Procurement principles and management

Cover......Page 1
Title Page......Page 4
Copyright Page......Page 5
Contents......Page 6
Preface......Page 14
Acknowledgements......Page 16
Part 1 Procurement objectives and development......Page 18
  Objectives of this chapter......Page 20
  The scope of purchasing......Page 21
  The changing role of purchasing and supply......Page 26
  Proactive purchasing......Page 31
  Procurement positioning/targeting......Page 36
  Supplier preferencing......Page 40
  Total acquisition cost and total cost of ownership......Page 42
  Non-manufacturing organisations......Page 47
  The supply chain concept......Page 48
  Purchasing development......Page 49
  Summary......Page 58
  References and further reading......Page 59
  Objectives of this chapter......Page 61
  Strategic procurement......Page 62
  The concept of strategy......Page 64
  Levels of strategy......Page 66
  Category management......Page 67
  Strategic analysis......Page 69
  Strategic development......Page 76
  Objectives for purchasing/procurement......Page 78
  Strategies and their scope......Page 79
  Selecting a strategy......Page 80
  Effective supply market strategies......Page 83
  Purchasing and supply in different types of organisation......Page 84
  Organisation of the activity......Page 86
  Purchasing in the organisation structure......Page 91
  The supply chain......Page 93
  Types of supply chain......Page 100
  Strategic development of purchasing......Page 101
  Hierarchy of objectives......Page 108
  Summary......Page 126
  References and further reading......Page 127
  Objectives of this chapter......Page 129
   Historic background......Page 130
   UK National Health Service (NHS)......Page 134
   UK Metropolitan Police procurement......Page 135
   The Ministry of Defence (MoD)......Page 136
   EU competition procurement cycle for goods and services......Page 143
   EU procurement directives......Page 144
   The main provisions of the directives in relation to contracts......Page 147
  Summary......Page 157
  References and further reading......Page 158
Part 2 Key Procurement issues......Page 160
  Objectives of this chapter......Page 162
  Outsourcing......Page 163
  Outsourcing methodologies......Page 169
  Outsourcing – pitfalls......Page 172
  How to avoid pitfalls......Page 173
  References and further reading......Page 176
  Objectives of this chapter......Page 178
  What is quality?......Page 179
  Statistical process control......Page 181
  Taguchi methods for the ‘off-line’ control of quality......Page 183
  Failure mode and effect analysis......Page 186
  Specification......Page 187
  Producing a specification......Page 188
  Early supplier involvement......Page 190
  Standardisation......Page 192
  Supplier assessment......Page 197
  Economics of quality......Page 200
  Quality circles......Page 201
  The seven wastes......Page 202
  Value analysis/value engineering......Page 203
  Make-or-buy decisions......Page 205
  Six Sigma......Page 207
  References and further reading......Page 211
  Provisioning systems......Page 213
  Order quantities and stock control......Page 214
  Order quantities for production......Page 223
  Materials requirements planning (MRP)......Page 224
  Manufacturing resource planning (MRP2)......Page 227
  Distribution resource planning (DRP)......Page 232
  Just-in-time (JIT)......Page 233
  Lean and agile supply......Page 242
  Vendor-managed inventory (VMI)......Page 249
  Summary......Page 251
  References and further reading......Page 252
  Time and competitive advantage......Page 254
  On-time delivery......Page 255
  Expediting......Page 261
  Liquidated damages......Page 263
  References and further reading......Page 266
  The nature of the sourcing decision......Page 267
  Attributes of a good supplier......Page 268
  Sourcing decisions......Page 269
  Source location......Page 272
  Sources of information on potential suppliers......Page 273
  Supplier evaluation......Page 274
  Carter’s 10 Cs model......Page 279
  The right relationship......Page 282
  Other aspects of sourcing......Page 285
  Partnering......Page 292
  The Bensaou model of relationship management......Page 294
  Tiering of suppliers......Page 297
  Summary......Page 299
  References and further reading......Page 300
  Factors affecting pricing decisions......Page 301
  How buyers obtain prices......Page 309
  Discounts......Page 310
  Price analysis and cost analysis......Page 314
  Pricing major contracts......Page 321
  Investment appraisal......Page 325
