Outsourcing is the process of contracting a business function or any specific business activity to

specialized agencies. Mostly, the non-core areas such as sanitation, security, household, pantry, etc
are outsourced by the company. The company makes a formal agreement with the agency.

This ends weeks of media speculation about the future of the said staff. Below is the full
statement from MTN.

The MTN Group continues to evolve its operating model to bolster its competitiveness in the
market. As part of this process, it started implementing a new business model to outsource its
network operations three years ago in a bid to improve efficiency and reduce rising network
maintenance costs.

In February 2015, MTN Group appointed ZTE Technologies as the Managed Services provider
for MTN Uganda. Under the Managed Services model MTN Uganda will benefit from shared
value by having the new Network partner take over the management and enhancement of its
highly evolved network processes capabilities which is expected to significantly enhance the
delivery of a superior Customer Experience.

In this transaction there are no planned job losses as all employees in the impacted Network
environment will be taken over by ZTE technologies with the same employment terms and
conditions. The process of migrating the said staff to ZTE involves dissolution of their
employment contracts with MTN and the offer of new contracts with ZTE.

The approximately 140 staff to be affected have been informed of this transition and oriented
about their terminal benefits and their immediate re employment by ZTE. In line with the
requirements of the Labour Laws of Uganda, the Labour Commissioner has also been notified of
the impending transmission of staff and been appraised of the processes that MTN Uganda has
undertaken in compliance with Legal and Contractual requirements. Contrary to what has been
reported in some Social and Print media, there will be no job cuts as all staff are to be
immediately re employed by ZTE and all statutory, contractual and terminal benefits will be paid
with a full guarantee of immediate re employment.

The Network Outsourcing Model has been successfully rolled out in other markets in which
MTN operates. These include South Africa, Nigeria, Iran, Ghana, Cameroon, Sudan, South
Sudan, Guinea Conakry, Zambia, Afghanistan and Cyprus, to ensure MTN’s long term
competitiveness and sustainability.

Gouldie, CEO of MTN Uganda said, “As the telecoms market matures, it is becoming essential
that every effort is made to drive efficiency in order to manage our cost structures and create
mechanisms for strategic advantage. This is critical to remain competitive as technology evolves.
MTN is utilizing its strategic partnerships in order to drive this effectiveness and has started an
‘outsourced’ based approach by the appointment of strategic partners to manage key operational
areas. This will be an ongoing focus on how MTN can differentiate itself across multiple
operational environments to provide a differentiated experience to its customers.

Despite the above commitments by MTN the anticipated model is expected to have both
positive and negative impacts as shown below;

Positive impacts of Outsourcing

Overall Cost Advantage: 

It eludes the need to hire individuals in‐house; hence recruitment and operational costs can be
minimized to a great extent. It reduces the cost and also saves time and efforting on training cost.

Stimulates Entrepreneurship, Employment, and Exports: 

Outsourcing stimulates Entrepreneurship, Employment, and Exports in the country from where
outsourcing is done. Look at the example of India. After the initial success of call centres, there
was a sudden emergence of many small scales and medium scale BPo and KPO companies.

Low Manpower Cost: 

The manpower cost is much lower than that of the host country. This is exactly the case with
India. We have a very large educated workforce. And this causes the labour cost in our country to
be much lower.
Access to Professional, Expert and High‐quality Services: 

Mostly, the tasks are given to people who are skilled in that particular field. This provides us with
a better level of service and fewer chances of errors or misjudgment.

Emphasis on Core Process Rather than the Supporting Ones: 

With its help, companies can focus on their core areas which lead to better profits and increase the
quality of their product. They simply outsource ancillary services.

Investment Requirements are Reduced: 

The organization can save on investing in the latest technology, software, and infrastructure and
let the outsourcing partner handle the entire infrastructure.

Increased Efficiency and Productivity:

There is an increased efficiency and productivity in the non – core areas of an organization.

Knowledge Sharing: 

Outsourcing enables the organizations to share knowledge and best practices with each other. It
helps develop both the companies and also boosts goodwill in the industry.

Outsourcing can really be beneficial for a number of reasons. Some companies enjoy benefits
such as reduced labor costs, larger workforces, access to industry experts and increased
flexibility through outsourcing. However, despite the obvious advantages to outsourcing there
are some situations when outsourcing is not a good idea as explained below.

