Procurement MGT.

Mudassar Ali,
Associate Professor
Bahria University, Islamabad
Ph.D in Project Management (Harbin
Institute of Technology, Harbin, China)
Contact: 03325178994
mudassarsalamat@gmail.com

1. https://scholar.google.com/citations?user=K61OHnwAAAAJ&hl=en
2.https://www.researchgate.net/profile/Ali-Mudassar
• 15 W category articles published
• 1 research conference, presented in Spain (Madrid).
• 09 W category research articles are under review.
• All articles are in bronze, silver, and golden categories.
• 1 research article nominated for best award in the world’s best project management
journal.
• Silver medallion in cricket (PAEC, 2015)
• Gold Medal in Harbin marathon in -45cc (HARBIN, CHINA, 2019)
• Certification in soft skills of project management, University of Sao Paul, Brazil (2017)
• Won a fully funded Chinese government scholarship in 2017.
• 10 years of industry experience as a project coordinator in PAEC.
• Research Fellow at Harbin Institute of Technology, Harbin, China.
• I received the Best Ph.D. Researcher Award 2021 from the Harbin Institute of Technology.
Procurement
• Procurement management is also referred to as the source-to-settle
process. It incorporates the evaluation, selection, and creation of
formal contractual agreements as well as managing the company’s
ongoing supplier relationships.
 If you could have a procurement management
superpower, what would it be and why?
Think about how fun it would be if management had its
own adventure park. What would the fun activities or
interesting journeys be?
In procurement management, which animal represents
your management style, and why?
Tell us about the funniest or strangest project you've ever
been involved in, and what important lessons did you
learn from that experience?
Create a procurement management meme that
summarizes the essence of this course.
Difference among
• Purchase, supply chain and procurement
Procurement Scope & Development
• Scope
• Purchasing Cycle concept
• Order creation
• Budget check
• Vendor selection
• Negotiation
• Delivery
• Matching the requirements
• and closing)
• Digitize the process in terms of development
Continue…
• Purchasing and supply as a service activity
• Internal and external influences that affect the evolution of purchasing
• Total acquisition cost’ concept (cost without tax)
• Adoption of relationships based on mutual benefits as an alternative to
the traditional transactional, adversarial approach
• Evolution of concepts relating to purchasing development
• Key practices encountered in developed strategic purchasing
At TechCo, led by Chief Procurement Officer Aisha, the need to improve
procurement practices. A comprehensive assessment by Aisha reveals manual
processes hindering efficiency. With support from CFO Yusuf, initiatives
including e-procurement systems and strategic sourcing are proposed.
Procurement Specialist Fatima and IT Manager Omar collaborate to implement
these changes. Training sessions on sustainable procurement practices are
conducted company-wide. Through these efforts, TechCo achieves cost savings
and strengthens supplier relationships. The integration of sustainability
initiatives enhances the company's reputation. Aisha's leadership transforms
TechCo's procurement into a strategic asset, driving innovation and efficiency.