  Learning curves and experience curves......Page 326
  Summary......Page 328
  References and further reading......Page 329
  Negotiation......Page 330
  Negotiation skills......Page 333
  Preparation......Page 334
  The introductory stage......Page 344
  Discussion stage......Page 345
  The post-negotiation stage......Page 347
  Competition and cooperation in negotiation......Page 348
  Negotiation strategies......Page 356
  Best practice negotiation......Page 357
  Summaries of other examples of best practice negotiation approaches......Page 361
  Summary......Page 362
  References and further reading......Page 363
Part 3 Applications......Page 364
  Introduction to projects......Page 366
  Project planning......Page 368
  Project control......Page 369
  Subcontracting......Page 375
  Network analysis......Page 378
  Risk......Page 381
  Summary......Page 388
  References and further reading......Page 389
  Objectives of this chapter......Page 391
  The principal commodities......Page 392
  Why do commodity prices fluctuate?......Page 393
  Price stabilisation schemes......Page 395
  The role of the speculator......Page 396
  Hedging with futures contracts......Page 397
  Some buying techniques......Page 399
  Indifference prices......Page 401
  Glossary......Page 404
  Summary......Page 405
  References and further reading......Page 406
  Global sourcing and international procurement......Page 407
  Why source internationally?......Page 410
  Problems with international sourcing......Page 412
  Incoterms 2010......Page 421
  Importing......Page 424
  How to change......Page 425
  Customs......Page 427
  Countertrade......Page 428
  Latest developments......Page 431
  References and further reading......Page 437
  The acquisition of capital equipment......Page 439
  What are capital items?......Page 441
  Leasing and hiring of capital equipment......Page 442
  Capital requisitions......Page 443
  Specification of capital equipment......Page 444
  The project approach......Page 447
  Lifetime costs......Page 448
  Investment appraisal......Page 449
  Investment appraisal criteria......Page 450
  Conclusion......Page 455
  References and further reading......Page 456
  Objectives of this chapter......Page 457
  Retailing......Page 458
  Supply chains in retailing......Page 459
  Electronic point of sale (EPOS)......Page 460
  Merchandise planning......Page 462
  Stock analysis and sales analysis......Page 463
  Brands......Page 465
  Supplier selection......Page 466
  Efficient consumer response......Page 467
  Summary......Page 470
  References and further reading......Page 471
  Objectives of this chapter......Page 472
  Special factors......Page 473
  Service quality......Page 479
  Managing perceptions and satisfaction......Page 480
  Procuring public relations (PR)......Page 493
  How to buy legal services......Page 496
  European Union Public Contracts Directive......Page 497
  Management in service provision......Page 498
  Summary......Page 499
  References and further reading......Page 500
  Objectives of this chapter......Page 501
  Corporate social responsibility (CSR)......Page 502
  Public accountability......Page 505
  Business drivers for socially responsible procurement......Page 508
  Social Accountability 8000 (SA8000)......Page 510
  Three pillars of CSR......Page 513
  Summary......Page 519
  References and further reading......Page 520
Part 4 E-Procurement systems and contract management......Page 522
  Objectives of this chapter......Page 524
  What is e-procurement?......Page 525
  The benefits of e-procurement......Page 527
  Complex procurement......Page 529
  Reverse auctions......Page 530
  The current state of e-procurement initiatives......Page 532
  The barriers......Page 535
  What to measure......Page 536
  Electronic auctions (e-auctions)......Page 538
  Conclusions......Page 546
  References and further reading......Page 547
  Objectives of this chapter......Page 548
  Contract law......Page 549
  Contract management......Page 573
  A balanced performance measurement system......Page 574
  Examples of performance metrics......Page 581
  Performance measurement: effectiveness......Page 582
  Measuring procurement performance......Page 584
  Procurement as the intelligent customer......Page 589
  Benchmarking in procurement and supply......Page 590
  Administration instructions......Page 593
  Disposing of redundant stock, scrap or waste......Page 594
  Summary......Page 595
  References and further reading......Page 596
Index......Page 598