Negative impacts of Outsourcing

Signing contracts with other companies may take time and extra effort from a firm's legal team.
Security threats occur if another party has access to a company's confidential information and
then that party suffers a data breach. A lack of communication between the company and the
outsourced provider may occur, which could delay the completion of projects.

Lack of Customer Focus

An outsourced vendor may be catering to the needs of multiple organizations at a time. In such
situations, vendors may lack complete focus on an individual organization’s tasks. And the
reputation of the organization may suffer as a result

A Threat to Security and Confidentiality: 

The inside news of the organization may be leaked to the third party, so there are security issues.
The leak of sensitive information may result in losses to the company and also be an advantage to
competitors.

Dissatisfactory Services: 

Some of the common problem areas with outsourcing include stretched delivery time and sub‐
standard quality.

Ethical Issues: 

The major ethical issue is taking away employment opportunities from one’s own country. Instead
of creating employment and wealth in the origin country it gets outsourced to another country. In
recent times this has been viewed by many as unethical and even unpatriotic.

Other Disadvantages: 

Include misunderstanding of the contract, lack of communication, poor quality and delayed
services amongst others.
QUESTION ONE B

Principles of sustainable procurement

Using procurement to deliver sustainable outcomes

The document should consider procurement as a strategic process and a way of delivering
business objectives through a supply chain. The standard needs to set out how sustainability
objectives of an organisation are addressed at the early stage of the procurement process through
strategic procurement techniques such as market analysis, forward commitment, life cycle
assessment, risk management, whole-life costing, scenario modelling, social return on
investment and more.

Focus on impacts material to the procurer

The sustainability requirements of an organisation need to be clearly defined and materiality

understood in consultation with stakeholders. This aligns well with the GRI reporting process.
We do not agree that the ISO 26000 principles should be prescribed. They are one (good)
example but may not be applicable to all procuring organisations.

‘Sustainable supply’ not ‘sustainable supplier’

The focus of the standard should be on sustainable supply, not sustainable supplier. This means
using procurement techniques to deliver the outcomes required by the buying organisation’s
corporate responsibility objectives or policy outcomes for public sector. It should not primarily
focus on the sustainability practices of the supplier in their own organisations unless this
represents a risk to the purchasing organisation (e.g. labour standards).

Not one-size-fits-all

Prioritisation should be of the essence to the standard. Sustainability impacts and risks should be
mapped against categories of supply and high priority impacts/categories should be addressed
first. This should be done with a wide range of internal stakeholders, also taking into
consideration corporate policy and external stakeholder requirements. This is clearly set out in
BS 8903.

Manage demand

Demand management should be key to the standard. The most sustainable way to procure is not
to buy at all or to keep demand to a minimum by operating the business more efficiently. There
needs to be an organisational link between procurer and user of goods, works and services.

Embedding sustainability into current procurement practice

It is important for the standard to address achieving more sustainable outcomes through the
current procurement practices of an organisation. It is not telling you to buy better, it should set
out how to deliver sustainability through a variety of procurement processes for all sizes and
types of organisations.

Tier one is not the only one

The standard is not just about the first tier of suppliers. It must reference management of the
overall supply chain where there are often significant risks (such as labour standards) or
opportunities (for example positioning local SMEs in lower tiers of the supply chain).

Encourage innovation

The process should encourage innovation related to more sustainable goods, works and services,
through effective market research and use of outcome specifications.

Develop a competitive, sustainable supply chain

There should be emphasis on maintaining or improving the competitive market. For example, if a
supplier with lower sustainability capacity is selected for other commercial or technical reasons,
they should be required to develop a programme of work to improve during the contract. This
will improve the pool of competitive suppliers who can deliver sustainable outcomes.
Full and fair opportunity

Local procurement, minority businesses, SMEs etc. are often significant stakeholder priorities
and should be supported through the supply chain where appropriate. However, this needs to be
set in the context of full and fair opportunity and not positive discrimination.

CASE STUDY: COCACOLA

Using cocacola as a case study for this case, the sourcing of its raw materials accounts for a
large portion of our economic, operational and environmental footprint, and the behaviour of our
suppliers directly impacts our sustainability performance. We therefore consider our suppliers as
critical partners, as well as contributors to the ongoing and sustainable success of  our business.