How did Chief Procurement Officer Aisha's leadership and

strategic initiatives contribute to the transformation of TechCo's
procurement processes and what were the resulting benefits for
the company?
Procurement Processes
• Identifying Needs
• Supplier Selection
• Contract Negotiation
Strategic purchasing
Objectives of Project Procurement
• Cost Reduction
• Supplier Relationship Management
• Strengthen supplier relationships to improve reliability, quality,& innovation.
• Risk Mitigation
• Change and manage risk to prepare for supply chain delays.
• Quality Improvement
• Use strict supplier selection and quality control to get high-quality goods and
services.
• Innovation Promotion
• Promote supplier collaboration to produce creative products, processes, and
modern technology.
• Sustainability Integration
• Promote responsible procurement by incorporating environmental, social,
and ethical factors into purchase choices.
• Alignment with Organizational Goals
• To promote development, growth in the market, and excellence in operations,
align procurement with company goals.
• Sustainability in procurement
• Sustainability by procurement
Procurement plan
•?
• Procurement planning is integral to program/service planning,
aiming for cost savings, efficiency, and enhanced value. It involves
evaluating the procurement process to ensure sound decisions,
especially in acquiring goods, works, and services.
• Group buying combines departmental requirements into a single
procurement order, commonly practiced in government sectors.
• Bulk pricing and negotiation are crucial for cost-effective
procurement, controling combined quantities for better pricing.
Vital components while doing planning
• Acquisitions are managed in line with government policy to ensure
agreement.
• The government aims to secure best value for money on contracts.
• Vendors are provided fair access to information on procurement
opportunities, processes, and outcomes.
• Ministries and government agencies engage in competitive processes
with the commitment to award contracts fairly and are accountable
for decisions and processes.
• The cost of procurement processes is equal to the value and
complexity of each procurement.
• Ensure procurement aligns with program requirements.
• Determine the appropriate procurement method: quality- and cost-based
selection(QCBS), quality based selection(QBS), selection under a fixed budget
(FBS), least-cost selection (LCS), selection based on consultants’
qualifications(CQS), or single-source selection (SSS).
• Familiarize with government procurement policies, laws, standard bidding
documents, regulations, and guidelines.
• Manage solicitation and contract award processes fairly and impartially.
• Design contracts to provide optimal value to the government.
• Ensure ministry acquisitions comply with policy and legislation.
• Maintain confidentiality to avoid impairing the government’s negotiating position or
benefiting one contractor unfairly.
Tender
• A tender is a formal invitation for suppliers or contractors to submit
bids or proposals.
• It is used to select the most suitable supplier or contractor for a
project or contract.
• Tenders include details such as the scope of work, project
specifications, and evaluation criteria.
• Suppliers or contractors interested in participating must submit their
proposals.
• The entity issuing the tender evaluates submissions to choose the best-
suited bidder.
How to manage tender
• Prepare comprehensive tender documents outlining project requirements
and evaluation criteria.
• Advertise the tender widely and issue formal invitations to eligible suppliers.
• Address any queries or requests for clarification promptly and transparently.
• Establish a secure process for bid submission and set a clear deadline.
• Evaluate bids objectively based on predetermined criteria.
• Select the preferred bidder and initiate contract negotiations.
• Finalize contract terms and conditions and notify all bidders of the outcome.
• Monitor and manage the contract to ensure compliance and conduct a post-
tender evaluation for process improvement.
• Let's consider a city government that needs to renovate a public park.
They prepare a tender document outlining the scope of work, such as
installing new playground equipment, re-concrete pathways, and
landscaping. They advertise the tender widely through local media and
issue formal invitations to construction companies. During the process,
they promptly address any questions from potential bidders and ensure a
secure bid submission process with a clear deadline. After receiving bids,
they objectively evaluate them based on cost, experience, and proposed
timeline. They then select the preferred construction company, negotiate
the contract terms, and finalize the agreement. Throughout the renovation
project, they monitor the contractor's progress to ensure agreement with
the contract and conduct a post-tender evaluation to improve future
procurement processes.
Student will observe and write
• Green procurement and practices video
What is sea procurement
 US, Saudi Arabia, UAE and India said
aiming to ink joint railway deal at G20
Agreement, which could include Israel if it normalizes ties with Saudi Arabia, is one of
several initiatives Biden is deploying to charm countries away from dealings with China

https://www.timesofisrael.com/us-saudi-arabia-uae-and-india-said-aiming-to-ink-joint-railway-deal-at-g20/?
__cf_chl_tk=jDFdQtX99ClhY3YRM0Ex4l7Ie4ypen8oR4mgjy4TG0M-1705556495-0-gaNycGzNC6U
Scope of purchasing

