SEMINAR QUESTIONS

FOR TOPIC ONE

BAF BS 2A & 2B
Qn 1.
What would you consider to be procurement’s added value to a
company? What are the procurement’s core and non core activities?

Procurement adds value by reducing costs, without the compromise

of quality, product failures, assuring the operational efficiency to
enable better quality without any additional cost with an aim to
achieve the best objectives, output at a reduced cost in the supply
chain.
Qn 1; cont…….
Value adding activities of Procurement function are as follows;

Efficient management of procurement activities to reduce transaction

cost that will enable cost reduction

Effective inventory management, to minimize acquiring and holding

costs this also will help in cost reduction

Effective contracts negotiation and management in order to reduce

the cost of inputs
Value adding activities cont….
Effective communication with user departments to enhance
specifications, so that business needs are fulfilled more efficiently and
at lower cost

Selecting and managing suppliers, in order to improve the quality of

inputs, with consequent improvement in the quality of outputs

Working with key supply chain partners to eliminate wastes (non-value

adding activities) wherever they are found in the supply process: an
approach sometimes referred to as 'lean' supply.
Procurement’s core and non core activities
Procurement’s core activities are all those activities that are involved
in the procurement cycle. These are strategic tasks that improve
customer value and drive profits. Example of activities involved in the
procurement cycle…………………..

Non core Procurement activities are day to day tasks that have little
value and are not profit center. Example human resource activities,
record keeping, data processing, etc.
Qn 2
Explain how and in what areas purchasing can contribute to the
achievement of strategic objectives of the organization.

Cost reduction; Effective procurement management will enable an

organization to lower costs by procuring supplies, services, and
contracts at the best price. Also, an effective procurement process will
provide an organization better visibility into the organization’s budget
and how company funds are spent. This allows a business to have the
option of leveraging additional cash flow by extending payment terms
and helping business owners forecast for the future.
Qn 2 cont……
Greater efficiency; When a company has a fully functional
procurement process, will result in quality goods and services being
delivered on time. This also helps businesses find solutions to
unforeseen circumstances such as labor shortage or surplus, natural
disasters, and economic instability.
Qn 2 cont……
Better suppliers/services providers/contractors: An effective
procurement process also enables an organization to distinguish
between effective vendors and underperforming vendors. As a result,
the company’s overall supply chain will be improved and there is a
possibility of being compensated by underachieving vendors who fail
to deliver goods and/or services within agreed upon parameters.
Qn 2 cont…..
Competitive advantage; Due to stiff competition that businesses
face, business owners seek any competitive edge they can achieve to
make their products or services better. It is not a question of simply
improving your operation; if you want your company to be ahead in the
competition, or at the very least, at par with competitors, you need to
transform your operations. An effective procurement process allows a
company to look for innovative products or services that they can offer
consumers. When this happens, the business may also be able to
secure exclusive deals with suppliers.
Qn 3
A hybrid structure represents a combination of the Centralized and

Decentralized Purchasing structure. In what circumstances would you

consider appropriate to use a hybrid structure? What are the

advantages and disadvantages of using a hybrid purchasing structure?
Qn 3 cont………….
• What is a hybrid procurement structure?
A hybrid procurement model refers to a procurement strategy that
combines elements of both centralized and decentralized procurement
processes. This approach allows organizations to tailor the procurement
process, fostering innovation and customization while balancing the
advantages of both centralized and decentralized models.
It encompasses the quickness or agility of the decentralized
procurement structure to respond to needs without seeking the
approval from the main office and follows the strict procurement
guidelines set.
Qn 3 cont……
Advantages of hybrid procurement structure

Flexibility: A hybrid procurement model offers more flexibility

compared to a strictly centralized or decentralized procurement
model. It allows organizations to choose the best procurement
approach based on their specific needs.
Qn 3 cont……..
Cost savings: Hybrid procurement models can help organizations
achieve cost savings by leveraging the benefits of both centralized and
decentralized procurement approaches. For instance, centralized
procurement can help reduce costs by consolidating purchasing
power, while decentralized procurement can help reduce costs by
enabling individual departments to negotiate better deals based on
their specific requirements.
Qn 3 cont…….
Improved supplier relationships: A hybrid procurement model can
help improve supplier relationships by enabling closer collaboration
and communication with suppliers. It can also help ensure that
suppliers are selected based on their ability to meet specific needs,
rather than just their price.
Qn 3 cont…..
Increased transparency: A hybrid procurement model can increase
transparency by providing a clear view of procurement activities
across the organization. This can help identify areas for improvement
and ensure compliance with procurement policies.
Qn 3 cont…..
Disadvantages of hybrid procurement structure

Complexity: Hybrid procurement models can be more complex to

manage compared to strictly centralized or decentralized models. This
is because they require a more nuanced approach to procurement,
which can be challenging to implement and maintain.
Qn 3 cont….
Risk of inconsistency: A hybrid procurement model can result in inconsistencies in

procurement processes and policies across different departments or regions. This can

make it more difficult to ensure compliance and maintain accountability.

Difficulty in implementation: Implementing a hybrid procurement model can be

challenging, as it requires significant organizational change and a clear understanding

of procurement processes and policies. This can result in resistance from employees

and stakeholders, which can slow down the implementation process.

Qn 4
If the purchasing function is NOT effectively and efficiently managed,
what consequences will the organization face?

Increased costs of purchases

Consumption of funds that would have otherwise been used in other

activities

Corruption and malpractices in the organization

Stockout situations
Qn 4 cont….
Loss of customers

Poor coordination within departments in the organization

Delays in delivery of goods, services and works

Poor competition among suppliers, services providers and contractor

Qn 5

Select any organization of choice, thereafter demonstrate its supply

chain and link with the role of procurement.

Procurement can be defined as the sum total of effort that goes into
discovering and acquiring the supplies an organization requires to
function effectively.

Supply chain can be defined as the network of manufacturers,

suppliers, logistics providers, and others who work together to get a
product into the hands of a client.
Qn 5 cont…..
Linking supply chain and the role of procurement;

Sourcing: Procurement plays a key role in strategic sourcing, which involves

identifying, evaluating, and selecting suppliers to obtain goods and services. This
sourcing contributes directly to the efficiency and effectiveness of the supply chain.

Supplier Relationship Management: Procurement is responsible for managing

relationships with suppliers. Effective supplier management is crucial for ensuring a
smooth and reliable supply chain. This involves negotiating contracts, monitoring
performance, and collaborating with suppliers to address challenges and improve
processes.
Qn 5 cont……
Cost Management: Procurement is often tasked with negotiating prices and
contract terms with suppliers to achieve cost savings. Effective cost
management in procurement positively impacts the overall cost structure of
the supply chain.

Inventory Management: Efficient inventory management is a critical aspect

of the supply chain. It involves balancing the costs of holding inventory
against the risks of stockouts. Procurement decisions directly influence
inventory levels and, consequently, impact the supply chain's ability to meet
demand.
Qn 5 cont…..
Quality Assurance: Procurement is responsible for ensuring that the goods or
services procured meet quality standards. This is essential for preventing
disruptions in the supply chain due to defective products or inferior services.

Demand Planning: Demand planning is about forecasting future demand for

products. Procurement teams need to align their activities with demand
forecasts to ensure that the right quantities of materials or products are
available when needed, avoiding excess or shortage issues in the supply chain.
This is done through the preparation of APP (Annual Procurement Plan).
THE END OF OUR SEMINAR
DISCUSSION, THANK YOU
FOR LISTENING!!