Procurement Best Practice ProgramProf. Ayman Al Akkad

Program Outlines

1.Overview of Procurement Facts نظرة عامة–المشتريات

2.Understanding Procurement Chain مفهوم سلسلة أنشطة المشتريات

3.Procurement Plan خطة عمل المشتريات

4.Supply Positioning/ LTA اعداد طويل االجل-يد وتحديد المواقع رالتو

5.Risk Management إدارة المخاطر

6.Procurement Oversight الرقابة على المشتريات

7.Contract Management إدارة العقود

8.Engaging and Managing Consultants. المشاركة وإدارة الخبراء االستشاريين

9.Transportation in a Supply Chain التوريفي سلسلة ودورهالنقل2

Registration Information

▪Location: Hadara Center, Damascus – Syria

▪Contact Details

▪Tel: 0933-726444

▪Email: prof.ayman.Akkad@gmail.com

▪Teaching Language: English + Arabic

▪Program Materials: PPTs + Ebooks (All in Enlish)

▪Certification: Final Test + Project.3

Overview of Procurement ProcessUnit One

Procurement: Definition

▪ Is the act of acquiring, buying goods, services or works from an external source. It is favourable that the goods, services or works are appropriate and that they are procured at the best possible cost to meet the needs of the acquirer in terms of quality and quantity, time, and location.

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What exactly is procurement?

▪All stages and parties involved, directly or indirectly, in fulfilling a customer request

▪ Internally, the procurement process includes all functions involved in fulfilling a customer request (product development, marketing, operations, distribution, finance, customer service).

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What exactly is procurement?

▪Externally, it includes the suppliers, vendors, manufacturers, transportation, and distributors, that exist to transform raw materials to final products and supply those products to customers.

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Example: Buying Cereals from Wal-Mart

Tenneco

Packaging

Paper

Manufacturer

Timber

Company

P&G or other

Manufacturer

Corn

manufacturer

Wal- Mart

Plastic

Producer

Customer

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The Objectives of a Procurement Chain

▪Primary purpose is satisfying customer needs.

▪Maximizing the overall value created

▪Value, measured monetarily, refers to: the difference between what the final product is worth to the customer (price the customer is willing to pay) and the effort, collectively, the procurement chain expends in filling the customer’s request (the collective costs)

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The Objectives of a Procurement Chain

▪Therefore, procurement profitability would be: the difference between revenue generated from the customer and the overall cost across the entire Procurement chain.

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Why should procurement be a challenging problem?

▪Procurement chain network is often very complex

▪Procurement chain partners have conflicting objectives.

▪Consequently, making everyone to agree is not an easy task.

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Conflicting Objectivesin the Procurement Chain

1. Purchasing wants

▪Stable volume requirements

▪Flexible delivery time

▪Little variation in mix

▪Large quantities

2. Manufacturing wants

▪Long run production

▪High quality

▪High productivity

▪Low production cost

Tell me why some of these objectives are conflicting.

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Conflicting Objectives in the Procurement Chain

3. Warehousing wants▪Low inventory ▪Reduced transportation costs▪Quick replenishment capability

4. Customers want▪Short order lead time▪High in stock▪Enormous variety of products▪Low prices

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PROCUREMENT PROCESS IN SAP

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BASICS PROCUREMENT PROCESS IN SAP

▪Materials can be procured in any company from external vendors or from other branches of the company itself.

▪Purchasing, warehousing and invoice verification departments are involved in procurement process.

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Procurement Process

▪Determination of requirement (purchase requisition – PR or Materials requirement planning MRP)

▪Determination of source of supply (Request for quotation – RFQ)

▪Vendor selection ( Quotations – compare, accept or reject)

▪Purchase order - Manual or automatic

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Procurement Process

▪Data in purchase order either from PR or RFQ

▪Monitor and send reminder to suppliers

▪Goods Receipt

▪ Invoice verification

▪ Payment process

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Organizational level

▪Client – highest hierarchical level in SAP system

▪Company Code – Smallest organizational unit for external reporting

▪Plant – Organizational unit within logistics for production, procurement and MRP (Material requirements planning)

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Organizational level

▪Storage locations – Plant dependent, inventory management and physical inventory places

▪Purchase organization – Centralized at company level or decentralized at plant level

▪Purchase Group – Not defined in customizing, directly deal with vendors.

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Procurement Departmental Structure

▪The Department of Procurement and Contracts is comprised of five (5) primary business units

1. Financial and Administrative Services

2. Systems Management and Technology Services

3. Strategic Planning and Procurement Policy

4. Contract Compliance and Vendor Services

5. Purchasing and Contract Administration20

Departmental Responsibilities

▪Finance and Administrative Services

▪Requisition Services

▪Office Management

▪Record Management

▪Vendor Services

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Departmental Responsibilities

▪Systems Management and Technology Services

▪Purchasing Web Site

▪E-Procurement

▪Bids/RFPs for technology goods and services

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Departmental Responsibilities

▪Strategic Planning and Procurement Policy

▪Procurement Policies and Procedures

▪Strategic Sourcing

▪Board Reports

▪Contract Administrators for special projects

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Departmental Responsibilities

▪Contract Compliance and Vendor Services

▪M/WBE Monitoring

▪M/WBE Statistical Data

▪Vendor Performance issues

▪Vendor Report Cards

24M/WBE = Minority & Women Business Enterprise

Departmental Responsibilities

▪Purchasing and Contract Administration

▪Competitive Solicitations - Professional Services

▪Competitive Solicitation - Operations (Construction)

▪Contract Management

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Contract Administration

▪Solicitation Processes

▪Bids (BID)

▪Request for Proposals (RFP)

▪Request for Qualifications (RFQ)

▪Request for Information (RFI)

▪Sole Source (SS)

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