As part of the Coca-Cola System, we have a uniform approach to sustainable agriculture, which
is rooted in the principles of protecting the environment, upholding human and workplace rights,
and helping to build more sustainable communities. These principles are showcased in The
Coca-Cola Company’s Sustainable Agriculture Guiding Principles, which provide guidance to
our suppliers of agricultural ingredients.

The scale and uniform approach of the Coca-Cola System helps us source our raw materials
sustainably, while mitigating business risks. This helps us balance the costs of sustainability by
leveraging relationships and initiating new opportunities, ensuring that our agricultural suppliers
and their suppliers have a sustainable business. All suppliers are required to meet our Supplier
Guiding Principles. These principles communicate our values and expectations of compliance
with all applicable laws, and emphasise the importance of responsible workplace practices that
respect human rights.

This framework for sustainable sourcing is integrated into internal governance and procurement
processes. Our 2025 target for ingredient sourcing is to achieve 100% certification of our key
agricultural ingredients against the Sustainable Agriculture Guiding Principles. In 2019, 74% of
the key commodities we purchased for use as ingredients were certified, up from 64% in 2018.
Our work to certify our key agricultural ingredients will continue to expand in 2020, with close
cooperation with suppliers who are still progressing towards certification.

SUSTAINABLE POLICIES APPLIED BY COCACOLA COMPANY

Our planet matters.
We act in ways to create a more sustainable and better shared future. To make a difference in
people's lives, communities and our planet by doing business the right way.

Sharing our priorities and progress

We continue to prioritize our sustainability goals as the business emerges stronger from the
global pandemic, as outlined to investors during a recent presentation.

Giving people options and choices

We offer 500+ brands and 4,700+ varieties, including reduced-sugar drinks and smaller
packages.

Focusing on a World Without Waste

We aim to collect and recycle a bottle or can for every one we sell and make 100% of our
packaging recyclable.

Returning 100%+ of water used in our drinks

We are water balanced and working to improve safe, clean drinking water in communities where
it's needed most.

Reducing our carbon footprint

We set a target to reduce our carbon emissions 25% by 2030 from a 2015 base year.

Sustainable Packaging

Our goal is to recover every bottle or can that is sold to recycle and reuse, no matter the size,
shape or material.
QUESTION ONE C

Negotiating is the process that procurement professionals go through to create favourable terms

as part of a new supplier contract. This can involve negotiating different terms with an existing
supplier when a contract is renewed, or discussing terms from scratch with a brand new vendor.

Public procurement refers to the public authorities’ activities of purchasing goods, works and
services.

The 5 steps of the negotiation process are;

1. Preparation and Planning.

2. Definition of Ground Rules.
3. Clarification and Justification.
4. Bargaining and Problem Solving.
5. Closure and Implementation.

In this post, we will look at the negotiation process which is made up of five steps. These steps
are described below;

1. Preparation and Planning

Before the start of negations, one must be aware of the conflict, the history leading to the
negotiation of the people involved and their perception of the conflict, expectations from the
negotiations, etc.

Before starting the negotiation, it needs to do homework.

 What’s the nature of the conflict?

 What’s the history leading up to this negotiation?
 Who’s involved and what are their perceptions of the conflict?

Moreover before any negotiation takes place; a decision needs to be taken as to when and where
a meeting will take place to discuss the problem and who will attend.
Setting a limited time-scale can also be helpful to prevent disagreement from continuing. This
stage involves ensuring all the pertinent facts of the situation are known in order to clarify own
position.

It also needs to prepare an assessment of what the other parties’ negotiation’s goals are. What are
they likely to ask for?

2. Definition of Ground Rules

Once the planning and strategy are developed, one has to begin defining the ground rules and
procedures with the other party over the negotiation itself that will do the negotiation.

 Where will it take place?

 What time constraints, if any will apply?
 To what issues will negotiations be limited?
 Will, there be a specific procedure to follow in an impasse is reached?

During this phase, the parties will also exchange their initial proposals or demands.

3. Clarification and Justification

When initial positions have been exchanged both the parties will explain amplify, clarify, bolster
and justify their original demands. This need not be confrontational.

Rather it is an opportunity for educating and informing each other on the issues why they are
important and how each arrived at their initial demands.

This is the point where one party might want to provide the other party with any documentation
that helps support its position.

