Majors: SCM/3

S.NO. 03

Conventional Vs Comprehensive process of Procurement & Sourcing: A

Case Study of Telecom Sector Pakistan (JAZZ)

By

Arslan Haleem 01-222181-001

Zarmeena Gauhar 01-221191-029

MBA

Supervisor:
Aftab Haider

Department of Management Science (MS)

BAHRIA UNIVERSITY, ISLAMABAD.
Spring-2020

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Certificate

This is to certify that this project report, entitled “Conventional Vs Comprehensive process of
Procurement & Sourcing: A Case Study of Telecom Sector Pakistan” by Arslan Haleem a (01-
222181-001) and Zarmeena Gauhar (01-221191-029), submitted in partial fulfilment of the
requirements for the degree of Masters of Business Administration from Bahira University,
Islamabad Pakistan, during the academic year of 2020 is a bona fide record of work carried out
under my permission and guidance.

Zohair Ahsan (Services Delivery Manager, Procurement, FIN), JAZZ

JAZZ Digital Headquarters, F-8 Markaz, Islamabad

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Acknowledgment

We have a pearl of our eyes to admire the blessings of the compassionate omnipotent because the
words are bound, knowledge is limited, and time is short to express His dignity. It is one of the
infinite blessings of Almighty Allah that He bestowed us with the potential and ability to
complete this project and make a material contribution towards the deep ocean of knowledge.
First, we avail this opportunity to bow my head before Allah Almighty in humility who has
given us the wisdom and preserves for completing this piece of report.

We invoke peace for Holy Prophet Muhammad (P.B.U.H) who is forever torch. We feel highly
privileged to ascribe the most and ever burning flame of my gratitude and a deep sense of
devotion to our mentor “Raja Khalid Hafeez” who guided us in our final project of MBA with
his heart and gave us a guideline to do our work in the best possible way. We are grateful and
would like to express our sincere gratitude to our supervisor for his invaluable guidance,
continuous encouragement and constant support in making this research project possible.
Without his advice and assistance, it would be a lot tougher to achieve the completion of this
research project. We also sincerely thank him for the time spent proofreading and correcting our
mistakes.

We would also like to thanks to Almighty Allah who gives us an opportunity to fulfill the dreams
of our parents. Who was very determined and show high confidence throughout our studies.
Without their support, it was not possible for us to achieve this milestone.

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Abstract

Businesses especially in telecom sector expect from their procurement and sourcing departments
to procure technological equipment as well as services in a timely manner and cost-effective way
so as to deliver projects as per plan and to meet their demands. By applying Lean principles to
procurement and sourcing processes, businesses experience multiple benefits throughout the
supply chain.

However, when we talk about the procurement and sourcing processes of JAZZ within the
telecom sector, which is a far better than its rivals in the market place. Although being market
leader is not enough when it comes to lean and agile management processes, which demands
R&D and day to day innovations in operating procedures.

After examining and deep analysis of JAZZ current procedures of procurement and sourcing, it
is worth mentioning that there are certain gaps which needs to be highlighted and addressed
accordingly to reduce lead time, cost as well as service affecting procedures. With the rapid
growth in demand of technology in market place JAZZ is more focusing on digitalization and
technological innovation streams. But the supply chain (procurement & sourcing) procedures are
conventional which could ultimately affect the long-term goals.

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 List of Acronyms
BOQ Bill of Quantity   PMC Pakistan Mobile Communication Limited
L
BPA Blanket Purchase Agreement   PMP Procurement Master Plan
CAPE Capital Expenditure   PO Purchase Order
X
CCM Contracts and Claim Management   PPG Procurement, Performance and
Governance
CEO Chief Executive Officer   PR Purchase Requisition
CFO Chief Financial Officer   QES Quotation Evaluation Statement
EOI Expression of Interest   RFI Request for Information
ERP Enterprise resource planning   RFP Request for Proposal
FCPA Foreign Corrupt Practices Act   RFQ Request for Quotation
FP&A Financial Planning and Analysis RFV Red Flag Vendor
GBPA Global Blanket Purchase   RFx Request for proposal/quotation
Agreement
GFA Global Framework Agreement   RM Responsibility Matrix
GL General Ledger   SAP System, Application & Products
GPB Global Price Book   SCM Supply Chain Management
GPS Global Procurement System   SO Service Operations
HQ Head Quarter   SOW Scope of Work
KPI Key Performance Indicator   SPOC Standard Point of Contact
KTC Key Terms and Conditions   SSD Single Source Decision
NOM New Operating Model   SSM Single Source Mandate
OPEX Operational Expenditure  

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Table of Contents
CERTIFICATE........................................................................................................................................................ 2
ACKNOWLEDGMENT........................................................................................................................................... 3
ABSTRACT........................................................................................................................................................... 4
LIST OF ACRONYMS............................................................................................................................................. 5
CHAPTER 1 INTRODUCTION................................................................................................................................. 9
1.1 BACK GROUND..............................................................................................................................................9
1.2 PURPOSE OF CASE STUDY.......................................................................................................................10
1.3 GOAL OF CASE STUDY............................................................................................................................10
1.4 OBJECTIVES.............................................................................................................................................11
1.5 KEY SUCCESS FACTORS..........................................................................................................................11
1.6 ESTIMATED TIME FRAME.......................................................................................................................11
CHAPTER 2 SOURCING SCOPE & DEFINITIONS.................................................................................................... 11
2.1 SCOPE.....................................................................................................................................................11
2.2 DEFINITIONS......................................................................................................................................13
CHAPTER 3 POLICY............................................................................................................................................ 16
3.1 SOURCING LEVELS..................................................................................................................................16
3.2 SOURCING LIMITS...................................................................................................................................17
3.3 FAST-TRACK SOURCING..........................................................................................................................17
3.4 TACTICAL SOURCING..............................................................................................................................18
3.5 SIMPLIFIED SOURCING............................................................................................................................18
3.6 TENDERING..............................................................................................................................................19
3.7 SINGLE SOURCE PROCUREMENT............................................................................................................21
3.8 SOURCING THROUGH GLOBAL PRICE BOOK (GPB)..............................................................................24
3.9 REPEAT ORDERS......................................................................................................................................24
3.10 ESCALATION GOVERNANCE....................................................................................................................24
3.11 SOURCING APPROVAL MATRIX..............................................................................................................25
3.12 TURN AROUND TIME...............................................................................................................................25
CHAPTER 4 SOURCING PROCEDURES................................................................................................................. 28
4.1 FAST-TRACK SOURCING PROCEDURES...................................................................................................28
4.2 TACTICAL SOURCING PROCEDURES.......................................................................................................30
4.3 SIMPLIFIED SOURCING PROCEDURES.....................................................................................................31
4.4 SIMPLIFIED SOURCING THROUGH I-SOURCING PROCEDURES...............................................................34
4.5 TENDERING PROCEDURE (1 OF 3)...........................................................................................................36
4.6 TENDERING PROCEDURE (2 OF 3)...........................................................................................................40
4.7 TENDERING PROCEDURE (3 OF 3)...........................................................................................................43
4.8 TENDERING THROUGH I-SOURCING........................................................................................................46
4.9 SINGLE SOURCING – ACCEPTABLE SSDS...............................................................................................48
4.10 REPEAT ORDER.......................................................................................................................................51

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 4.11 ESCALATION GOVERNANCE......................................................................................................................52
CHAPTER 5 INTRODUCTION TO SAP................................................................................................................... 54
4.1 COMPLETE E-SOURCING SOLUTION.......................................................................................................54
4.2 UNDISPUTED ROI, QUICK PAYBACK WITH SAP E-SOURCING..............................................................57
CHAPTER 6 SOURCING SOLUTIONS IN SAP......................................................................................................... 59
6.1 SAP STRATEGIC SOURCING....................................................................................................................59
6.2 SAP CONTRACT LIFE CYCLE MANAGEMENT........................................................................................60
6.3 SAP SUPPLIER MANAGEMENT................................................................................................................61
6.4 KEY BENEFITS OF SAP ARIBA..............................................................................................................61
6.5 DIFFERENCE BETWEEN SAP ARIBA AND ORACLE PROCUREMENT.......................................................62
CHAPTER 7 CONCLUSION................................................................................................................................... 64
7.1 SUMMARY................................................................................................................................................ 64
7.2 BUSINESS CHALLENGES...........................................................................................................................64
7.3 SUPPORTED BUSINESS PROCESSES AND SOFTWARE FUNCTIONS...........................................................64
7.4 BUSINESS BENEFITS.................................................................................................................................65
REFERENCES...................................................................................................................................................... 65

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 Chapter 1

INTRODUCTION

1.1 Back ground

Strategic sourcing is an method to supply chain management that validates the way information
is assembled and used so an organization can use its consolidated purchasing power to find the
best possible values in the marketplace and align its purchasing strategy to business goals.
Strategic sourcing is growing in popularity, as digital transformation is causing procurement and
supply chain processes to evolve. It requires analysis of what an organization buys, from whom,
at what price and at what volume. Strategic sourcing differs from conventional purchasing
because it places emphasis beyond initial purchase price to focus on total cost of ownership and
optimizing the sourcing process through ongoing market analysis and building relationships with
suppliers. 

