PROJECT

Facilitator : Ahmed Aslam, PMP, MPM, ACCA

COURSE OUTLINE
 Week 01 – Introduction
 Week 02 – Procurement in project life cycle
o Week 03 – Assignment, Make or buy analysis
o Week 04 – Buyer & Seller relationships
o Week 05 – Purchasing process
o Week 06 – Quiz, Procurement documents
o Week 07 – Supplier positioning and sourcing strategy
o Week 08 - Mid-term Examination
o Week 09 – Seller pre-qualifications, evaluation & bidding
o Week 10 - Commercial contract management
o Week 11 - Assignment, Bids opening and evaluation
o Week 12 - Conflict & Dispute resolution
o Week 13 - Formal acceptance of deliverables
o Week 14 – Quiz, Procurement involving international suppliers
o Week 15 – Project Presentation
o Week 16 - Final Examination
What is a Supply Chain?

• All stages involved, directly or indirectly, in fulfilling a customer

request. Includes manufacturers, suppliers, transporters,
warehouses, retailers, and customers

• Within each company, the supply chain includes all functions

involved in fulfilling a customer request (product development,
marketing, operations, distribution, finance, customer service)
Typical Supply Chain Illustrated
Typical SCM Organizational Design
Supply Chain
Supply Chain Leader Council

PROCUREMENT LOGISTICS SCM ADMIN

•Strategies
•Warehousing
•Efficiencies
•Inventory
Strategic Sourcing •Process Review
Tactical •Transportation
•Demand &
•Environmental Forecasting
•KAP-Vendors •Release orders-KAP’s •Disposal
•$ Volume Driven •Spot Orders
•Q A •Non-Repetitive
•Spend Areas- Orders
Future •NON-CORE
•CORE Commodities Commodities

Contract Management

SCM=Supply Chain Management KAP=Key Alliance Partners

Dell success story
Flows in a Supply Chain
Information

Product
Customer
Funds

Supply chain management is the management of flows between and

among supply chain stages to maximize total supply chain profitability
• Maximize overall value created

• Supply chain value: difference between what the final product is worth to
the customer and the effort the supply chain expends in filling the
customer’s request

• Value is correlated to supply chain profitability (difference between revenue

generated from the customer and the overall cost across the supply chain)
Procurement vs. sourcing vs. purchasing
• Procurement deals with sourcing activities, negotiation and strategic selection
of goods and services that are usually of importance to an organization.

• Purchasing is the process of how goods and services are acquired.

• Sourcing is the component of the Procurement process that deals with supplier
selection and management.

Example
An organic food company that is committed to sustainability has a sourcing process
that involves visiting the premises of major suppliers as part of basic due
diligence before signing supply contracts. Once a supplier is signed, purchases from
that supplier are a matter at filling out order forms and obtaining internal approvals.
Sourcing
• The process of identifying potential vendors, conducting
negotiations with them, and then agreeing supply contracts with
these vendors.

• The buying of components of a product from an outside supplier

• Sourcing encompasses numerous facets, including supplier

management, timing of suppliers, pricing and the delivery
methods.

• Is the practice of locating and selecting businesses or individuals

based on set criteria.
Why sourcing is Important?
In manufacturing sector the percentage of purchases to sales
averages 55%. It is not difficult to see why purchasing is clearly a
major area for cost savings. However, savings come in different
forms;

• Traditional approach:
 Bargain hard for price reductions

• Newer approach:
 Build relations with suppliers to jointly pull costs out of the
product or service.
Strategic sourcing
Strategic sourcing is an approach to supply chain management that
formalizes the way information is gathered and used so that an
organization can leverage its consolidated purchasing power to find the
best possible values in the marketplace

• First established by General Motors in the 1980’s and is now a

common business purchasing tool.

• The rise of China and its manufacturing capabilities has opened up

numerous strategic purchasing opportunities.

• Strategic sourcing is often used for high valued services, ad hoc

purchases and core large values purchases.
Strategic sourcing processes
• Evaluation of the company’s current purchasing cycles.

• Evaluation of what is currently available in the supply market.

• A review of the cost benefit analysis of using other suppliers.

• A review of potential vendors.

• An update of the current procurement strategy.

• Negotiations with potential vendors to ensure that they meet the new
procurement strategy and cost benefit analysis.

• Implementation of the new vendor relationship.

• On a continuous process, review and update the strategic sourcing.

Global Procurement
• Sourcing products and (sometimes
services) irrespective of national
boundaries.

• It is particularly popular in Europe

and Asia. Both of these areas are less
concerned with geographic
boundaries.

• Purchasing companies are seeking

low labor and production costs which
are not countered by high delivery
costs.

• Many improving countries also offer

attractive tax and tariffs to encourage
purchasing from them.