4. Bargaining and Problem Solving

The essence of the negotiation process is the actual give and take in trying to hash out an
agreement, a proper bargain. It is here where concessions will undoubtedly need to be made
by both parties.

5. Closure and Implementation

The final step in the negotiation process is a formalization of the agreement that has been worked
out and developing and procedures that are necessary for implementation and monitoring.

For major negotiations – this will require hammering out the specifics in a formal contract.

Negotiation Process has five stages. In all steps of a negotiation process, the involved parties
bargain in a systematic way to decide how to allocate scarce resources and maintain each other’s
interests.

QUESTION TWO A

Procurement fraud can be difficult detect as well as complex to investigate. We’ve compiled

a list of six common types of procurement fraud and their warning signs.

Kickbacks and corrupt payments

A type of bribe, a kickback is paid by the contractor after they’ve received payment for the
winning project. They often vary between 5% and 20% of the overall contract value.

A corrupt payment is promised to influence the recipient for a successful bid. It can be monetary,
but can also take the form of goods or services in kind such as expensive gifts, credit cards,
sexual favours and overpaying for reciprocal purchases.

Warning signs:

 There may be a broker or middleman involved in transactions, where it isn’t needed. The
selection of the contractor appears unjustified or there is approval of high prices and low
quality goods
 A member of the procurement team receives gifts or seems to enjoy a sudden and
unexplained increase in wealth

Corrupt influence

Corrupt influence includes paying over market rates, buying more items than are needed,
qualifying an untested or unqualified supplier and excluding qualified bidders. The perpetrator
might also tailor or narrow specifications to such a degree that only their chosen bidder can win.

Warning signs: This is harder to prove than a kickback, but some of the same signs of that
category apply here, as well as:

 Knowingly accepting low quality goods/services

 Awarding contracts without robust and transparent justification

Collusion and manipulation by bidders

Collusion (bid-rigging) often accompanies kickbacks and involves groups agreeing to submit
complementary bids to win contracts, sometimes on a rotation basis. This system may be used to
divide regions between select parties and to monopolise the field.

Manipulation occurs when a bid, or circumstances surrounding it, are managed to benefit a
preferred bidder. Examples are leaking information from fellow bidders, accepting late bids and
re-bidding of the tender.

Warning signs:

 No public opening of bids

 Deadlines are not enforced, extended unnecessarily or bids are accepted late
 The late bidder is also the lowest bidder
 Project is subject to re-bidding
 Qualified or winning bidders are disqualified for unclear or questionable reasons
 Bids are “lost”
Billing fraud

This is the intentional submission of false, duplicate or inflated invoices by a supplier or

contractor. This can also happen in collusion with the representatives of the buyer who will profit
in some way from the fraud.

Warning signs: There are many in this category, but in essence:

 Invoiced goods/services can’t be accounted for

 Records are non-existent or don’t match
 Invoices share purchase order numbers or are identical in terms of value or service
 Total payments exceed total purchase order or agreed amounts
Conflicts of interest

Non–disclosure falls under this category, wherein a member of the procurement team fails to
disclose their interests with a contractor or supplier, liaises with them unofficially, or accepts
gifts or payments.

Where an employee purchases items through their company and bills this to a project for private
use, this is deemed to be personal interest and is clearly fraudulent.

Warning signs:

 Accepting of gifts and close fraternisation between bidder and buyer

 Favouritism
 Individuals appear to enjoy sudden and unexplained increases in wealth or engage in a
side business

Delivery fraud

There are three main types of deliver fraud: variation abuse, contract specification abuse and
improper claims/imprest funds.

In variation abuse, a contractor submits a successful low bid (in collusion with a procurement
executive) and subsequently submits further multiple variations to increase financial gain.
Fraudulent contractors may flaunt contract specifications by delivering sub-par goods or
services, aware they fail to meet the quality expected. In order to succeed, the quality of the
items or works is concealed or falsely represented.

Sometimes, suppliers exploit operating costs or petty cash funds with false or exaggerated
requests for reimbursement of expenses, personal or unauthorised spend, or duplication.

