3.3 - Examine the different structures of a procurement or supply chain function Flashcards
The main objective of the private sector
Make profit on the goods and services they provide
Main objective of the public sector
Providing services to the public, and company profit is not an issue
Main objective of the third sector
Achieve value for money
Name 7 basic actions that can achieve good customer service
- Answer the telephone and respond to emails
- Do not make false promises
- Do what you say you will do
- Deliver good and bad news honestly
- Encourage feedback
- Aim to resolve complaints effectively and efficiently
- Always be helpful and appear willing
Name 4 elements of value for money
- The 5 rights of procurement
- Innovation
- Whole-life cost
- Customer service
Centralised structure
Activities carried out at one central location
Name 3 procurement structures
- Centralised - entire organisations procurement conducted from one central point
- Hybrid - combination of both centralised and developed
- Decentralised - procurement carried out by location or departments
Name 3 advantages of centralised procurement
- Promotes economies of scale
- More efficient use of skills and resources
- Reduction in expenses
Name 3 disadvantages of centralised procurement
- Not supportive of local economy
- Increased bureaucracy
- Less accountability and sometimes a lack of control
Decentralised structure
Activities carried out at local levels. Also referred to as a devolved structure
Name 5 advantages of decentralised procurement
- Direct communication with supplier
- Fast delivery
- Local suppliers supported
- Fewer procedures
- Specialist product knowledge
Name 6 disadvantages of decentralised procurement
- Prices may not be negotiated to the best value
- Economies of scale not used
- Supplier relationships not valued
- Total cost of ownership may not be monitored
- Detracts from core activities
- Higher risk of fraud and embezzelment
Hybrid structure
A mix of centralised and decentralised structures
Hybrid procurement
Procurement of products or commodities is placed within the structure where they best fit
Name 4 recognised hybrid structures
- Consortium structures
- Shared services
- Lead buyer structures
- Outsourced
Consortium structure
Formed when similar organisations or organisations with the same needs collaborate for mutual benefit
Name 6 types of consortia
- Loose
- Voluntary
- Regional
- Profit-making
- Member-owned
- Non-profit
Name 8 advantages of consortium structure
- Economies of scale
- Additional negotiating skills
- Lower prices
- Reduced workloads
- Improvement of best practise
- Shared and increased knowledge
- Enhanced quality
- Reduced levels of risk
Name 5 disadvantages of consortium structure
- Reduced control
- Internal conflict
- Reduced competition
- Increased supplier lead times
- Supplier relationships lost
Name 4 functions that are often shared services
- HR
- Admin
- ICT
- Finance
Name 3 objectives of shared services
- To create uniformity in policies, procedures and standards
- Continuous improvements
- To save costs
Purpose of shared services
Reduce the amount of individual admin and support activities within departments and to streamline and standardise them across an organisation
Name 6 advantages of shared services
- Reduces costs
- Provides high level of skill and knowledge
- Puts focus on core activities
- Pools resources
- Avoids duplication of work
- Information all held in one central location
Name 5 disadvantages of shared services
- Risk of breaching departmental confidentiality is increased
- Resistance to change from workforce
- New processes and procedures take time to adopt
- Auditing more challenging
- Information not readily available within departments
Lead buyer structure
When one organisational department, or individual takes the responsibility for setting the framework or the purchasing of a specific product or service such as ICT or stationery
Name 3 advantages of lead buyer procurement strategies
- Individuals with procurement experience can develop their skills
- Economies of scale can be achieved
- Reduces workload compared with devolved procurement strategy
Name 7 disadvantages of lead buyer procurement strategies
- If a department has no procurement knowledge the prices will not be competitive
- Products or services chosen may not suit all parties
- Increases workload compared with centralised procurement strategy
- Ethical breaches could occur
- Reduced control
- Increased risk
- The same suppliers may get multiple orders which could have been collated to reduce costs
Name 5 things outsourcing can be used to do
- Reduce costs
- Save time
- Enable the organisation to concentrate on core competencies
- Reduce staff
- Integrate external expertise into an organisation
What structure does outsourcing fit in to?
Hybrid structure
Multi-nationals
Organisations that operate globally
Name 5 advantages of outsourced procurement
- Cost reduction
- Reduced training costs
- Lower headcount
- Economies of scale
- Access to highly skilled buyers
Name 8 disadvantages of outsourced procurement
- Changing from internal to outsourced procurement could be difficult in terms of employee relations
- Lack of control
- Outsourcing needs managing
- Technological problems with integration of company systems to the outsourced procurement function
- Resistance to change from internal staff
- Redundancies in current procurement team
- Continuity of supply and supplier relationships
- Reliance on the success of another organisation
Name the 4 sections of the trust matrix
- Affection
- Trust
- Distrust
- Respect
Name 9 methods of building rapport
- Positive body langauge
- Make eye contact
- Listen and use positive gestures for emphasis
- Ask questions
- Be empathetic
- Respect all ideas
- Remove preconceptions
- Be honest
- Justify opinions and feedback