Businesses can use strategic sourcing to make their procurement processes less shortsighted and
focused on price. A sourcing plan can instead allow them to develop an adaptable system that
contributes to the overall value of the business long term. The process begins with analyzing
business needs and historical spending, followed by outlining a strategic plan, and then
conducting data collection and market analysis that guides selection of a roster of suppliers.
Once selection and negotiations have taken place, strategic sourcing also involves measuring
performance and improving the process on a continual basis. Strategic sourcing is generally
practiced by large organizations with many suppliers. Outsourcing providers for strategic
sourcing exist for organizations that wish to delegate the function to a specialist.

1.2 Purpose of Case Study

The purpose of this case study project is to examine the procedures of procurement and sourcing
of equipment and services within telecom sector (targeting JAZZ). Current (conventional)
procurement and sourcing practices are performed on fragmentation basis. The highly
fragmentation ultimately results the factors affecting cost, lead time, operational excellence and
as well as performance. Due to the increase in demand of technological innovations in market
place, the procurement and sourcing procedures must synchronize with technology stream and

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upgrade the operation procedures. The notion is to inspect the gaps in current conventional setup
and to highlight the importance of comprehensive procedure which is more specialized,
professional, integrated and used globally to achieve efficiency, effectiveness and competitive
advantage.

1.3 Goal of Case Study

To ensure the swift response and operations of procurement and sourcing processes which yields
in reducing lead time, cost as well as timely delivery of projects. The main purpose of this
research project is to highlight and spread the knowledge about SAP sourcing, build and leverage
the SAP sourcing community.

1.4 Objectives
The main objectives of this research project are as follows:

 Detailed study and analysis of current procurement and sourcing practices of telecom
sector (JAZZ), Pakistan.
 Highlight those processes which are main cause of affecting operational excellence,
Project delivery time and associated costs.
 Describing the detailed reasons of above-mentioned fragmented setup which are main
cause of service affecting procedures.
 Finally suggesting an appropriate solution (SAP) which can overcome and mitigate all
risks which are highlighted.

1.5 Key Success Factors

Once the SAP is introduced, the industry can manage business operations and customer relations
more efficiently and effectively. After implementation of SAP software organization can boost
their procurement and sourcing process and can achieve competitive advantage Industries will
also be able to generate more revenue by saving time, cost and overcoming weak processes after
transformation from current practices to new process which is more lean and agile.

1.6 Estimated Time Frame

The timeframe required for the completion of suggested project is approximately one year. This
project should be implemented in different fragments / chunks within different streams.

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 Chapter 2

SOURCING SCOPE & DEFINITIONS

2.1 Scope

This chapter describes the policy and procedures for all activities performed ate PMCL (JAZZ)
during the sourcing cycle, from initiation of the sourcing request to finalization of sourcing
decision in synchronization with duly updated Procurement Master Plan (PMP). This chapter
also provides guidance related to sourcing of procurement categories falling in Level B.

Procurement function shall facilitate sourcing requests received from End-User departments
ensuring procurement of goods or services that meet the specifications and requirements of End-
User. Procurement function shall add value to the sourcing process by supporting PMCL in
procuring the required goods and services striving to obtain value for money.

This chapter explains the roles and responsibilities of personnel and committees involved in the
sourcing process and covers the following processes:

 Sourcing Levels
 Fast-track Sourcing;
 Sourcing Limits
 Tactical Sourcing;
 Simplified Sourcing;
 Tendering;
 Single Sourcing;
 Sourcing through Global Price Book
 Repeat Order; and
 Escalation Governance.

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2.2 Definitions

2.2.1 Bill of Quantity

A bill of quantities (BOQ) is a document used in which required materials, parts, and
labor are itemized against exact specification. It also details the terms and conditions of
the project and itemizes all work to enable Vendor to price the work for which he or she
is bidding.

2.2.2 Commercial Evaluation

Commercial Evaluation is the comparison of the commercial bids submitted by the
bidders in respect of any procurement of goods or services, and includes comparison of
the price and other commercial terms quoted by the bidders such as delivery and payment
terms.

2.2.3 Evaluation Criteria

Evaluation criteria are the basis upon which proposals from all Vendors are analyzed and
compared to achieve the best result for the organization.

2.2.4 Quotation Evaluation Statement

Quotation Evaluation Statement is the document prepared for commercial evaluation of
bids submitted by Vendors and includes all commercial terms including price, delivery
time, payment terms etc.

2.2.5 Procurement Cycle

Procurement cycle means the amount of time involved in completing the procurement
process, from raising sourcing request to finalizing a contract / issuing purchase order.

2.2.6 Procurement Lead time

Time taken by Vendor for the supply of goods & services (manufacturing and delivery
lead time) once an order has been placed with the Vendor.

2.2.7 Purchase Requisition (PR) Unit

With respect to the Fast-track Sourcing, PR unit means designated teams, whether
regional or central, in any specific End-User department in PMCL that can raise PR in
system.

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2.2.8 Repeat Order
Procurement of the same commodity / service of exact specification from the same
source without any competitive sourcing process.

2.2.9 Request for Information

A request for information (RFI) is a document whose purpose is to collect written
information about the capabilities of various Vendors / potential bidders.

2.2.10 Request for Proposal

Request for proposal (RFP) is a document that solicits proposal, often through a bidding
process, to procure services from potential Vendors.

2.2.11 Request for Quotation (RFQ)

A request for quotation (RFQ) is a document that Company may provide to one or more
potential Vendors seeking quotations for goods.

2.2.12 Simplified Sourcing

Simplified sourcing is a competitive sourcing process applicable for purchases of
medium value and is undertaken following a simplified method of competitive bidding.

2.2.13 Single Source Procurement

Single Source Procurement is where only one Vendor is considered for award of sourcing
without any competitive sourcing process.

2.2.14 Splitting
Breaking a larger procurement into smaller ones to circumvent approval and/or scrutiny
by senior management.

2.2.15 Technical Evaluation

Technical Evaluation consists of Vendor and Product evaluation by evaluation Team,
which leads to Vendor qualification or disqualification based on results.

2.2.16 Tendering
Tender is a competitive sourcing process applicable for purchases of large value items
and is undertaken following a comprehensive review of multiple available Vendors.

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2.2.17 Total Cost of Ownership
Total cost of ownership (TCO) is a financial estimate intended to help buyers and owners
determine the direct and indirect costs of a product or system, it includes the purchase
price of an asset and other costs to operate it.

2.2.18 Missing Costs

Missing Costs are the costs of missing elements from a Vendor’s quotation that are
required to be added to make the proposed products/services complete and comparable to
the other Vendors.

2.2.19 Hidden Costs

Hidden Costs are the indirect costs that would be endured by the PMCL as a result of the
acquisition of products/services of a certain Vendor. Examples include costs for
maintaining or swapping existing equipment, cost for logistics
(warehousing/transportation, etc.)

2.2.20 Operational Costs

Operation Costs are costs that might be endured by the PMCL to mitigate operational
risks associated to products/services of a certain Vendor.

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 Chapter 3

POLICY

3.1 Sourcing Levels

PMCL Procurement team shall be responsible for leading the sourcing process for Global
Categories classified in Level B and local categories classified in Level C in line with the
New Operating Model (NOM).

3.1.1 Level A Sourcing

Global categories are by default classified as Level A and Group Strategic Sourcing team
shall execute the sourcing process for Level A categories in accordance with guidelines
mentioned in New Operating Model (NOM).