Warning signs:

 As with billing fraud, records are missing or duplicated

 Lack of oversight
 Duplication – refunded from both petty cash and accounts payable
 Unauthorised or excessive use
PROCUREMENT PROCESS

Purchase Requisition
Purchase requisition are written or electronic documents raised by internal users/customers
seeking the procurement team's help to fulfill an existing need. It comprises key information that
is required to procure the right goods, services, or works.

Step 2: Requisition review

The procurement process will officially commence only after the purchase requisition is
approved and cross-check for budget availability. In the review stage, functional managers or
department heads review the requisition package and double-check if there is a genuine need for
the requested goods or service and also verify whether necessary funding is available.

Approved purchase requests become POs, while rejected requests are sent back to the
requisitioner with the reason for rejection. All these can be handled with a simple purchase order
software
StakeholdersProcurement officers, end users, departmental heads

E-requisition submission form, purchase requisition form, sole-brand procurement, RFI

Documents
template, fast track RFP

Questions 1.What is the available or approved budget for this purchase? 2. By when should the
 purchase be delivered by? 3. Where should the requested items be delivered?

Step 3: Solicitation process

Once a requisition is approved and PO is generated, the procurement team will develop an
individual procurement plan and sketch out a corresponding solicitation process. The scope of
this individual solicitation plan depends ultimately on the complexity of the requirement.

StakeholdersProcurement managers

Letter of invitation for suppliers, request for information, supplier general information
Documents worksheet, evaluation committee member participation form, market analysis
worksheet.

1.Are solicitation documents cross-checked for consistency and completeness.

Questions 2. How are we planning to handle queries from suppliers (written correspondence and/or
by a pre-offer conference)?

Once the budget is approved, the procurement team forwards several requests for quotation
(RFQ) to vendors with the intention to receive and compare bids to shortlist the perfect vendor.

Step 4: Evaluation and contract

Once the solicitation process is officially closed, the procurement team in conjunction with the
evaluation committee will review and evaluate supplier quotations to determine which supplier
will be the best fit to fulfill the existing need.

StakeholdersProcurement team and evaluation committee

Evaluation committee agenda, RFQ cost negotiation (best and final offer), contract
Documents terms and conditions, request for clarification, supplier technical evaluation template,
solicitation review summary sheet.

1.Is there a potential conflict of interest situation with any suppliers?.

Questions
2. Have we shortlisted compliant/acceptable offers, and rejected non-responsive offers?
Once a vendor is selected, the contract negotiation and signing are completed, and the purchase
order is then forwarded to the vendor. A legally binding contract activates right after a vendor
accepts a PO and acknowledges it.

Step 5: Order management

The vendor delivers the promised goods/services within the stipulated timeline. After receiving
them, the purchaser examines the order and notifies the vendor of any issues with the received
items.

StakeholdersInventory managers, requisitioners, vendors, and procurement team

Purchase order, shipping notifications, goods receipt notes, purchase invoices , goods

Documents
return shipments, product/service quality check template, supplier assessment report.

1. Are there any discrepancies in the three-way matching?

2. Is there a significant amount of variance between the expected and actual
Questions performance of the vendor?
3. Is there a significant amount of variance between the expected and actual
performance of the vendor?

At this step, three documents purchase orders, packaging slips (that arrive with the order), and
vendor invoices are lined up and reconciled to pinpoint discrepancies and ensure that the
transaction is accurate. Discrepancies should be addressed once they are discovered.

Step 6: Invoice approvals and disputes

Once three-way matching is complete, the invoice is approved and forwarded to payment
processing depending on organizational norms.
StakeholdersProcurement managers, evaluation committee, arbitrator, and vendors

Original supplier contract, invoice approval form, dispute settlement form, complaints
Documents
registration and meeting minutes, arbitration documents, settlement receipts.

Questions 1. Was the settlement handled within the stipulated time?

2.Was the settlement handled within the stipulated time?
 3. Were the dispute resolution clauses helpful in resolving any conflict?

Step 7: Record Keeping

After the payment process, buyers make a record of it for bookkeeping and auditing. All
appropriate documents right from purchase requests to approved invoices are stored in a
centralized location.

Stakeholders Procurement officers and requisitioners

Documents Procurement process evaluation report, contract closure report.

1. Was the requirement adequately fulfilled?

2.Were the evaluation criteria and methods appropriate?
Questions
3. What problems were encountered?
4. Recommendations to avoid similar situations.

