L2.2 Analyse each stage of the CIPS Procurement Cycle in relation to adding value Flashcards
The purpose and added value created at each PRE-contract award stage
Stage 1: Define business needs and develop specification
Purpose
- To ensure the need is as per CONSUMERS’ REQUIREMENTS and is CLEARLY DEFINED to potential suppliers
Value
- Ensures QUALITY STANDARDS are met and reduces the need for requotes due to lack of information or misinterpretation. This helps SAVE TIME over the whole proc process
The purpose and added value created at each PRE-contract award stage
Stage 2: Market analysis and make or buy decision
Purpose
- To assess the marketplace, and what OPTIONS are available;
- if necessary, may analyse whether it would be preferable to make or buy
Value
- Scope out the DYNAMICS of the marketplace to ASSESS MARKET OPTIONS; you might decide to do a make vs buy analysis
The purpose and added value created at each PRE-contract award stage
Stage 3: Develop the strategy and plan
Purpose
- To evaluate the COMPETITION and decide on which TYPE of SUPPLIERS to approach
Value
- Saves TIME and ensures CONFORMANCE by using suppliers that fit the org’s strategy
The purpose and added value created at each PRE-contract award stage
Stage 4: Pre-procurement market testing
Purpose
- To review demographics and TRENDS and evaluate the LIFE-CYCLE stage of the need
Value
- Reduces the chances of goods or services not being received well or the agreed contract price being uncompetitive
The purpose and added value created at each PRE-contract award stage
Stage 5: Develop documentation and detailed specification
Purpose
- 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
Value
- Ensures potential suppliers are FULLY BRIEFED on the T&Cs and ELIMINATES, at an early stage, suppliers who cannot conform
The purpose and added value created at each PRE-contract award stage
Stage 6: Supplier selection to participate in tender
Purpose
- To EVALUATE the shortlisted suppliers to ensure they FIT with the buyer’s org. and that they can FULFIL the need
Value
- Evaluation of suppliers REMOVES UNETHICAL & UNSUITABLE suppliers, in addition to those in financial difficulties
The purpose and added value created at each PRE-contract award stage
Stage 7: Issue tender documents
Purpose
- To give the suppliers a CHANCE to provide an OFFER with a view to being awarded a contract
Value
- Increases the number of SUITABLE suppliers by OPENING UP the need with a view to receiving the MOST COST EFFECTIVE RESPONSE
The purpose and added value created at each PRE-contract award stage
Stage 8: Bid and tender evaluation and validation
Purpose
- To assess the BEST COST & VALUE FOR MONEY to meet the need
Value
- Evaluation and COMPARISON of suppliers’ offers results in selection of the MOST COST EFFECTIVE OPTION
The purpose and added value created at each POST-contract award stage
Stage 9: Contract award and implementation
Purpose
- To state the REQUIREMENTS of the buying org. and give the supplier VISIBILITY of the EXPECTED PERFORMANCE
Value
- Saves TIME compared with spot buying (=ad hoc or infrequent buying of a product/service)
- Ensures goods are sourced AGAINST ONGOING NEEDS
The purpose and added value created at each POST-contract award stage
Stage 10: Warehouse, logistics and receipt
Purpose
- To check goods/services are as REQUIRED
Value
- 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
The purpose and added value created at each POST-contract award stage
Stage 11: Contract performance and improvement
Purpose
- To ensure the EFFICIENT and EFFECTIVE RUNNING of the contract
- To ensure the contractual performance is as EXPECTED in accordance with agreed KPIs
- To discuss plans for continuous improvement
Value
- Ensures the contract is performing as expected and in turn, that the INITIAL REQUIREMENTS driving the contract are BEING MET
The purpose and added value created at each POST-contract award stage
Stage 12: Supplier relationship management
Purpose
- To ensure the relationship with the supplier is managed correctly to ensure CONTINUITY OF SUPPLY
- To ensure that the relationship type and mgmt style is IN LINE with the strategy, type of purchase, length of contract and marketplace
Value
- Ensures the relationship has the CORRECT NO. OF RESOURCES ALLOCATED and that the buyer is ACHIEVING the required deliverables and outcomes from the supplier
The purpose and added value created at each POST-contract award stage
Stage 13: Asset management
Purpose
- To assess changing business requirements and whether the need is still VALID
- To calculate end-of life costs and review LESSONS LEARNED
Value
- Allows full opportunity for REFLECTION to check whether the requirement is ongoing and the reallocation of resources if not
- To assess what worked well and what needs improvement for future contracts
Making an offer + Acceptance of offer
1. What is a response to an ITT or an RFQ?
2. Define Unconditional acceptance
3. Define Counter offer
- !! A response to an ITT or an RFQ is an OFFER.
- simply providing an individual or org. with information about a product/service is known as an INVITATION TO TREAT, not an offer
eg. television adverts - Unconditional acceptance
= acceptance of an offer exactly as it is presented - Counter offer
= a response to an offer that is different from the original, incl. AMENDED DETAILS such as price
- the counter offer does not have to be accepted by the supplier; if it is, then an agreement exists
- within procurement law, silence does not mean acceptance; an offer must be accepted and confirmed formally in WRITING
The supplier’s offer - 8 types of offer details that should be included {less important FC in my opinion}
- price
- delivery
- packaging
- frequency
- lead time
- quality
- minimum order quantity (MOQ)
- payment terms