3.1.2 Level B Sourcing

Level B shall apply to sourcing initiatives for Global categories which have been
delegated to PMCL for execution during the PMP stage.
PMCL shall execute the sourcing process for Level B categories and Group (VEON)
involvement in sourcing shall only be required if volume of sourcing initiative exceeds
25% of PMCL’s GAM limit. Group involvement shall be required at key sourcing steps
as mentioned in the NOM. Please refer to NOM for the specific sourcing steps requiring
Group involvement.
In addition to the specific steps requiring group involvement specified in NOM, Group
Co-approval as per GAM shall be required at sourcing commencement and award stage.

3.1.3 Level C Sourcing

Level C shall apply to sourcing initiatives for local categories. PMCL shall execute the
sourcing process for Level C categories with no involvement of Group Strategic Sourcing
except in case of Group Strategic Priorities as defined by Group CTO.
In case of sourcing initiatives involving Group Strategic Priorities, Group involvement
shall be limited to co-approval of sourcing kick-off and award recommendation to ensure

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 decision alignment with Group Strategy.

3.2 Sourcing Limits

PMCL shall comply with the following limits for each sourcing method:

Sourcing Method Limit (in PKR 000)

Fast-track Sourcing 1 – 150
Tactical Sourcing 150 – 1500
Simplified Sourcing (Local 1500 – 15,000
Procurement -Indirect Categories)
Simplified Sourcing (Local 15,000 - 37,500
Procurement -Direct Categories)
Simplified Sourcing (Global As per limits specified in NOM
Procurement Categories under Level B)
Tendering (Local Procurement- Above 15,000
Indirect Categories)
Tendering (Local Procurement- Above 37,500
Direct Categories)
Tendering (Global Procurement As per limits specified in NOM
Categories under Level B)

3.3 Fast-track Sourcing

End-User shall be authorized to make petty purchases or repetitive purchases through
Fast-track Sourcing without involving any Category Manager.
For Purchase Requisitions (PR) valuing up to PKR 150,000, system shall automatically
create and issue standard Purchase Orders (PO) after PR has been approved by the
designated authority. PR units shall not issue multiple Fast-track auto POs with
cumulative value of more than PKR 150,000 per month to any specific Vendor. However,
such limit of PKR 150,000 per month per Vendor is not applicable in case of Auto PO
issued to Vendors under a valid contract or Global Blanket Purchase Agreement (GBPA)
between PMCL and respective Vendor for procurement of goods, services or works.
CXO-2 Procurement, Performance and Governance (PP&G) shall review monthly Fast-
track Sourcing Compliance Report and quarterly Fast-track Sourcing trend analysis to
track any breaches of the above stated Fast-track Sourcing threshold. Following
corrective actions shall be taken against identified breaches of the Fast-track Sourcing
limit.

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  For the first time, flag shall be raised to PR requester keeping his / her line Manager in
loop for justification.
 For repetitive breaches, PR creation log-in shall be deactivated.
 In case of splitting scenario, the instance shall be forwarded to Compliance Team for
further action.

3.4 Tactical Sourcing

Tactical Sourcing shall be applicable for low value purchases. Tactical Sourcing may be
executed via benchmarking of more than one proposal / quotation before awarding.

Vendor proposing best value for money shall be selected based on a simple comparison
of the proposals or quotations received subject to approval by authority specified in “3.11
Sourcing Approval Matrix.”

3.5 Simplified Sourcing

Simplified Sourcing shall be applicable for medium value purchases.

Category Manager shall prepare Request for Quotations / Request for Proposal (RFx) /
Bill of Quantity (BoQ) in consultation with End-User representative, formally requesting
the participating Vendors for competitive proposals or quotations for the goods or service
required in the RFx.

At least two proposals or quotation shall be required to proceed with the evaluation of the
proposal or quotation.

End-User representative and Category Manager shall respectively conduct technical and
commercial evaluation of the proposals or quotations received.

Where less than two proposals or quotations are available due to non-availability of
Vendors for the specific goods or services or only one Vendor is qualified after technical
evaluation, process for Acceptable Single Source Procurement shall be followed.

The sourcing shall be awarded to best proposal or quotation as per the evaluation criteria,
subject to approval by authority specified in “3.11 Sourcing Approval Matrix.”

Unsuccessful Vendors shall be formally informed about the sourcing decision.

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3.6 Tendering
Tendering method of sourcing shall be applicable for large value purchases up to the limit
specified in “Sourcing Limits.”

3.6.1 Tender working group

For each tendering case, an independent and transparent Tender Working Group
(previously known as Tender Committee) shall be established for day to day management
of the tender and to ensure continuous alignment of the procurement and End-User
stakeholders. Tender Working Group’s responsibilities shall include the following:

 Review and approval of the Tender Mandate;

 Reviewing and responding to any queries received from Shortlisted Vendors;
 Opening of commercial proposal submitted by the Vendors;
 Review of the commercial bids submitted by the Vendors;
 Recommending the best proposal to the SteerCo for sourcing decision; and
 Any other tasks that may be assigned by the SteerCo in respect of the tender.
 Tender Working Group shall comprise of following members;
 CXO-2 End-User department;
 CXO-2 Procurement;
 Respective Category Manager;
 Representative from Legal or Compliance (optional); and
 Any other representative as approved by Head of Procurement and SCM (CXO-1).

Tender Working Group shall not include any member having any declared Conflict of
Interest (COI) with any of participating Vendor. To ensure independence and
transparency of Tender Working Group members, Category Manager shall consult with
Local Compliance and Ethics team to check if any of the Tender Working Group
members have issued any COI disclosures involving the participating Vendors.

3.6.2 Tender mandate

Category Manager shall develop Tender Mandate for all tendering cases. Tender Mandate

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 shall define the scope of tender and shall act as the guideline document for the tendering
case. Tender Working Group shall approve the Tender Mandate before distribution of
RFx to the shortlisted Vendors.
Any amendment in the Tender Mandate required after distribution of the RFx to the
Vendors shall be made before initial bid / proposal opening subject to approval by Head
of Procurement and SCM (CXO-1) and all members of Tender Working Group.
Category Manager and End-User representative shall agree on the initial list of Vendors
to be invited for participation in the Sourcing process. List of shortlisted Vendors shall be
comprehensive to reasonably cover all Vendors that can provide the required products or
services ensuring adequate competition.
The list of Vendors shall form part of the Tender Mandate and shall not be modified after
initial bid / proposal opening.
A clear award strategy and criteria for award shall be agreed before issuance of RFx to
Vendors in order to avoid delays and conflicts in later stages. Award strategy shall form
part of the Tender Mandate.
Award strategy shall be developed in a way that does not give preference to a specific
Vendor. Award strategy may be communicated to Vendors to encourage competitiveness
subject to approval of Tender Working Group.

3.6.3 Bids / proposals

Separate Technical and Commercial bids or proposals shall be obtained from the
Vendors. Bids shall not be opened before the bid opening date specified in the Tender
Mandate.
Category Manager shall ensure security and confidentiality of the bids submitted by the
Vendors.
Bid or proposals received after the bid submission deadline stated in the Tender Mandate
shall not be accepted. Any exception shall be approved by Head of Procurement and
SCM (CXO-1) and all members of Tender Working Group.
At least three bids or proposals shall be obtained to continue Tender based sourcing
process. Where less than three bids or proposals are received due to non-availability of
Vendors for the specific goods or services, the bid / proposal evaluation process shall
only be conducted subject to the approval of Head of Procurement and SCM (CXO-1).

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 However, where only one bid/proposal is received or only one Vendor is qualified after
technical evaluation, the process for Acceptable Single Source Procurement shall be
followed.

3.6.4 Bid / proposal evaluation

Both technical and commercial bids / proposals shall be evaluated in accordance with
pre-defined evaluation criteria, which shall be determined and set before distribution of
RFx and shall form part of the Tender Mandate.
Evaluation criteria shall not be modified after date of initial bid / proposal opening. Bids
or proposals of all Vendors shall be objectively evaluated in accordance with the defined
evaluation criteria.
End-User department shall perform evaluation of the technical bids or proposals
submitted by the Vendors. Technical Evaluation results shall be approved by CXO-1
End-User.
Commercial bids or proposals of Vendors shall only be opened and evaluated once
technical evaluation has been completed and approved.
Financial Proposal / Quotation Evaluation Statement shall be prepared to compare the
Price and other commercial terms quoted by all Vendors (as per Tender mandate), which
shall be approved by Tender Working Group.

