvement
Whats the value of contract performance and improvement
Ensures the contract is performing as expected and in turn, that the initial requirements driving the contract are being met
Whats the purpose of supplier relationship management
To ensure the relationship with the supplier is managed correctly to ensure continuity of supply. To also ensure that the relationship type and management style is in line with the strategy, type of purchase, length of contract and the marketplace
Whats the value of supplier relationship management
Ensures the relationship has the correct number of resources located and that the buyer is achieving the required deliverables and outcomes from the supplier
Whats the purpose of asset management
To assess changing business requirements and whether the need is still valid. To calculate end-of life costs and review lessons learned
Whats the value of asset management
Allows full opportunity for reflection to check whether the requirement is ongoing and the reallocation of resources if not and to assess what worked well and what needs improvement for future contracts
Name 7 aspects of a collaborative relationship
- Information is shared
- Needs are understood and attempted to be met
- Common goals, strategies and objectives
- Focus on teamwork, openness and trust
- Long-term relationship
- Open communication
- Promotes supplier relationship management
Name 8 aspects of a distributive relationship
- Information is withheld
- No effort made to understand the other side
- No shared goals
- One sided, aims to meet own needs only
- Often results in win-lose situation
- Usually short-term or one-off relationship
- Little communication
- Focuses on contract management
Collaborative style
Working together effectively, a style promoting win-win and trust within relationship
Distributive style
A style where one party wants to win and does so by focusing on their own goals
Name 4 main factors of supplier relationship management
- Monitor performance
- Maintain strategy
- Manage change
- Manage relationships
Name 4 serious implication of the post-contract award stage not being managed correctly
- Warehousing issues
- Lack of awareness of supplier performance issues
- Failure to improve processes
- Incorrect disposal of assets
