NMIMS Global Access School for Continuing Education

Course: Procurement Management

Internal Assignment Applicable for June 2023 Examination

Q1. Ans
Introduction:
Purchases defined as whenever we buying something with an intention to sale in normal
course of business. Eg – grain business , computer , medicine
Purchases is the process of procuring /buying the material or service for an organization to
meet the production targets or customer requirement .
Procurement is the planned acquisition of goods and services on behalf of a procuring entity.
Purchasing functions are necessary to ensure that the required materials are available at the
right time and at the right cost. A purchasing department is especially necessary in a
manufacturing company, where a large number of raw materials and components must be
purchased regularly.
When companies have a deep understanding of the many different types of purchases
customers make, they can better develop marketing strategies tailored to the needs and plays
of their target audiences. That's because companies are in a prime position to expand
marketing strategies tailored to the specific needs and movements of their audience.

Concepts and Application

A final products manufacturing by an organization is form / result of many inputs , few items
are manufacturing within organization and rest are purchase from outside .
Organizations buy many different goods and services. For most things, the decision to make
or buy is actually quite simple. Few companies can make their own production equipment,
computers or pencils. However, all businesses need these things to support their operations.
The challenge is to determine which vendors offer the best opportunity for what the
organization needs to outsource.
Let's talk about the range of products and services that the purchasing department has to buy.
It should be noted that organizations must take steps to track the quantity of goods in the
physical inventory of each category.
1. Raw materials:
The commodity category includes commodities such as petroleum, coal, and timber, as well
as metals such as copper and zinc. It may also be associated with agricultural products such
as soybeans and cotton. An important feature of the raw material is the absence of conversion
of the supplier into a newly created product. Any change makes the raw material salable.
 For example, copper needs to be refined to remove impurities from the metal. Another
important factor is that the raw materials are not of the same quality. For example, different
types of coal can vary in sulphur content. Raw materials are often given a grade that reflects
the level of quality. This makes it possible to source raw materials in accordance with the
required quality.
2. Semi -finished product :
Semi – finished include all purchases from vendors necessary to support the organization's
end result. This includes parts with a single part number, subassemblies, assemblies,
subsystems, and systems.
Semi-finished products are normally manufactured according to the specification given by
the buying organization and therefore are not sold finished products to the outside market .
3. Finished products
All organizations buy finished products from external suppliers for internal use. This
category also includes purchased items that do not require significant processing before resale
to end customers. An organization may market another manufacturer's item under its own
brand.
Examples purchase of heating , ventilation and air conditioning ( HVAC) equipment to
perform heating and or cooling for residential , commercial or industrial buildings , come
under the finished products category ,
4. Maintenance, Repair, and Operating Items
Maintenance, repair, and operation (MRO) items include anything that is not directly related
to an organization's product. However, these elements are important when running a business.
This includes spare parts, office and computer supplies and cleaning products. The way these
items are often scattered throughout the organization makes it difficult to track MRO
inventory. The only way for most purchasing services to know when an MRO has been
ordered is when a user submits a purchase request.
These can be spare parts of machinery related to capital goods, office supplies, etc.
5. Production support items
Packaging materials required for the shipment of finished goods, such as pallets, boxes, bulk
shipping containers, tape, bags, wrappers, inserts and other packaging materials, are
considered production support materials. The main difference between manufacturing support
and MRO equipment is that manufacturing support equipment directly supports the
manufacturing operations of an organization.
Production facilities directly support an organization's production activities; This is the main
difference between production support and MRO items .
Like MRO items , production support items also do not from part of the final product but they
are required for production process .
Example : electrodes , lubricant , packing material , shipping material etc .. are few examples
of production support items .
6. Capital equipment :
When purchasing capital goods, goods that are intended to be used for one year are
purchased. There are different stages of fundraising. The first includes common equipment
that does not require special design requirements. The second category includes large goods
specially designed to meet the needs of consumers. Examples include specialized
manufacturing equipment, new factories, specialized machine tools, and power generation
equipment. Buying these last items requires close technical involvement between buyer and
seller.
Examples include modern manufacturing facilities, advanced machine tools and power
plants. These latter items require careful technical cooperation between buyer and seller to be
purchased.

Conclusion
A finished product manufactured by an organisation is the result of many input , some of
which are manufactured within the organisation and the rest are purchased from outside . No
organisation can manufactured all inputs required to manufactured a product in house .
There's also the threat that companies struggle to keep customers and get them to buy more.
In fact, businesses may need help competing with online stores. This is especially true in
competitive markets where customers have a wide variety of options from which to choose
the services or products that best meet their needs. therefore, companies must constantly
compare and adjust the marketing strategies they use to adjust to changing customer
expectations and behaviours, cultivate long-lasting customer relationships, and build trust and
loyalty in the products and services they offer.