3.6.5 Negotiation
Category Managers may conduct rounds of negotiation with prospective Vendors in
accordance with Tender mandate to obtain required goods or services at the target price.
Negotiation strategy shall be determined before start of the negotiations and shall be
made part of the Tender Mandate. Category Manager shall be responsible for conducting
negotiations with Vendors.

3.6.6 Sourcing award

SteerCo shall act as the approving authority for all Sourcing activities including kickoff
and tender results/sourcing decision. SteerCo shall comprise of the members specified in
“3.11 Sourcing Approval Matrix.”

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3.7 Single Source Procurement
Procurement team shall make all reasonable efforts to avoid reaching single source
situation and perform sourcing through a competitive process to procure the products or
services at best value for money.

However, if single source procurement is inevitable, End-User shall be responsible for

the Single Source Mandate (SSM) and shall be accountable for the contract across its life-
cycle from inception to close-out. Justification for SSDs shall be documented in the
Single Source Mandate and Decision Form with adequate explanation of the reasons for
SSD.

SSDs are classified in two categories and are independently validated as part of the
approval process:

 Acceptable SSD; and

 Avoidable SSD.

3.7.1 Acceptable SSD

SSDs shall be categorized as Acceptable SSD if it meets any one of the following
criteria:

 Goods or services are to be procured from a Vendor having a monopoly position;

 Vendor has exclusive rights to the required products or services;
 Vendor is mandated by governmental authorities;
 Extension of Hardware or Software maintenance of existing installed base after TCO
period in case of Vendor exclusivity;
 Convergence with already installed hardware or software base due to which it is not
technically or economically viable to select goods or services from other Original
Equipment Manufacturer or Vendor due to significant operational or strategic impact;
 Only one counterparty meets the functional requirements (only one participant is present
at the commercial stage);
 Corporate membership in business associations or external consulting resources;
 Force Majeure situations such as urgent need for products/services due to reasons out of

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 the control of the company (e.g. fire, theft, flooding, etc. leading to equipment being out
of service);
 Urgent need that was not possible to forecast earlier due to which standard competitive
sourcing process cannot be followed (not related to poor planning); or
 Only one counterparty meets Strategic Business Outcomes as determined by PMCL
Board.

CXO-2 Procurement, Performance & Governance shall review the justification for the
SSD to assess its applicability as an Acceptable SSD. Acceptable SSD shall be approved
in accordance with “C.12.1 Sourcing Approval Matrix for Single Source Decisions.”

3.7.2 Avoidable SSD

An SSD shall be categorized as an Avoidable SSD if any one of the following conditions
exist:

 SSD that does not meet any of the specific criteria for Acceptable SSDs as stated above;
 SSD resulting from poor planning or expired contract that could have been avoided; or
 Where possibility of undergoing a competitive sourcing, process exists.

All Avoidable SSDs above 10% GAM, and SSDs related to Strategic Business
Outcomes, shall by default be considered “Group Material Matters” and shall be
escalated to the relevant authority mentioned in the section “Escalation of Group
Material Matters” in Group Authority Matrix.

Avoidable SSD shall be tracked and monitored through KPI Framework including share
of Avoidable SSDs in total spend, monthly and Year on Year dynamics.

An SSD shall not be used to ratify any process non-conformance i.e. Verbal
commitments, where work has commenced etc. Any procurement process non-
conformance through Avoidable SSD shall be reported and require approval from CEO
and shall impact the Short-Term Incentives (STIs) of the CXO of respective End-User
department.

3.7.3 Value and validity

Validity of the Single Source Decision shall not exceed one year, unless exclusivity

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 conditions exist that are not expected to change in near future.

Where duration of the SSD is more than one-year, Single Source value shall be based on
TCO (Total Cost of Ownership) model for total decision duration and justification for the
validity period of more than one year shall be documented in the Single Source Mandate
and Decision.

3.8 Sourcing through Global Price Book (GPB)

Sourcing through GPB shall be performed in case of Global Tenders, where prices for
goods or services are locked with Vendors considering Total Cost of Ownership (TCO).

After Sourcing through Global tendering, Group shall prepare Global Framework
Agreement (GFA) in which terms and conditions and price list is mentioned. Validity of
GPB is based on life of TCO.

Contract Team shall prepare LFA based on GFA considering local needs for different
products and services.

3.9 Repeat Orders

Maximum two repeat orders may be issued in respect of any Purchase Order (PO) within
1 year from date of issuance of the original PO/sourcing decision and value of the
cumulative repeat orders shall not exceed total value of per line item stated in the original
PO. In case of repeat orders, there shall be no need to initiate new RFQ and Category
Managers may negotiate with Vendors to obtain better commercial terms.

Approving authority for the repeat order shall be same as the approving authority for
initial award unless TCO limits exceed to higher approving authority. In such cases,
applicable relevant approvals shall be required. For details of limits please refer to “
Sourcing limits”.

3.10 Escalation Governance

Where stakeholders involved in the sourcing process cannot reach an agreement on any
point, Category Manager shall put in all efforts to ensure such dispute is resolved.

22
 Escalation shall be initiated if Category Manager is unable to resolve such dispute.

In the event of an escalation, a meeting of the SteerCo shall be convened at the earliest
opportunity (subject to availability of SteerCo members). SteerCo shall review the case
and recommend the way forward.

Stakeholders in sourcing process shall be responsible to ensure all sourcing activities are
executed in compliance with Steer Co.’s decision.

3.11 Sourcing Approval Matrix

Limits in PKR (in 000) Sourcing Type Approvers of Sourcing Decision
1-CXO-2 End-User
150 – 1,500 Tactical Sourcing
2-CXO-2 Procurement
Simplified
Sourcing-Indirect
1,500 – 15,000
Procurement
1-CXO-1 End-User
Categories
2-Head of Procurement and SCM (CXO-1)
Simplified
1,500 - 37,500 Sourcing-Direct
Categories
Tendering 1 - SteerCo comprising of the following
15,000 - 375,000
Indirect Categories members:
1-CXO-1 End-User
Tendering 1
37,500 - 375,000 2-Head of Procurement and SCM (CXO-1)
-Direct Categories
3-CXO-1 Legal
SteerCo comprising of the following
members:
1-CXO-1 End-User
375,000 - 1,500,000 Tendering 2 2-Head of Procurement and SCM (CXO-1)
3-CXO-1 Legal
4-CXO End-User
5-CFO
Above 1,500,000 Tendering 3 As per the Group Authority Matrix

3.12 Turn Around Time

3.12.1Fast-Track Sourcing
Task Turn Around Time (Working
days)
Collection and evaluation of quotations, if required 2 days
Creation and approval of PR for Fast-track Auto PO Issuance 2 days
th
Preparation of Fast-track Sourcing Compliance Report By 10 of subsequent month
Preparation of Quarterly Fast-track Sourcing Trend Analysis Within 10 days after end of
respective quarter

23
3.12.2 Tactical Sourcing
Task Turn Around Time (Working
days)
Sharing functional requirement with Category Manager and
As and when required
creation of PR
Collection and assessment of quotations 2 days
Awarding and issuance of PO 2 days

3.12.3 Simplified Sourcing

Task Turn Around Time (Working days)

Develop RFx and Contract draft Within 5 days after receipt of

sourcing request
Collection of proposals As per timelines mentioned in RFx
Technical evaluation (including re-submissions and contract
3 days
KTC negotiations)
Commercial evaluation (including re-submission) 2 days
Shortlisting and Negotiations 2 days
Sourcing decision Approval 2 days

3.12.4 Tendering
Task Turn Around Time* (Working
days)
Develop RFx and Contract draft Within 13 days after receipt of
sourcing request
Issue RFx and collect proposals 10 days
Technical evaluation (including re-submissions and contract
15 days
KTC negotiations)
Commercial evaluation (including re-submission) 7 days
Shortlisting and Negotiations 5 days
Sourcing and Contract Approval 15 days
Contract / LFA finalization and Signing 10 days
* In case of any conflict between the timelines mentioned in the above table and sourcing
timelines as per the Tender Mandate, the timelines in the Tender Mandate shall be
followed.

3.12.5 Single Sourcing

Task Turn Around Time* (Working

24
 days)
Preparation of Single Source Mandate Within 5 days after receipt of
sourcing request
Issue RFx and collect proposals 5 days
Negotiations 4 days
Single Source Decision 4 days
Contract / LFA finalization and Signing 7 days
* In case of any conflict between the timelines mentioned in the above table and sourcing
timelines as per the SSM&D Form, the timelines in the SSM&D Form shall be followed.

