Supply Chain Management Procurement System of A Company

Supply Chain Management Procurement. Now a days, Supply Chain Management is the popular tropic in every factory or industries. Every factory or Industries want to experience or expert worker in supply chain department. Supply Chain Management Procurement is the important key of a factory or industries. Here we including what is Supply Chain Management Procurement and how it is useful and important of a factory.

Supply Chain Management Procurement

Supply Chain Management Procurement

To define procurement broadly, “procurement is the overarching function that describes the activities and processes to acquire goods and service. Procurement involves the activities involved in establishing fundamental requirements, sourcing activities such as market research and vendor evaluation and negotiation of contracts. It can also include the purchasing activities required to order and receive goods.

Major Processes Evolved-

  • Identify.
  • Ascertain.
  • Evaluate.
  • Ensure.

Ascertain:

  1. Check and ensure quality.
  2. Supplier capacity.
  3. Legal and financial reputation.

Factors for Procurement:

  • Availability of materials.
  • Absolute dollar volume of purchases.
  • Percent of product cost represented by materials.
  • The types of materials purchased.

Supply Chain Management Procurement

  • Identification of requirement.
  • Authorization of purchase request.
  • Final approval of purchase request.
  • Identification of suppliers.
  • Inquiries.
  • Receipt of the quotation.
  • Selection of the vendor.
  • Negotiation.
  • Purchase order acknowledgement.
  • Advance shipment notice.
  • Goods receipt.
  • Invoice recording.
  • Payment to supplier.

Purchase Specification:

The specification is a document which clearly, accurately and completely describes the essential requirements of the goods or service being purchased. Read Search engine optimization .

Purpose of Product Specification

  • Communicate the buyer’s requirements to potential suppliers.
  • Guide supplier responses. and
  • Help the buyer to evaluate offers by providing a basis for comparability.

A poor specification may result in-

  • The product or service not being delivered as required.
  • Difficulties in evaluating.
  • Offers from unsuitable suppliers or no offers because the department’s requirements are unclear.
  • The need to clarify the specification to potential tenderer during the tender process. and
  • Contract variations.

Requirement of Good Specification

  1. State the requirement clearly, concisely and logically in functional and performance terms unless specific technical requirements are needed.
  2. For goods, it’ll state what the item will be used for.
  3. Contain enough information for offer-or to decide and cost the goods or services they will offer and at what level of quality.
  4. Permit offered goods or services to be evaluated against defined criteria by examination, trial, test or documentation.
  5. State the criteria for acceptance of goods or services by examination, trial, test or documentation.
  6. Provide equal opportunity for all potential suppliers to offer goods or services which satisfies the needs of the user, including goods or services incorporating alternative solutions.
  7. From the fundamental basis of the contract between buyer and seller.
  8. Specifications should be as flexible as possible. Inflexible specifications defeat the competitive bid process.
  9. The specification should be reasonable in its tolerances. Unnecessary precision is expensive.

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