Q2.Ans
Introduction
Strategic sourcing is a the process that identifies the spending profile of a business and its
suppliers . a process that constantly re evaluates and enhance a business buying activities .
Strategic sourcing creates supply channels not just at the lowest purchase price , but at the
lowest total cost .
A manufacturing company is looking for a supplier of the raw materials needed to
manufacture its products. The employer identified the capability of suppliers through market
research and assessed their capabilities and performance. After reviewing vendor finances,
contracts, and performance, the company selects a vendor and negotiates pricing terms,
delivery terms, and best rates. Once the terms are agreed, the company will implement the
relationship with the supplier by drafting service level agreements and monitoring the
supplier's performance to ensure that it meets the company's requirements. Through strategic
sourcing, an employer can improve their purchasing processes, reduce risk and realize cost
savings, while ensuring a reliable, high-quality foundation.
 A systematic approach to sourcing and procurement involves sourcing, evaluating and
selecting suppliers for the most influential business value. This process is known as "strategic
sourcing". Further analysis of the system can be found as follows:

Concepts and applications

Fred Sollish defined purposive purchasing as an organizational purchasing and innovation
management process used to find, develop, qualify and hire suppliers to add maximum value
to the buyer's products and services.
Strategic sourcing is the process of identifying, selecting and working with suppliers to meet
a company's needs and objectives. The strategic sourcing process includes steps that help
companies research their purchasing needs, identify potential suppliers, research their
capabilities, negotiate favorable terms, and manage ongoing supplier relationships. Here's a
detailed breakdown of how to get help:

The following steps involved in strategic sourcing process are ……

1. Assess business needs and goals: The first step in strategy research is to assess the
business's buying needs, determine goals and objectives, and find the products and services
needed to meet them. respond. This includes analyzing things like finances, happy needs,
delivery times, and other business-specific conditions.
2. Find potential suppliers: Once the needs of the business have been identified, the next step
is to select potential suppliers who can meet those needs. This includes conducting market
research, learning the skills of job providers, and compiling a list of potential providers.
3. Assess vendor skills: Once you've created a list of skills vendors, the next step is to review
their skills to make sure they meet your business needs. This includes due diligence, analysis
of supplier finances, review of supplier contracts and evaluation of their performance.
4. Negotiate terms: Once a suitable supplier has been identified and approved, the next step is to
negotiate favorable terms. This includes trading fees, cost terms, shipping times, quality
standards, and other applicable terms.
5. Establish and manage supplier relationships: Once the terms and conditions have been
negotiated, the final step is to establish and manage supplier relationships. This includes
drafting carrier agreements, monitoring carrier performance, and resolving any issues or
disputes.
Here is an example of the buying process for a manufacturing company:
The business needs analysis is the first step in the procurement process. At this stage, you
decide which products or services are important to the business. This includes reviewing the
employer's business and determining areas where it could benefit from additional products or
services.
The next level is to conduct market research to assess behavioral markets to find potential
suppliers and determine the capabilities of those skill carriers. This includes obtaining
information about suppliers such as their reputation, the price of the goods or services they
provide, the price, the time required for delivery and their location.
Develop a financing method After completing the necessary market research, a financing
method is developed. This method specifies the best way to find the products or services you
are looking for. This includes determining whether a particular form of delivery, including
competitive bidding, negotiation or exclusive purchasing, is most appropriate.
After reviewing the approval process, it is necessary to identify the feasibility of the supplier
and confirm the company's readiness and ability to execute. Retain ownership of service
providers and provide services. Cela completes providing information about competition
offerings and contact information for competition offerings for corporate exam exams.
Le degré suivant examines its own avantages to assess the provision of the provideneurs and
the value of the propositions des Providenneurs. This requires, among other things, an
analysis of the company's capabilities, product or service quality, prices and delivery times.
After evaluating the supplier, the terms should be negotiated. Cela encompasses prices,
transit times, and key parties to the transaction. Select a provider after this step. Your
company selects all companies and takes charge of the person in charge.
Contract execution and management constitute the final element of strategic acquisitions.
Understanding the Contrat Ratings Provided by the Average Diver

conclusion

A large manufacturing company that needs to purchase large quantities of raw materials for
production is an example of a company that can benefit from strategic purchasing. The
purchasing branch of the company follows the process described above based on the analysis
of the needs of the organization and the results of market studies. Based on the results of this
research, they develop a purchasing strategy and find effective sources of supply. They begin
to haggle over which competent company offers the best solutions to their problems, then
proceed to evaluate and negotiate the terms of that offer. The procurement team monitors
vendor performance and manages payments to ensure the organization gets the most value for
its money.

Q3 a ANS:
Introduction
A market is a place where buyers and sellers meet to buy or sell their products and exchange
money or goods. An electronic marketplace is defined as an electronic platform where buyers
 and sellers can come together to transact business online. It can be divided into public and
private electronic market.
The e-marketplace is an online virtual marketplace where businesses can register as buyers
and sellers to conduct business-to-business (B2B) or business-to-consumer (B2C)
transactions over the Internet. Use of the Internet has helped eliminate the middleman from
sales
Play an important role in the digital economy and facilitate trade
Create value for buyers, sellers, consultants and the community at large
It works in these virtual markets.
Match buyers and sellers

concepts and applications

Online catalogues allow online purchase of materials and other resources . These catalogs
contain products to be purchased online from predetermined vendors. online catalogs provide
information on prices and discounts applicable to volume purchases
These catalogues may be available for purchasing goods within the procurement intranet of
the buying organisation provided by approved suppliers . These catalogues may be developed
, maintained and updated for E – procurement processing by the buying organisation based
on supplier catalogues and internal inventory system . Alternatively, the e-procurement
platform can refer to an external link to the catalogs managed by the supplier.