3.12.6 Repeat order

Task Turn Around Time (Working days)
Sourcing request approval Within 1 day of raising request
Awarding and issuance of repeat order 2 days

3.12.7 Sourcing Through Global Price Book

Task Turn Around Time (Working days)
Collection of Proposals from Vendors Within 7 days after receipt of
sourcing request
Negotiations with Vendor and finalization of price 5 days
Awarding and issuance of PO 2 days

25
 Chapter 4

SOURCING PROCEDURES

4.1 Fast-track Sourcing Procedures

NOTES

26
2. Creation and Approval of PR

2.1 Creates PR in Oracle

 Planned Auto POs are the Auto POs issued to Vendors with whom valid contacts and
framework agreements have been signed.
 In case of Planned auto PO, PR shall be created along with attachment of invoice in
Oracle.
 PR shall be created in Oracle by End-User having buyer rights in Oracle, if budget is
available. Oracle shall not allow any PR if budget is not available.
 Requestor shall also mention the Vendor name while creating PR.

3. Award of Fast-track Sourcing

3.1 Awards PO to Vendor mentioned by End-User while creating PR in Oracle

For Purchase Requisitions having total value less than or up to PKR 150,000, system
shall create and approve standard Purchase Orders automatically.

4. Monitoring

4.1 On a monthly basis, requests SO-PO Fulfillment Team through email to extract list
of POs

Procurement, Performance and Governance Team shall perform monthly review of the
Fast-track Sourcing method by reviewing the list of all POs below and up to PKR
150,000 generated during the month. Procurement, Performance and Governance Team
shall assess if there were any breaches of stated policy for Fast-track Sourcing by the
End-User department.

4.3 Prepares Fast-track Sourcing Compliance Report for the month

Fast-track Sourcing Compliance Report shall be prepared in Excel based on the list of
auto-POs extracted from Oracle. Fast-track Sourcing Compliance report shall include
value of POs raised by a unit for each Vendor and list of breaches of the allowed limit of
PKR 150,000 per PR Unit per Vendor per Month.

27
4.2 Tactical Sourcing Procedures

NOTES

2. Collection of Quotations

2.1 Obtains at least three quotations

 End-User Department shall recommend a minimum of three Vendors for Sourcing when

outlining functional requirements.
 Category Manager may also contact other known Vendors if appropriate and applicable.

28
4.3 Simplified Sourcing Procedures

29
NOTES

1. Sourcing Request

1.1 Scope of work is clear?

Scope of the work is unclear where the End-User lacks clarity over the final output
expected to be obtained from the sourcing activity.

1.2 Creates PR in Oracle

End-User shall share following information (where applicable) with Category Manager
while raising sourcing request:

 List of Vendors including the prospective Vendors from whom bids shall be requested;
 Budget;
 Scope / BoQ for the sourcing case; and
 Any other relevant information.

3. RFX

3.1 Prepares RFx with input from End-User department

RFx shall include the following information;

 BOQ / SOW;
 Draft contract template;
 Evaluation criteria;
 Standard template for technical and commercial submission;
 Items required;
 Terms & conditions;
 Bid / Proposal submission deadline; and
 Any other relevant information.

3.3 Issues RFx & supporting documentation to approved Vendors through email

30
 Category Manager shall circulate the RFx to the Vendors through email. Information
regarding submission of proposals shall be covered in RFx and/or email.

3.5 Prepares consolidated response to all queries received

Any commercial and technical clarification requests from Vendors shall be collected
according to the instruction of the RFX (timelines, contact person, etc.). Category
Manager shall prepare response against commercial queries and End-User shall prepare
response against technical queries and distribute to all Vendors simultaneously through
email, without disclosing the source of the queries. 

3.7 Submission of quotation / proposal as per instructions in RFx

Quotations / Proposals (Technical and Commercial Proposals) shall be submitted by the

Vendors to the Category Manager along with any other required documents as per
instructions in RFx. 

Quotation / proposal shall be submitted within the deadline specified in the RFx
document.

3.8 Submit password of commercial proposal through email

Commercial proposals shall be submitted in password protected files and password of

such file shall be submitted to a representative of the Procurement, Performance and
Governance Team, who shall keep the password in safe custody until technical evaluation
is completed.

3.13 Sends queries or request for further information through email

End-User shall send queries or request for further information to the Vendor through
email while keeping Category Manager in loop.

3.15 Identifies technically qualified Vendors and shares evaluation results

Process for Acceptable Single Source Procurement shall be followed where only one
Vendor is qualified after technical evaluation.

31
4.4 Simplified Sourcing through I-Sourcing Procedures

32
NOTES

3. RFX

3.3 Issues RFx to approved Vendors through I-Supplier

 Category Manager shall circulate the RFx to the Vendors through I-Supplier. Where RFx
are uploaded in I-Supplier, Vendors shall receive system generated email related to the
RFx.
 RFx can be floated to as many Vendors as considered appropriate by the Category
Manager and End-User.
 Information regarding submission of proposals shall be covered in RFx.

3.7 Submission of sealed technical proposals through I-Supplier

 Quotations / Proposals (Technical Proposals) shall be submitted by the Vendors along

with any other required documents by uploading in I-Sourcing as per instructions in
RFx. 
 Quotation / proposal shall be submitted with the deadline specified in the RFx document.
 Quotations / Proposals shall remain sealed until Quotations / Proposals submission
deadline has lapsed. 

3.16 Submits sealed commercial bids / proposals through I-Supplier

Quotations / Proposals shall remain sealed until bids / proposals submission deadline has
lapsed.

33
4.5 Tendering Procedure (1 of 3)

34
NOTES

1. Sourcing Request

1.1 Scope of work related to tender is unclear

Scope of the work is unclear where the End-User lacks clarity over the final output
expected to be obtained from sourcing activity.

1.2 Creates PR in Oracle

End-user shall share following information (where applicable) with Category

Manager while raising sourcing request:

 List of Vendors including the prospective Vendors from whom bids shall be requested;
 Scope / BoQ for the sourcing case;
 Budget;
 Award Criteria; and
 Other relevant information

2. Tender Mandate

2.3 Develops tender mandate with input from End-User

Main tender parameters that are documented in tender mandate shall include: 

 General (name of tender, procurement category, brief description of product/services,

date of tender mandate approval);
 Tender Scope;
 Tender Requirement defining the technical specification or functionalities required from
goods or required Scope of Work etc.;
 Evaluation Criteria;
 Sourcing Process & Negotiation Strategy;
 Award Strategy;
 Blocking factors;
 Prospective Vendors details;

35
  Nominated Tender Working Group members;
 Format of tender;
 Weight split between technical and commercial part;
 Tender Activities Schedule specifying the turnaround time for each activity to be
performed during the tendering process; and
 Relevant attachments.

Following attachments shall also be part of tender mandate;

 Technical Proposal form;

 RFP requirement form / Commercial compliance sheet; 
 RFQ requirement form / Commercial proposal format;
 Participation criteria, Technical evaluation criteria, Commercial evaluation criteria for
RFx; and
 Technical Evaluation Format.

2.6 All members approve the tender mandate through email or by signing

Addendums shall be issued when scope of work is required to be changed or

missing details need to be added. Requesting department shall notify the Category
Manager to that effect well before the bids closing date in order to avoid unnecessary
submission by Vendors. All addendums shall be approved by Head of Procurement &
SCM (CXO-1) and the Tender Working Group before their onward communication. If
required, the bids closing date shall be extended. Amendment to Tender requirements
may also be required to address clarifications or additional information.   

 Amendments shall be made available simultaneously in writing to all invited Vendors, to

provide all Vendors with the same fact base to ensure principle of fairness. 
 Substantial changes to the requirements necessitating change of Vendors may require re-
tendering. 
 Amendments to Tender requirements shall be subject to approval by the Tender Working
Group.

2.7 Fills information in Steer Co template for obtaining Steer Co approval for sourcing

36
kick-off

Category Manager shall fill the template (pre-defined format) for obtaining approval of
the Steer Co for starting the sourcing process. Contents of the template are as follows:

 Scope and objective;

 Sourcing mode / Contract type;
 Amount (Budget / TCO value);
 Duration (TCO / Contract);
 List of prospective Vendors;
 Evaluation criteria; 
 Baseline and target savings;
 Negotiation and award strategy;
 Key commercial / contractual conditions;
 Nominated Tender Working Group members;
 Kick off date; and  
 Any other information required.

