Procurement and Supply Chain Management

Cover......Page 1
Title page......Page 4
Copyright page......Page 5
Contents......Page 8
Preface......Page 16
Acknowledgements......Page 18
Publisher’s acknowledgements......Page 19
Plan of the book......Page 21
Part 1 Introduction, strategy, logistics, supply chain, policies and procedures......Page 22
  Key ideas......Page 24
  1.1 How to define procurement......Page 25
  1.2 Strategic roles of procurement......Page 26
  1.3 Procurement as organisational buying......Page 28
  1.4 The evolution of purchasing through to procurement......Page 30
  1.5 Procurement and change......Page 36
  1.6 World-class procurement......Page 37
  1.7 The status of procurement and supply management (PSM)......Page 39
  Discussion questions......Page 46
  References......Page 47
  Key ideas......Page 49
  Introduction......Page 50
  2.1 Strategic thinking......Page 51
  2.2 What is strategy?......Page 52
  2.3 Strategy development......Page 53
  2.4 Levels of organisational strategy......Page 57
  2.6 Growth strategies......Page 58
  2.7 Business-level strategy......Page 61
  2.9 Strategic analysis......Page 64
  2.10 Important environmental factors......Page 66
  2.11 Internal scrutiny......Page 70
  2.12 Strategy formulation......Page 71
  2.13 The evaluation of alternative strategies......Page 75
  2.14 Strategy implementation......Page 86
  2.15 Post-implementation evaluation, control and review vii......Page 90
  2.16 Strategic procurement and supply chain process models......Page 92
  Discussion questions......Page 96
  References......Page 97
  Key ideas......Page 99
  3.1 What is logistics?......Page 100
  3.2 Materials, logistics and distribution management......Page 101
  3.3 Reverse logistics......Page 106
  3.4 Supply chains......Page 107
  3.5 Supply chain management (SCM)......Page 110
  3.6 Supply chain vulnerability......Page 115
  3.8 Value chains......Page 116
  3.9 Value chain analysis......Page 121
  3.10 Supply chain optimisation......Page 124
  3.11 Supply chains and procurement......Page 127
  Discussion questions......Page 130
  References......Page 131
  Key ideas......Page 133
  4.1 Organisational structures......Page 134
  4.2 New type organisations......Page 142
  4.3 Networks......Page 143
  4.4 Factors in configurations......Page 150
  4.5 Lean organisations......Page 153
  4.6 Agile organisations and production......Page 156
  4.7 Supply and value chain mapping......Page 160
  4.8 Types of change......Page 164
  4.9 Centralised procurement......Page 167
  4.11 Cross-functional procurement......Page 169
  Discussion questions......Page 172
  References......Page 173
  Introduction......Page 176
  5.1 Exemplar Procurement Policy – The Crossrail Project......Page 177
  5.2 Procurement procedures......Page 180
  5.4 E-commerce, e-business, e-SCM and e-procurement......Page 182
  5.6 Electronic data interchange (EDI)......Page 186
  5.7 E-hubs, exchanges, portals and marketplaces......Page 192
  5.8 E-catalogues......Page 194
  5.9 E-auctions......Page 197
  5.10 Reverse auctions......Page 198
  5.11 E-payment......Page 203
  5.12 Low-value purchases......Page 204
  5.13 Procurement manuals......Page 206
  5.14 Supplier manuals......Page 208
  Discussion questions......Page 209
  References......Page 210
Part 2 Supplier relationships, legal & contractual management, quality management, sourcing, supplier selection, price management and long-term cost in use......Page 212
  Introduction......Page 214
  6.3 Collaborative business relationships......Page 215
  6.4 Relationship formation......Page 218
  6.5 Models of supplier relationships......Page 220
  6.6 Practical considerations of supplier relationship management......Page 226
  6.7 The termination of relationships......Page 229
  6.8 Relationship breakdown on an IT project......Page 232
  Discussion questions......Page 234
  References......Page 235
  7.1 The procurement specialist and Contract Law......Page 237
  7.2 Offer and acceptance......Page 238
  7.3 Acceptance......Page 240
  7.4 Contracts for the Sale of Goods......Page 242
