Professional Documents
Culture Documents
Sourcing and Procurement
Sourcing and Procurement
Sourcing and Procurement
Arcilla, Jeizzar
Balajadia, Renz
Camaya, Arthos
Catacutan, Renzo
Galang, Ivan
Rivera, Carlos
Sahagun Rainier
PROCUREMENT
Direct Materials
Direct materials are components used to make
finished goods
Raw material and production goods
TWO MAIN CATEGORIES OF PURCHASED GOODS
Indirect Materials
Indirectmaterials are goods used to support the
operations of a firm
Maintenance, repair and operating supplies
PURCHASE REQUEST TO PURCHASE ORDER
Purchase Request / Requisition
Document generated by a user department or
storeroom-personnel to notify the
purchasing department of items it needs to order,
their quantity, and the timeframe. It may also contain
the authorization to proceed with the purchase. Also
called purchase request or requisition.
You will need to create a standardized requisition
document, which all employees must then use. That
standardized procedure ensures that receiving
requisitions does not waste your employees time.
PURCHASE REQUEST TO PURCHASE ORDER
Budgets
Asemployees begin to draft requisitions, youll be
able to create an average monthly spend and track
what your employees are purchasing. This means
you can start analyzing how they use supplies and
identify opportunities for savings. An approver will
be the person managing the budget. If employees
go over budget, the approver may not approve all
the requisitions that are not immediately necessary.
PURCHASE REQUEST TO PURCHASE ORDER
Volume discounts
Once employees begin submitting requisitions, the
approver can more easily identify purchasing
patterns. The approver can then submit bulk orders
and request discounts if they are available. If the
requests are created digitally, it can significantly
reduce processing time because frequently
requested items can be added to a catalog from the
best supplier at the best price.
PURCHASE REQUEST TO PURCHASE ORDER
Purchase Order
Purchase orders are documents sent from a buyer
to a supplier with a request for an order. The type of
item, the quantity and agreed upon price are
generally (should be!) printed on the purchase
order the more specific the order, the more
details included, the more effective the purchase
order will be.
PURCHASE REQUEST TO PURCHASE ORDER
DELIVERY
The purchase order must be delivered, usually by
fax, mail, personally, email or other electronic
means. Sometimes the specific delivery method is
specified in the purchasing documents. The
recipient then acknowledges receipt of the
purchase order. Both parties keep a copy on file.
PURCHASE ORDER TO DELIVERY
Expediting
Expedition of the purchase order addresses the
timeliness of the service or materials delivered. It
becomes especially important if there are any
delays. The issues most often noted include
payment dates, delivery times and work
completion.
PURCHASE ORDER TO DELIVERY
RECORD MAINTENANCE
In the case of audits, the company must maintain
proper records. These include purchase records to
verify any tax information and purchase orders to
confirm warranty information. Purchase records
reference future purchases as well.
NEGOTIATIONS
discussion aimed at reaching an agreement.
Is a process which you and your supplier will agree
in mutual interest
As a buyer or seller you should negotiate to your
supplier or consumer to get the better deals
because the success or failure of the deal
depends on how effective you are in negotiating
The objective of the negotiation process is to
ensure the right product or service, right quantity
needed, delivered at the right time, at the right
location and all for the best price and quality.
4 CRUCIAL STEPS TO SUCCESSFUL
NEGOTIATIONS
1. Preparation
Establish your goals.
Before entering into negotiations, determine what your goals
are and how reaching them will benefit your business.
Prepare. Consider the interests and objectives of your
negotiating partners. Put yourself in their shoes. This
homework will prove invaluable during the discussions.
Look at different scenarios that may arise during the
negotiations and how you will respond to each.
Know your deal breaker. Decide from the start what the
most desirable outcome would be and what an acceptable
one would be. Where will you draw the line and walk away?
4 CRUCIAL STEPS TO SUCCESSFUL
NEGOTIATIONS
2. Opening discussions.
Go for Win-Win
Explain your interests and point of view and listen carefully to the other
sides position. Seek to understand their key issueswhats crucial for
them may not be important to you.
Always ask for more than youre willing to settle for, but dont get backed
into a corner early in the process. Start by resolving the easiest points first.
Build common ground and trust. Use positive, inclusive terms such as: Our
areas of agreement, beneficial to both sides, our shared vision.
While some preliminary groundwork can be done over the phone or by
email, try to discuss important matters face to face. Observing reactions
to your proposals gives you a significant advantage, Israel says.
Make sure youre negotiating with the decision maker. After a lengthy and
hard-fought negotiation, the last thing you want to hear is: Ill have to
check with my boss and get back to you.
4 CRUCIAL STEPS TO SUCCESSFUL
NEGOTIATIONS
3. Concessions
Have them planned beforehand.
Everybody needs to put water in their wine, Israel
says. The question is how much? Look for trade-
offs. When agreeing to a concession, ask for
something in return.
Stick to the facts and dont get emotional. Youll risk
losing your objectivity and missing opportunities.
If it seems youve reached a dead end, look for
something to offer thats less important to you, but
relevant to the other party. Still stuck? Ask: What do
you suggest we do?
4 CRUCIAL STEPS TO SUCCESSFUL
NEGOTIATIONS
4. Agreement
Never commit until the end.
Summarize the most important points of the
agreement.
Confirm. Is that a yes? Do we have a deal?
What is 'Outsourcing'
Outsourcing is a practice used by different
companies to reduce costs by transferring
portions of work to outside suppliers rather
than completing it internally.
Outsourcing is an effective cost-saving strategy
when used properly. It is sometimes more
affordable to purchase a good from companies
with than it is to produce the good internally.
OUTSOURCING
BREAKING DOWN 'Outsourcing'
An example of a manufacturing company
outsourcing is Dell buying some of its computer
components from another manufacturer to
save on production costs. Alternatively,
businesses may decide to outsource
bookkeeping duties to independent accounting
firms, as it may be cheaper than retaining
an in-house accountant.
OUTSOURCING
Disadvantages
Outsourcing also has several disadvantages.
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
the 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.
SAVINGS ON NEGOTIATIONS
It is act of rejecting.
The state of being reject.
REJECTION
Having a low percentage or almost null rejected items in
your procurement will result to an effective service.
To make this this possible, your supplier must ensure
the product or the supplies that will be delivered.
If this rejection of items occurs, the management should
immediately notify the supplier. Preferably in way of
writing and if verbal, confirm it in writing immediately.
Most effective supplier nowadays, the targeted defective
is only about 25 PPM(Parts Per Million).
Rate of Rejection