37
4.6 Tendering Procedure (2 of 3)

38
NOTES

1. RFP and Selection

1.1 Issues RFx and supporting documents through email

Category Manager shall circulate the RFx to the prospective Vendors through email.

The final list of Vendors to be invited to take part in the tender shall be defined in the
approved tender mandate and shall not be modified later in the process.

Supporting documents include but are not limited to: 

 BOQ/ SOW;
 Draft contract template; 
 Evaluation criteria;
 Standard template for technical and commercial submission; 
 Items required in quotation;
 Terms & conditions; and
 Bid submission deadline.

RFx can be updated if there is need to enhance/change scope of work. In such cases
updated RFx shall be circulated again by Category Manager through email to all
perspective Vendors.

1.2 Clarification required by the Vendors

All Vendors shall be required to send their queries related to the scope of work to the
Category Manager through email within the time period specified in the RFx.

1.4 Pre-bid session, if required

Where required, Category Manager shall invite representatives from all Vendors through
email for a pre-bid session to address any clarifications required by the Vendors with
support of the End-User.

1.5 Prepares responses to the queries received

39
 Category Manager shall consolidate the queries received from all Vendors and prepare
responses with input from End-User or other relevant departments.

Changes in scope of work if any, shall be made before bid submission deadline. 

Bid submission timelines shall be extended in case changes are required in the scope of
work or any other technical reason based on pre-bid sessions or Vendor queries. Updated
scope of work and revised timelines shall be communicated to the Vendors by the
Category Manager through email.

1.7 Submission of bids / proposals through email

Vendors shall be required to submit technical and commercial bids and required
attachments through email to the Category Manager within the bid submission deadline
date specified in the RFx. 

Vendors shall be required to submit commercial bid in a password protected file and the
password shall be shared in a separate email with Procurement, Performance and
Governance Representative.

PPG Representative shall keep the passwords received from all Vendors in safe custody
and shall only share the same with Tender Working Group members after completion of
technical evaluation.

In case of missing documents submitted by Vendor, Category Manager subject to

approval of Tender Working Group shall request Vendor to submit the missing
documents.  

1.11 Performs technical evaluation

End-User shall provide technical input on the bids and share their Hidden/Missing
Operations Risk (HMO) to Category Manager through email while keeping Tender
Working Group members in loop.

40
4.7 Tendering Procedure (3 of 3)

41
NOTES
1. RFP and Selection
1.2 All members approve Bids opening statement through email/signatures

Bids Opening Statement shall contain the following details:

 Requesting department name;

 Invitation for Bids reference;
 Bids opening time;
 Bids opening date;
 Bids opening location;
 List of all Vendors with their proposal’s status;
 Committee members; and
 Any other relevant details

Tender Working Group members shall also sign / endorse all submitted bidding
documents.

1.3 Commercial Evaluation

Commercial bids shall only be considered for Vendors whose technical offers have been
qualified by the End-User. Same shall be communicated to Category Manger by End-
User while keeping Tender Working Group in loop. If required, Tender Working Group
shall seek documented feedback on technical bids from CXO-1 End-User.

Technical and commercial parts of offers shall always be separate as visibility on

commercial part may have impact on independence of technical evaluation. Commercial
part must not be visible to End-User Department before finalizing technical evaluation.

Criteria for Commercial Shortlisting shall be communicated to Vendors preferably to

make sure that they have provided their best offer.

1.5 Conducts negotiation with Vendors

Category manager shall conduct number of negotiation rounds with Vendors as per
negotiation strategy mentioned in Tender Mandate.

42
 Negotiations shall be performed considering: 

 Criteria for selecting Vendors to be included into commercial shortlist; 

 Number of negotiation rounds; 
 Number of commercial shortlists; 
 Method of negotiations (i.e. classical negotiations, physical auction, e-auction, etc.); and
 Other parameters to ensure transparency of negotiation process and competitive
environment. 

2. Approval

2.1 Prepares QES

In case of any dispute between members of Tender Working Group during finalization of
evaluation results, escalation shall be initiated. For detailed process please refer to
“Sourcing-Escalation Governance”. 

2.6 Award to best proposal as per award strategy and evaluation criteria

In certain cases, there shall be a need to compromise on some requirements of normal

Tendering procedure to maximize the value for the company and/or eliminate risks.

Sourcing award shall be made to the Vendor as per following criteria, which shall be
clearly mentioned in Tender Mandate:

 100% commercial evaluation;

 Techno-commercial evaluation with clearly defined weightage for technical and
commercial scores;
 Evaluation under HMO method i.e. Hidden Cost, Missing Cost and Operational Cost; or
 Any other criteria mentioned in Tender Mandate.

43
4.8 Tendering through I-Sourcing

44
 NOTES
1. RFx and Selection

1.1 Issues RFx and supporting documents through I-Supplier

Category Manager shall circulate the RFx to the Vendors through I-Supplier. Where RFx
are uploaded in I-Supplier, Vendors receive system generated email related to the tender.

The final list of Vendors to be invited to take part in the tender shall be defined in the
approved tender mandate and shall not be modified later in the process.

RFx shall be updated if there is need to enhance/change scope of work. Updated RFx
shall be circulated again by Category Manager by uploading RFx in I-Supplier subject to
approval of Tender Working Group.

1.7 Submission of sealed technical proposals through I-Supplier portal

 In case of tendering through I-Sourcing, Vendors shall upload the technical bids in I-
Supplier and submit them to the Category Manager. Bids / Proposals shall remain sealed
until bids / proposals submission deadline has lapsed.
 In case of missing documents submitted by Vendor, Category Manager subject to
approval of Tender Working Group shall request Vendor to submit the missing
documents.

1.14 Submits sealed commercial bids / proposals through I-Supplier

 In case of tendering through I-Sourcing, Vendors shall upload the commercial bids in I-
Supplier.Bids / Proposals shall remain sealed until bids / proposals submission deadline
has lapsed.

45
4.9 Single Sourcing – Acceptable SSDs

46
NOTES
2. Information gathering
2.1 Issues RFI through email to check the applicability of the Single Source Case
Technical and commercial requirements shall be clearly documented in the RFI in order
to request Vendor to submit the proposal.
2.4 Prepares Single Source Mandate providing requirement of single source and its
justification
Initiator of SSM shall not be below than CXO-3 End-User. Single source mandate shall
include following details:
 General (Date of SSM approval, ID, Title, Procurement category);
 Executive summary of scope;
 Budget or estimated single source decision value (including TCO);
 Validity of single source decision;
 Selected Vendor;
 Justification of single source decision;
 Group FD recommendation (Applicable only for Global categories);
 Schedule;
 Attachments; and
 Any other relevant information.

3. Review and Approval

3.2 Reviews the Single Source Mandate and its justification
CXO-2 Procurement Performance and Governance shall review the Single Source
Mandate Form to assess whether the concerned case falls in the category of Acceptable
Single Source Decision or Avoidable Single Source Decision.

4. Single Source Mandate

4.2 Obtains quote from the Vendor and conduct negotiation with Vendor
 Category Manager with input from the End-User shall negotiate with the Vendor's
representatives through email correspondence to obtain discounted price.
 Category Manager shall update the End-User regarding the status of the negotiations with

47
 Vendor.

4.3 Prepares Single Source Decision form

Single Source decision shall include following details:
 General (Date of SSD approval, ID, Title, Procurement category);
 Executive summary and justification of single source;
 Selected Vendor;
 Validity of Single source decision;
 Single source decision value;
 Procurement Assessment;
 Savings Calculation;
 Attachments; and
 Any other relevant information.

4.10 Repeat Order

`

48
 NOTES

3. Purchase Order/Contract

3.1 Issues PO to the Vendor through Oracle

While issuing the PO in Oracle, SO- PO Fulfillment Team shall mention in the comment section
that the PO being issued is a repeat order and reference of the original PO shall also be mentioned.

49
4.11 Escalation Governance

50
 NOTES

1. Escalation Initiation

1.1 Informs Head of Procurement and SCM (CXO-1) through email about need to
initiate escalation

In case of any dispute between members of Tender Working Group during evaluation of
bids / proposals and selection of Vendor for contract award, the escalation shall be
initiated.

