Master of Business Administration Program

Assignment-2

Date: March 30, 2023

 Activity 1
Topic: Explain the key aspects of the procurement cycle Carol works for an organization in
the primary sector whose main activity is mining precious metals in a developing nation.
The majority of people employed where Carol works are focused on the mining activity
and there are very few senior managers in the business. Carol needs to conduct a sourcing
process to purchase a capital asset for the business. This is for a piece of equipment she has
never bought before.
Explain FIVE stages of the procurement cycle she should follow for this type of purchase,
with examples.

The Main Stages of the Procurement Process

Identify the need: Determine precisely what your business requires in terms of procurement – is
it a certain product, material, service, software, etc.? Clarifying a demand precisely helps shorten
acquisition times, increase communication with possible suppliers, and remove any uncertainty.
Example: Carols needs a metal processing machine.
 
Find a supplier: Once you have determined what your business requires, it's critical to research
the possibilities on the market. By contrasting various distributors, you may choose who will
offer you the greatest price and help you maintain cost competitiveness.
Example: Carols selected two suppliers after considering all aspects
 
Negotiate the price and terms: After locating the ideal provider, it's time to concentrate on
communication. Building a solid rapport with the supplier will assist you in negotiating the best
terms and pricing for the good or service you're buying. You can also lock in other important
details at this point, such as the distributor's manufacturing or delivery timetable.
Example: Carols negotiated a certain price and was subject to certain conditions.
Develop documentation: Create the appropriate documentation, such as a pre-buy survey,
purchase order form, payment form, or service agreement, to guarantee that you have written
records of expectations and the terms that you and your provider have agreed upon.

Example: Prepare all documents for machine purchase

Manage logistics: To guarantee that the items you order are accurate, consistent, and delivered
on time each time, it's crucial to set up a standard procedure for orders and deliveries. Before
placing an order, make sure that you have all the necessary logistical information, including
shipping, delivery, and payment information, to ensure that your things arrive to you without any
delays.