  7.5 Contract for the Supply of Services......Page 243
  7.6 Consideration......Page 244
  7.7 Capacity to Contract......Page 245
  7.8 Drafting the detail of contract clauses......Page 247
  7.9 Misrepresentation......Page 248
  7.10 The Right to terminate a contract......Page 249
  7.11 HOT TOPICS......Page 251
  7.12 Standard Forms of Contract......Page 258
  References......Page 260
  Key ideas......Page 262
  8.1 What is quality?......Page 263
  8.3 The importance of TQM......Page 265
  8.4 Specifications......Page 270
  8.5 Alternatives to individual specifications......Page 275
  8.6 Standardisation......Page 278
  8.8 Quality assurance and quality control......Page 283
  8.9 Tests for quality control and reliability......Page 284
  8.10 The cost of quality......Page 296
  8.11 Value management, engineering and analysis......Page 297
  Discussion questions......Page 308
  References......Page 309
  Key ideas......Page 311
  9.2 Reasons for keeping inventory......Page 312
  9.4 Scope and aims of inventory management......Page 313
  9.5 Some tools of inventory management......Page 315
  9.6 The economics of inventory......Page 319
  9.7 Inventory performance measures......Page 320
  9.8 Safety stocks and service levels......Page 321
  9.9 The right quantity......Page 324
  9.11 Forecasting demand......Page 325
  9.12 ‘Push’ and ‘pull’ inventories......Page 331
  9.13 Independent demand......Page 332
  9.15 Just-in-time (JIT)......Page 336
  9.16 Materials and requirements planning (MRP)......Page 343
  9.17 Manufacturing resource planning (MRP II)......Page 347
  9.18 Enterprise resource planning (ERP)......Page 348
  9.20 Distribution requirements planning (DRP)......Page 351
  9.21 Vendor-managed inventory (VMI)......Page 353
  Discussion questions......Page 356
  References......Page 358
  Key ideas......Page 359
  10.2 The strategic sourcing process......Page 360
  10.3 Sourcing information......Page 362
  10.4 Analysis of market conditions......Page 363
  10.5 Directives......Page 365
  10.6 E-sourcing......Page 366
  10.7 Locating suppliers......Page 367
  10.8 Supplier assessment......Page 368
  10.9 Supplier approval......Page 376
  10.10 Evaluating supplier performance......Page 377
  10.11 Policy issues in sourcing......Page 380
  10.12 The supplier base......Page 381
  10.13 Outsourcing......Page 382
  10.14 Outsourcing manufacturing......Page 383
  10.15 Outsourcing services......Page 388
  10.17 Types of outsourcing......Page 390
  10.19 Problems of outsourcing......Page 391
  10.20 Handling an outsourcing project......Page 392
  10.21 Sub-contracting......Page 394
  10.22 Partnering......Page 396
  10.23 Intellectual property rights and secrecy......Page 406
  10.24 Procurement support for in-house marketing......Page 407
  10.25 Intra-company trading......Page 408
  10.27 Procurement consortia......Page 409
  10.28 Sustainability......Page 410
  10.29 Sourcing decisions......Page 411
  10.30 Factors in deciding where to buy......Page 413
  Discussion questions......Page 415
  References......Page 417
  Key ideas......Page 419
  11.2 Strategic pricing – an introduction......Page 420
  11.3 The buyer’s role in managing purchase prices......Page 421
  11.5 The supplier’s choice of pricing strategy......Page 432
  11.6 Price and cost analysis......Page 434
  11.7 Competition legislation......Page 438
  11.8 Collusive tendering......Page 440
  11.9 Price variation formulae......Page 441
  Discussion questions......Page 443
  References......Page 445
Part 3 Project management and risk management, global sourcing, negotiation skills, contract management, category procurement, world-class procurement to enhance business performance......Page 446
  Key ideas......Page 448
  12.2 The project lifecycle......Page 449
  12.3 PID and the project procurement strategy......Page 454
  12.4 Design and build......Page 456
  12.6 PRINCE2 ®......Page 457
  12.7 Project management issues......Page 459
  12.8 Project risk management......Page 460
  12.9 Project procurement risk management......Page 461