• To acquire the right quality of material, at the right time, in the right quantity, from the
right source, at the right price.
• To supply the organization with a flow of materials and services to meet its
needs.
• To ensure continuity of supply by maintaining effective relationships with existing sources
and by developing other sources of supply either as alternatives or to meet emerging or
planned needs.
• To buy efficiently and wisely, obtaining by ethical means the best value for every pound
spent.
• To maintain sound cooperative relationships with other departments, providing information
and advice as necessary to ensure the effective operation of the organization as a whole.
• To develop staff, policies, procedures and organisation to ensure the achievement of these
objectives.
Additional objectives
• To select the best suppliers in the market.
• To help generate the effective development of new products.
• To protect the company’s cost structure.
• To maintain the correct quality/value balance.
• To monitor supply market trends.
• To negotiate effectively in order to work with suppliers who will seek
mutual benefit through economically superior performance.
• To adopt environmentally responsible supply management.
Purchasing cycle
• Recognition of need
• Specification
• Make-or-buy decision
• Source identification
• Source selection
• Contracting
• Contract management
• Receipt, possibly inspection
• Payment
• Fulfilment of need.
Changing role of purchasing & supply
• The fact that the strategic role and contribution of purchasing and
supply is well recognised in many leading commercial concerns has
meant that the strategic purchasing decisions may be taken by
purchasing involvement at board level, rather than by a departmental
manager.
External organizational factors
• Leading Edge Concepts
• best practice benchmarking
• total quality management
• just-in-time philosophies and lean production
• supply chain concepts
• Ranking and empowerment of suppliers
• relationship management
• customer focus
Continue….
• Fewer but larger suppliers
• Increasing environmental awareness
• Competitor activity
• Advancing technology
• Increasing proportion of revenue spent externally
• Some reasons for the increased importance and recognition of
purchasing
• Innovation
• E-Commerce
Internal Organizational Factors
• The level and percentage of purchased goods and services
• Structural changes
• The increasing importance of purchasing and supply in the
manufacturing sector
• Performance measurement
 Activities and Responsibilities in Supply Chain
mgt.
1.Supplier Selection and
Management
2.Demand Forecasting
3.Inventory Management
4.Order Processing and Fulfillment
5.Logistics and Transportation
Management
6.Warehousing and Distribution
7.Supply Chain Planning
8. Procurement and Purchasing
9. Supplier Relationship
Management
10. Quality Control and Assurance
11. Supply Chain Analytics
12. Sustainability and Ethical
Sourcing
13. Risk Management
14. Collaboration and
Communication
15. Continuous Improvement
The role of procurement department
1.Sources and manages suppliers.
2.Manages costs and negotiates contracts.
3.Mitigates supply chain risks.
4.Manages contracts and compliance.
5.Ensures quality assurance.
6.Optimizes/enhances the inventory.
7.Promotes supplier diversity and sustainability.
8.Aligns procurement strategies with business objectives.
The strategic scope of procurement with other functions (Organizational
Structures for Supply Management and Organizing the Supply Group)

Cross-Functional Collaboration
Procurement aligns with finance, operations, and marketing departments to
support overall business goals.
Organizational Structures
Centralized Procurement
Decentralized Procurement
Hybrid Structures
Organizing the Supply Group:
Category Management
Supplier Relationship Management
Cross-Functional Teams
Stock Procurement
Regular purchases of items kept in inventory for ongoing use, like raw materials or
office supplies.
Non-Stock Procurement
One-time or infrequent purchases, such as specialized equipment or consulting services,
are not held in inventory.
Direct Procurement
Acquiring goods or services directly used in production or resale, like raw materials or
components.
Indirect Procurement
Obtaining goods or services not directly used in production, such as office supplies or
maintenance services.
Levels of Strategy and Category
Management
1. Procurement strategies can operate at different levels
1. Including company, business unit, and functional levels.
2. Category management involves strategically managing groups of
similar/related products/services to optimize the organization’s
value.
Objectives and Organizational Contexts
1. Depending on the organization's goals, market conditions, and
industry dynamics.
2. Purchasing activities may be organized differently based on
company size, industry sector, and geographical scope.
3. Purchasing devolution refers to decentralizing purchasing authority
and decision-making within an organization.
Understanding the Supply Chain and
Strategic Development
A supply chain incorporates all the activities involved in delivering a
product/service to customers, including sourcing, manufacturing,
transportation, and distribution.
Strategic development within procurement involves identifying
opportunities to improve efficiency, reduce costs, and enhance value
throughout the supply chain.
Ali seasoned procurement manager, operates like a well-oiled machine within a
manufacturing firm. His days are negotiations, analyses, and strategic actions, each
guided by his unwavering commitment to excellence and integrity. When the
production team urgently requires additional raw materials, Ali comes into action,
leveraging his extensive network of suppliers to secure timely deliveries. His composed
manner and sharp negotiation skills ensure that production lines continue without
interruption. Meanwhile, Fatima, a dedicated colleague in the administrative office,
seeks Ali's assistance in acquiring new software licenses to streamline office
operations. Recognizing the importance of efficiency in every aspect of the business,
Ali explores, meticulously evaluating vendors and negotiating terms to secure the
optimal arrangement. Another productive day, Ali reflects on his role in driving the
firm's success. With humility and determination, he embraces each challenge as an
opportunity to serve his colleagues and contribute to the company's growth. Ali's
dedication and principled approach serve as an inspiration for all who work alongside
him.