Sourcing process shall be put on hold until escalation is resolved. 

For Global Categories, the Senior Category Council shall include concerned PMCL
members.

2. Escalation Resolution

2.6 Ensures all sourcing activities are executed in compliance with Steer Co decision

Tender Working Group shall follow up on fulfillment of action points / decision and
report back to Steer Co in case of any deviation.

As we have seen that current sourcing procedures of JAZZ are working perfectly fine but we have
observed some delays that can affect the project execution. Our goal is to minimize the delays in
system and make it more efficient and effective. As a procurement professional, you want a
solution that benefits you to work in partnership across departments as well as discover, succeed,
and constantly evaluate suppliers and plan projects in collaboration with them. To help you address
these challenges – and modernize and improve your entire sourcing process – SAP offers the SAP
E-Sourcing application. This Web-based application lets you accelerate indispensable functions
such as collaborative project management, online bidding, contract negotiation, and ongoing
compliance.

51
 Chapter 5

Introduction to SAP

4.1 Complete E-Sourcing Solution

With SAP E-Sourcing, your procurement team can rapidly systematize specific processes and start
achieving value swiftly. Then, when you’re prepared, you can effortlessly add to your sourcing
solution by using comprehensive features and implementing other applications – such as spend
analytics or operational procurement – while leveraging your existing investment.

SAP E-Sourcing supports the sourcing process end to end, allowing you to expand crucial
activities by:
 Generating greater savings and value
 Extending procurement’s reach
 Enabling visibility across the organization
 Supporting project standardization and repeatability
 Reducing cycle times
 Driving change management through collaborative processes
 Identifying the right suppliers
 Managing requests for information, proposals, and quotations
 Conducting online reverse auctions
 Optimizing supplier awards
 Enabling end-user bid management
 Supporting contract creation and execution
 Helping ensure compliance
 Streamlining collaboration with suppliers
 Tailoring sourcing and contracting processes to your specific business needs

52
With SAP E-Sourcing, you can make greater savings and worth from your favored supply base. E-
sourcing happenings result in decisions that optimize the overall value involvement from suppliers.
Using analytic tools, you can evaluate and equate supplier offers on factors that are most
significant to your organization. For example, your procurement team can weigh and
collaboratively score responses to requirements for suggestions on the basis of factors such as key
supplier proficiencies, pricing, and more. The application helps you to develop a competent supply
base that delivers the best value to your enterprise. It also enables you to work together with
business units to extend procurement’s reach and drive additional savings. SAP E-Sourcing helps
you create an environment in which you work together with departments across the enterprise to
reach key sourcing conclusions connected to defining requirements and presenting important
contracts. Because it links all category activities to sourcing projects, the application wires
collaboration and visibility and drives standardization and repeatability. It lets you track
consequences and conclusions during each project’s duration, monitor project status, manage
employee workload, and track savings. And its seamless integration with the SAP Spend Analytics
application lets you initiate projects directly from identified sourcing opportunities. With SAP E-
Sourcing, you can design patterns of every key sourcing process, from project management to
requests management and contract creation.

These templates reduce creation and approval cycle times while ensuring that best practices are
recurring constantly throughout your organization. You can also permit key stakeholders to deliver
input to the process, driving change management and promoting its adoption throughout the
organization via functions such as collaborative scoring, weighted features, total cost calculations,
and side-by-side judgements. SAP E-Sourcing helps you ensure that the right suppliers are
competing for your business and that you have a complete supplier selection. Using the self-
registration procedure and supplier repository, you can easily identify which suppliers should be
part of your sourcing events. Suppliers can maintain their profile information so that you stay
current on their competences and certifications. The application also allows for easy management
of requests for information, proposals, and quotations. You can conduct simple or complex
sourcing events for direct, indirect, and service categories by programming the creation of requests

53
of all kinds. E-sourcing makes it easier to conduct online reverse auctions by enabling you to:

 Create tailored competitive bidding events

 Interact with suppliers in real time using instant messaging and a comprehensive bidding
console that automatically provides critical feedback to the suppliers
 Manage advanced disclosure rules such as bid and rank visibility, provide automatic
extensions, use bidding formats that support your strategies, and employ cost factors to
enable “apples to apples” comparisons.

You can optimize supplier awards to:

 Identify the lowest total-cost and best-value award strategies by using constraints-based
functions
 Analyze award scenarios easily by using standard reports and charts to compare options.

SAP E-Sourcing enables end-user bid management in two ways:

 Allowing users outside of purchasing to initiate rapid requests for quotations, using
preferred suppliers • Providing category-specific and ready-to-use templates that support
quick sourcing activities at the time the end user is ready to buy.

The application supports the construction and execution of contracts with your suppliers, either
directly from a bidding event or prior contract or by creating a new agreement. New functionality
lets you manage the whole portfolio of contracts. For example, you can:

 Generate, negotiate, and manage contracts with a single, searchable contract repository
 Create a library of standard clauses and contract templates to promote and enforce your
organization’s legal standards during the contract generation process
 Configure a workflow-based approval process using attributes such as a contract’s value
and spend category
 Automate all contract activity
 Track rebates and thresholds To help ensure compliance with a variety of policies,
procedures, and regulations, the application also supports integration with enterprise

54
 resource planning software. You can leverage packaged integration with the SAP ERP
application for key processes such as requirements, awards, and contracts to ensure
employees leverage negotiated contracts and purchase from preferred suppliers.

You can also streamline collaboration with suppliers via:

 Supplier collaboration functions that allow you to participate in collaborative discussions,

respond to bid requests and auctions, negotiate contract terms, and view scorecard
performance
 Supplier performance management functions that let you define metrics for supplier-
performance scorecards or use an activity library to define standard tasks and activities
you can easily apply to suppliers’ records.

SAP E-Sourcing lets you tailor e-sourcing to your specific business needs through:

 Executive dashboards – Support project portfolio management and create visibility into
sourcing activities across the organization using data collected from across the
application and presented in a single view
 Flexible configuration – Create templates, reports, page views, additional business forms,
and new data fields to capture information and enable processes specific to your
organization
 Robust reporting – Make relevant information available to all types of users through both
summarized executive views and detailed reports to procurement professionals

4.2 Undisputed ROI, Quick Payback with SAP E-Sourcing

Organizations can attain a clear ROI that includes time and cost savings ensuing from quick
deployment, enhanced decision making, and repeatable processes. In addition, SAP and its
partners offer services that help comfort your transition to the application. Multiple Deployment
Options You can organize SAP E-Sourcing according to your needs. For example, to get up and
running quickly, you may want SAP to host the application. Or you can select to organize SAP E-
Sourcing on your own substructure. You can also migrate from a hosted environment to an on-
premise environment at a later date if you wish. When SAP hosts your application, you benefit
from a secure, reliable, and scalable foundation without any associated investment in IT

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infrastructure and without straining your internal IT resources. Hosting fosters fast ROI while
rapid execution helps you generate savings quickly. Those customers just getting started with e-
sourcing may want to consider the SAP E-Sourcing on-demand solution, a subscription-based
hosted offering. The on-demand solution is deployed rapidly, contains preconfigured templates to
help you achieve early success, and contains end-user help-desk support. Services for Total E-
Sourcing Initial success produces long-term e-sourcing acceptance. Services available through the
SAP ecosystem and partners include product training and support for establishing suitable category
and negotiation policies and for dealing the change to e-sourcing in your organization. These
value-added services help increase user adoption and overall value by permitting you to
accomplish initial events, hold mock auctions, and support live events.

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 Chapter 6

Sourcing Solutions in SAP

SAP Sourcing covers the whole key source to contract process over all classes of spend. It
comprises of a set-up of the following solutions:

1. SAP Strategic Sourcing

2. SAP Contract Life cycle Management

3. SAP Supplier Management

6.1 SAP Strategic Sourcing

The key features of this solution are listed below:

SAP Key Sourcing lets you drive reasonable cost reserve funds while guaranteeing supportable
sourcing forms. This solution compromises of following key features:

6.1.1 Project Management

It brings all stakeholders together by using mutual online shared project plan. Stay up with the
latest utilizing status reports and cautions. Track open doors for investment funds. Influence
preconfigured business process formats to lessen process duration and help guarantee that
prescribed procedures are rehashed all throughout organization.