  12.10 Project procurement management......Page 468
  References......Page 476
  Key ideas......Page 478
  13.2 Motives for buying offshore......Page 479
  13.3 Sources of information for offshore suppliers......Page 480
  13.4 Overcoming challenges when sourcing off-shore......Page 481
  13.5 Incoterms ®......Page 488
  13.6 Shipping terms......Page 489
  13.7 Customs and Excise......Page 493
  13.8 Transport systems, costs and considerations......Page 494
  13.9 Freight agents......Page 496
  13.10 Methods of payment......Page 498
  13.11 Countertrade......Page 500
  13.13 Buying capital equipment offshore......Page 503
  13.14 Factors in successful offshore procurement......Page 505
  References......Page 506
  Key ideas......Page 508
  Introduction......Page 509
  14.1 Approaches to negotiation......Page 512
  14.2 The content of negotiation......Page 513
  14.3 Factors in negotiation......Page 516
  14.4 The negotiation process......Page 520
  14.5 Pre-negotiation......Page 521
  14.6 The actual negotiation......Page 527
  14.7 Post-negotiation actions......Page 532
  14.9 Negotiation and relationships......Page 533
  14.10 Negotiation ethics......Page 535
  Discussion questions......Page 539
  References......Page 540
  Key ideas......Page 542
  15.1 The pre-contract award activities impact on contract management......Page 543
  15.2 The contract manager’s role, skills and knowledge......Page 544
  15.3 Contract management plans......Page 548
  15.4 The contract management of specifications/standards......Page 552
  15.5 Managing contract performance......Page 555
  15.6 Social services contract monitoring audit......Page 557
  15.7 Contract management checklist......Page 561
  15.8 Contract provisions......Page 562
  15.9 Contract clauses and what they mean......Page 563
  Discussion questions......Page 564
  References......Page 565
  Key ideas......Page 566
  16.1 Defining categories......Page 567
  16.2 Illustrations of category management issues......Page 568
  16.4 Category management risk profiling......Page 570
  16.5 Category management – corporate travel......Page 571
  16.6 Category management – ICT......Page 575
  16.7 Capital investment procurement......Page 577
  16.8 Production materials......Page 588
  16.9 Raw materials......Page 589
  16.10 Futures dealing......Page 590
  16.11 Methods of commodity dealing......Page 594
  16.14 Energy supply chains in the UK......Page 598
  16.15 Markets......Page 599
  16.16 Pricing......Page 600
  16.17 Procuring energy contracts......Page 601
  16.19 Component parts and assemblies......Page 603
  16.20 Procurement and consumables......Page 604
  16.21 Construction supplies and bills of quantities......Page 605
  16.22 Procurement of services......Page 608
  Discussion questions......Page 613
  References......Page 614
  Key ideas......Page 615
  17.1 Innovation and supplier continuous improvement......Page 616
  17.2 Innovation......Page 617
  17.3 Environmentally sensitive design......Page 618
  17.5 Supplier development......Page 620
  17.6 Procurement research......Page 624
  17.7 Procurement performance evaluation......Page 627
  17.8 Accounting approaches......Page 631
  17.9 The procurement management audit approach......Page 632
  17.10 Benchmarking and ratios......Page 637
  17.11 Integrated benchmarking......Page 638
  17.12 Procurement ethics......Page 640
  17.13 Ethical issues relating to suppliers......Page 642
  17.14 Ethical codes of conduct......Page 644
  17.15 Procurement and fraud......Page 648
  17.16 Environmental aspects of procurement......Page 652
  Discussion questions......Page 663
  References......Page 665
Appendix 1: Code of professional ethics – Chartered Institute of Procurement and Supply (CIPS) (Approved by the CIPS Council, 11 March 2009)......Page 667
Appendix 2: Principles and standards of ethical supply management conduct (ISM) (Adopted May 2008)......Page 669
Definitions, acronyms and foreign words and phrases......Page 670
Index of names and organisations and some publications mentioned in the text......Page 676
Subject Index......Page 681