Domestic sourcing is the activity of contracting for goods or services that are delivered or
manufactured within the buyer's home country borders.

Competitive Advantage

Insourcing offers you to build exclusive competitive advantages. When you outsource
something, you may get the same service that other firms may also receive.

Organizational Culture

There are chances of having sore relationships with the outsourcing partners due to different
organizational structures. A firm can take advantage of uniform expectations and norms while
doing things in-house.
Cost

When it comes to select and manage the outsourcing partners, it takes some cost. Additionally,
the outsourcing partner takes a profit on you as a consumer. You can simply do things in a
cheaper rate if you can do it yourself with a level of competence in the same country as an
outsourcing partner.

Procurement Contracts

Like other contracts, a procurement contract legally binds two or more parties, typically a buyer
and a seller. Contracts detail the terms and conditions of a particular project. Forming a contract
inaccurately can cost you money over time. If a contract is inadequate, you may need to spend
money to get the other party to legally comply or pay extra because you opted for a time and
materials procurement contract instead of one with a fixed price.

The procurement manager is responsible for selecting the best contract for a particular project.
Procurement contracts are categorized into the following types and subtypes:

Fixed Price Contract

With this type of contract, the seller agrees to provide their service or product at a set price,
independent of resulting equipment, material, and labor costs. This means that the seller will bear
any costs beyond the agreed-upon amount. This type of contract has the least risk for the buyer.
A well-defined scope and statement of work and a selection of competitive bidders help control
pricing for this type of contract. If you don't have a clearly defined scope of work, this may not
be the best type of contract.

1. Firm-Fixed-Price contract (FFP)

2. Fixed Price Incentive Fee contract (FPIF)
3. Fixed Price with Economic Price Adjustment Contract (FP-EPA)
Firm Fixed-Price Contract (FFP)
This is the simplest type of procurement contract. The seller has to complete the job within an
agreed amount of money and time. The seller is responsible for any increase in cost and they are
legally bound to complete the task within the agreement.
Fixed-Price Incentive Fee Contract (FPIF)
Here, although the price is fixed, the seller may receive an incentive if they perform well. This
incentive lowers the seller’s risk.
The incentive can be tied to any project metrics such as cost, time, or technical performance.
Example: The contractor will receive an incentive of 10,000 USD if they achieve the first
milestone on time.
Fixed-Price with Economic Price Adjustment Contracts (FP-EPA)
You use a Fixed-Price with Economic Price Adjustment Contract when the agreement is multi-
year. This contract has a special provision that protects the seller from inflation.
Example: About 3% of the cost of the project will increase after a certain time based on the
Consumer Price Index.
Purchase Order (PO)
This contract is used to buy commodities.
Example: Buying 10,000 bolts of cloth at the cost of 1.00 USD.
Cost Reimbursable Contract
Many experts call this contract a Cost Disbursable contract. 
Here, the seller is reimbursed for completed work plus a fee representing their profit. Often,
sellers get this fee if they meet or exceed the selected project objectives: completing the task
earlier or saving costs, etc.
You can divide Cost Reimbursable contracts into four categories:

1. Cost Plus Fixed Fee (CPFF)

2. Cost Plus Incentive Fee (CPIF)
3. Cost Plus Award Fee (CPAF)
4. Cost Plus Percentage of Cost (CPPC)
Cost Plus Fixed Fee Contract (CPFF)
ere, the seller is paid for all incurred costs plus a fixed fee, regardless of their performance. The
buyer bears the risk.
Organizations use this contract with high-risk projects where bidders are not interested in
competing. 
CPFF contracts keep the seller safe from risks.
Example: Total cost plus 25,000 USD as a fee.
Cost Plus Incentive Fee Contract (CPIF)
In a Cost Plus Incentive Fee contract, the seller will be reimbursed for all costs plus an incentive
fee based upon achieving certain performance objectives mentioned in the contract. This
incentive will be calculated using an agreed-upon formula.
Cost Plus Award Fee (CPAF)
Here, the seller is paid for their costs plus an award fee. This extra will be based on achieving
satisfaction according to specified performance objectives described in the contract.
Cost Plus Percentage of Cost (CPPC)
Here, the seller is paid for all costs incurred plus a percentage of these costs. Buyers often do not
prefer this type of contract because the seller might artificially increase the costs to earn a higher
profit.