6.1.2 Collaborative Multiround Sourcing Processes

It allows multiple rounds so as to recognize qualified suppliers and arrange valuing while at the
same time utilizing shared scoring and offer streamlining highlights. Convey key information
forward into a thorough solicitation for proposition or sale.

6.1.3 Requests for information, proposals and quotations

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It involves both easy and complicated procurement activities for all service categories be it be
direct, indirect or service.

6.1.4 Robust Reporting

Evaluates response of suppliers by drawing side by side comparisons, pricing and potential
saving reports. Help guarantee that different suppliers are being welcome to partake in sourcing
events. Assess award decisions after some time to comprehend what key models are being
utilized in granting business to suppliers.

6.1.5 Effective auctions

Communicates with suppliers continuously, utilizing texting, offering supports with ongoing
updates, and graphical portrayals of closeout exercises. Effectively oversee bidding and
disclosure rules, for example, bid and rank visibility, programmed expansions, weighted-bidding
cost factors, amazed beginning and end times for singular things, and save costs.

6.1.6 Integrated sourcing and procurement execution

In order to drive compliance and reserve savings integration of sourcing and procurement
processes is done. For example: Integration of SAP ERP and SAP SRM.

6.2 SAP Contract Life Cycle Management

SAP CLM lets you enhance corporate agreements via mechanizing contract creation, upgrading
perceivability, improving consistence, and conveying quick an ideal opportunity to esteem. By
dealing with the whole agreement lifecycle reliably over the endeavor, you can understand the
full estimation of your agreements, bringing about higher benefits and lower lawful and money
related hazard.

This arrangement gives the accompanying key highlights:

 Normalized, computerized contract creation from provision libraries and formats

 Smooth out the endorsement procedure with steady, preapproved language, controlled
alters, and fitting endorsements.
 Completely accessible vault
 Support buying under agreement terms, track gatherings against contracts, and smooth

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 out exercises by rapidly investigating remarkable responsibilities and agreements.
 Incorporation with back-end frameworks and procedures
 Management of expiration and agreement reviews. It upgrades contract dealings by
starting timely renewal and utilizing the full agreement history to haggle better terms and
conditions.

6.3 SAP Supplier Management

SAP Supplier Management allows to enhance supplier onboarding, manage information,
assessment, and manage performance of employees. With full supplier visibility, you can make
increasingly educated, cooperative gracefully choices that support benefit.

This arrangement gives the accompanying key highlights:

 Supplier onboarding and capability

 Automate supplier onboarding processes with supplier self-support and distinguish the
correct suppliers effectively by smoothing out the procedure for gathering extra data.
 Supplier advancement.
 Drive improved execution with brought together centralized monitoring and
administration of supplier advancement.
 Supplier performance management
 Oversee scorecards and alerts identified with key supplier performance criteria.
 Supplier information management
 Offer the most forward-thinking-supplier information over the endeavor, empowering
increasingly educated collaborative supply chain decisions.

6.4 Key Benefits of SAP ARIBA

SAP Ariba is a cloud-based procurement solution that helps traders all around the world to meet
at a single platform. It enables in growing businesses with the help of its SAP Ariba Partner
Program tools and resources.

 People from different locations around the world can have access to SAP Ariba. It
requires very low initial capital cost for setting up solution. It enhances trading
experience by shifting towards digital transformation. It has redefined the way of how

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 you communicate and get your work done.
 SAP Ariba simplifies sourcing and procurement processes. It has easy setup of key
procurement processes like integrating sales department with accounts payabale
department, PO by maintaining shopping carts. PO details can be easily transferred to
Ariba solution with optimum integration.
 Easy transfer of transactional data.
 Real Time Transactions on record.
 Cost Effective Software
 Transparency in transactions
 Improved supplier and customer relationship
 It requires minimal maintenance cost
 Provides benefits to suppliers to market themselves.
 Minimal or no risk in supply chain process

6.5 Difference between SAP Ariba and Oracle Procurement

As per procurement cloud 2020 comparison between SAP Ariba and Oracle Procurement, SAP
Ariba earned second position in procurement software whereas Oracle Procurement Cloud is
ranked third out of thirty-two in procurement software.

Seven Reasons Why SAP Ariba Is the Leader

6.5.1 Connectivity:
Being considered as world’s largest B2B network, SAP Ariba is considered to be dynamic,
digital marketplace that generates trillion of dollars in yearly business trade between more than
3.6 million associated organizations.

6.5.2 Flexible:
SAP helps you design a solution that fits how you do business with trading partners.

6.5.3 World- Class Support:

Support is provided worldwide through professional experts regarding best practices, resources
and tools for successful process transformation, quick solution, deployment, efficient supplier
enablement and effective change management.

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6.5.4 Comprehensive:
From the start of process till the automation process, SAP Ariba maximize savings and minimize
risks across all spend categories.

6.5.5 Purpose Driven:

Working with SAP Ariba and our accomplice environment can make your group stewards of
your organization's image notoriety through dependable and supportable sourcing and
acquisition.

6.5.6 Credible:
SAP Ariba has certified system security developed over more than 22 years ago. It is supported
by stability, innovation and technical resources of SAP.

6.5.7 Purpose Driven:

SAP Ariba can enhance reputation of your brand company through responsible and sustainable
sourcing and procurement.

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 Chapter 7

CONCLUSION

7.1 Summary
Currently, JAZZ is using ORACLE for its supplier/vendor selection process, shifting towards
SAP would help them in getting touch with the suppliers all around the globe. Major difference
that lies between two softwares is that ORACLE requires manual induction of supplier whereas
SAP is completely digitized. Setting supplier specification will help company get suppliers
digitally on-board with the required type of specifications needed. This would help not only in
saving time but it would also help in delivering services or products at right time to the
customers. The SAP E-Sourcing application supports to automate and rationalize strategic
sourcing across all your supplier expenses. The Web-based software empowers processes such as
collaborative project management, online bidding, and contract negotiation and management.

7.2 Business Challenges

 Extend procurement’s reach to more categories of spend
 Aggregate expenditures across the organization
 Increase visibility into sourcing activities
 Streamline the supplier selection process
 Standardize contract management processes

7.3 Supported Business Processes and Software Functions

 Cross-enterprise collaboration – Work jointly with all departments to define
requirements, evaluate supplier proposals, and reach key sourcing decisions
 Enhanced project management – Link all sourcing activities to specific projects so you
can track results and monitor project status for savings opportunities
 Cycle-time reduction – Create templates of every key sourcing process to save time and
ensure best practices are being followed
 Supplier selection – Ensure that the right suppliers are competing for your business
 Automation and analysis – Manage requests for information, proposals, and quotations

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 by creating requests automatically and analyzing bids
 Reverse auctions – Create tailored bidding events in which suppliers can interact in real
time
 Contract creation, management, and compliance – Create supplier agreements from
approved template content, streamline reviews and approvals, and integrate with backend
systems for compliance management.

7.4 Business Benefits

 Optimized value from suppliers based on your ability to evaluate and compare their
offerings through help of digitization.
 More sourced spending and shorter time to savings thanks to automation and the use of
templates
 Bottom-line savings via integration to back-end processes

References

https://help.sap.com/saphelp_sourcing_100_p/helpdata/en/39/8ee60a3d74482e9e0111c46dc1e23
d/frameset.htm
https://www.tutorialspoint.com/sap_ariba/sap_ariba_key_benefits.htm
https://www.ariba.com/about/why-sap-ariba
https://www.google.com/search?
rlz=1C1GCEU_enPK837PK837&sxsrf=ALeKk00ox2JGi82WvvFTTh8kzbHo6D99FA:1592651917007
&source=univ&tbm=isch&q=SAP+sourcing+process&sa=X&ved=2ahUKEwix7Y3eopDqAhWE16QKH
adnB9MQsAR6BAgIEAE#imgrc=kjncNoLH7zki8M
https://www.sap.com/mena/why-sap.html?campaigncode=CRM-SA20-PPC-SSA_BRFTA0&source=ppc-
emea-ao-
dg_brand_x_PK_x_x_GOO_x_x&DFA=1&gclid=CjwKCAjw57b3BRBlEiwA1Imytvp4NzNGPqUzV07
HJs5P-g3HQcFlIS8A1Ij8TnAVdr31CzMlnpgIjRoCjHEQAvD_BwE&gclsrc=aw.ds
https://www.absoft.co.uk/sourcing-procurement-what-is-available-in-sap/

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