Three types of catalogues :

1. Simple catalogues : these catalogues provides a list of basic items such as stationeries with
individual descriptions and prices . these catalogues involve 60 % of all E- marketplaces
transactions .
2. Goods and services catalogues : these catalogues includes items like desktop computers
requiring detailed and complex descriptions . These catalogues involve 30 % of all E-
marketplace transactions
3. Contract driven catalogues : These catalogues includes items which are based on supplier
contracts already established through sourcing processes . These catalogues involve 10 % of
all E – marketplace transactions .
Virtual marketplaces are online marketplaces that specialize in serving an economic sector or
a specific niche of a product or service. For example, ThomasNet is an online market catalog
that provides access to a wide selection of services and products in all sectors. You are free to
browse this library whenever you want. This installation provides connectivity to the
ThomasNet laptop network.
Alternative Marketplaces to Vertical Marketplaces Horizontal marketplaces are online
marketplaces that promote goods and services from a variety of industries and are referred to
as “marketplaces”. For example, Amazon's business is a horizontal marketplace web catalog
that provides customers with access to a wide selection of products and services. Consumers
have access to a wide variety of alternatives.
Ariba is a well-known example of a professional service provider (PSP) serving the
purchasing needs of institutions. PSPs, which stand for "Purchasing Companies", are online
marketplaces where organizations can make transactions related to the purchase of goods and
supplies. PSPs are the top term often used to refer to these online markets. They offer a wide
range of services including digital procurement, contract management and supplier
management.
The term "private electronic marketplace" refers to online marketplaces owned and operated
by a single company. They were born to simplify the purchasing strategies of internal
companies to make it easier to manage these institutions. For example, Dell customers should
be allowed access to a private online marketplace known as Dell's Choices Pages, which
allows them to view and purchase Dell products without leaving the comfort of their homes.
What's more, they can do all this without paying a premium.
Electronic marketplaces that are part of a very good company are called consortium e-
marketplaces. This is another name for online markets. These markets are entirely owned and
controlled by companies working together as a consortium.

conclusion
Company PQR Inc. can reduce the complexity of its online earning mode by selecting the
appropriate online catalog in the electronic marketplace. This in turn enables them to reduce
costs and increase productivity. They can be designed to make the purchasing process easier
to understand and implement using a range of organizations.

Q3B .ANS:

Introduction

Online auctions have actually created a huge marketplace where people can come together to
buy, sell, trade and view goods of the day. They are very popular, high-traffic sites where you
can start selling products in no time

E-procurement can also take the form of online auctions, where potential companies compete
in real-time bids for contracts to provide the customer with the goods or services the sponsor
needs. E-sourcing can also take the form of various documents. Here is a list of the different
stages that can be part of an online auction system:

Concept and application

Several organizations have realized savings by buying through online auctions. There are
examples of online auctions involving sellers from all over the world.The purchaser is solely
responsible for choosing the gadgets or services of his choice and establishing the
requirements, which may include the best requirements, delivery times and any other relevant
facts.

When prequalifying vendors, the customer will first determine which capacity vendors can
meet the requirements. They will then ask if the suppliers are interested in participating in the
public auction. Sellers are already qualified based on their financial stability, track record,
and othe ressential qualities.

Conduct of the auction The Buyer is responsible for conducting the public auction in the
appropriate online environment and for determining the terms and conditions that may be
associated with the auction. These general conditions are found in the start and end times of
the public sale, the scale of progression between the offers and the minimum price that can be
offered.

Auctions take place when potential suppliers visit an online platform. At this point, they can
publish their offers, which are kept up to date. The duration of a public sale can range from a
few hours to a few days, and during this time the sellers have the possibility of adjusting their
offers to remain aggressive.

Bid evaluation: After the public sale, the buyer will primarily evaluate each bid based on
criteria established before the public sale begins. Price, quality, shipping dates and other
applicable factors may also be included in these rankings.

Upon contract award, the purchaser will select a successful supplier and provide security to
that entity. After being introduced to the company, the successful candidate is obligated to
abide by the terms of the agreement.

Profitability of electronic auctions

Reduced time and resources needed to complete the procurement process

Ensure the proper provision of services such as security, advice, cleaning

Improve purchasing efficiency

Promotes transparency within the organization

Better audit evidence and faster document retrieval

Mapped approval flow, reducing paperwork

Conclusion
Compared to traditional buying techniques, online auctions offer several advantages,
including greater resilience, higher cost, lower cost, and a reduction in the time it takes to
complete buying cycles. But to ensure they can be conducted in a fair and open manner,
while meeting consumer needs, they must be carefully planned and monitored.