How does Ali's steady commitment to excellence and integrity drive success within the
manufacturing firm's procurement department?
kraljic analysis
• Peter Karljic born in 1939 and proposed the analysis in 1983.
• supply risk – risks of the vulnerability of the business to the
unreliability of supply
• Technical risk – risks arising during and after installation.

https://www.forbes.com/sites/jwebb/2017/02/28/what-is-the-
kraljic-matrix/?sh=6a669123675f
Procurement potential/Prospective
• Procurement potential is the degree of opportunity that exists for the process
of acquiring the commodity or service under consideration to contribute to
company profitability. It is a measure of the benefits that can be achieved by
using an appropriate procurement strategy, as opposed to the unquestioning.
• Mechanistic placement of orders. The benefits potentially include:
• Reducing the total cost of ownership (TCO)
• improving the quality of the procurement process;
• improving the efficiency of the procurement process;
• earlier sales or production due to reduced cycle time.
Four categories
• Critical
• Leverage
• Bottleneck
• Routine.
• Inventory
• Recall that inventory refers to the stock of goods or materials a business holds for future use or sale.
• Identify various types of inventory, such as raw materials, work-in-progress, and finished goods.
• Inventory Management Techniques and understand basic inventory management methods like FIFO (First In,
First Out) and JIT (Just-In-Time).
• Inventory Comprehension
• Explain the importance of inventory control in optimizing stock levels to meet demand while minimizing
holding costs.
• Understand different methods of inventory valuation, such as LIFO (Last In, First Out) and weighted average
cost.
• Interpret inventory turnover ratios and their implications for business operations.
• Purchase
• Recall that purchasing is the process of acquiring goods or services needed by an organization.
• Understand the steps involved in generating and approving purchase requisitions.
• Identify components of a purchase order, including item descriptions, quantities, prices, and terms.
• Explain the criteria for evaluating potential suppliers, such as price, quality, and reliability.
• Understand the importance of negotiating contracts to secure favourable terms and conditions.
• Describe the steps in reviewing and approving purchase orders, including authorization levels and
documentation requirements.
Public procurement Regulatory authority
Public procurement significantly influenced by legal frameworks,
technological advancements, and societal needs.
PPRA plays a crucial role in regulating and overseeing public procurement
processes. Its roles typically include developing procurement policies,
guidelines, and regulations, monitoring compliance, and providing training
and capacity building for procurement professionals.
PPRA's scope covers various aspects of procurement, including
procurement planning, solicitation, evaluation, contract award, and contract
management. Its functions involve ensuring transparency, fairness, and
efficiency in procurement processes while preventing corruption and
ensuring value for money.
1.E-procurement uses electronic systems and technologies to conduct procurement
processes. An e-procurement module facilitates online procurement activities,
including vendor registration, bidding, and contract management, streamlining
processes and enhancing transparency and accountability.
2.Procurement directions are legal frameworks that govern public procurement
activities. These directives typically outline procedures, thresholds, and
requirements for various types of contracts, ensuring consistency and compliance
across public sector entities.
3.The main provisions of procurement directives often include rules related to
procurement procedures (e.g., open tendering, restricted tendering), thresholds for
different procurement methods, criteria for bid evaluation and contract award, and
measures to promote sustainability and innovation in procurement practices.
 Open Tender
1. is an open competition or bidding where the procurement opportunity is
advertised to all potential suppliers/contractors.
2. Any interested supplier or contractor who meets the qualification criteria
can submit a bid or proposal in response to the tender invitation. Open
tenders are characterized by transparency and broad participation, allowing
qualified suppliers to compete for the contract.
Restricted Tendering
• Selective tendering or prequalification initially involves advertising
the procurement opportunity to a limited number of pre-selected
suppliers or contractors. Only pre-selected suppliers are invited to bid
• These suppliers or contractors are invited to participate based on
specific criteria, such as qualifications, experience, or past
performance. Only those invited suppliers are allowed to submit bids
or proposals.
• Restricted tenders are often used when the buyer wants to limit
competition to a select group of suppliers deemed capable of meeting
the contract's requirements.