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Procurement and Inventory Management

The document discusses 5 topics related to purchasing and supply chain management: 1. It defines the key stages in the purchasing process including need recognition, specification, make-or-buy decision, source identification, selection, contracting, and receipt. 2. It explains strategic management in purchasing and different purchasing strategies aimed at gaining competitive advantage. 3. It discusses why organizations outsource and provides a flowchart of the outsourcing process. 4. It covers the importance of responding to customer needs, liquidated damages clauses, penalty clauses, and force majeure clauses in contracts. 5. It lists attributes of a good supplier and discusses vendor evaluation in the supply chain.

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75 views

Procurement and Inventory Management

The document discusses 5 topics related to purchasing and supply chain management: 1. It defines the key stages in the purchasing process including need recognition, specification, make-or-buy decision, source identification, selection, contracting, and receipt. 2. It explains strategic management in purchasing and different purchasing strategies aimed at gaining competitive advantage. 3. It discusses why organizations outsource and provides a flowchart of the outsourcing process. 4. It covers the importance of responding to customer needs, liquidated damages clauses, penalty clauses, and force majeure clauses in contracts. 5. It lists attributes of a good supplier and discusses vendor evaluation in the supply chain.

Uploaded by

Misbah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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GROUP 7:

1- What is purchasing? Explain purchase cycle and define the changing role of purchasing and
supply. (Chapter 1)

The main stages in the purchasing process may be summarized as follows: •


Recognition of need • Specification • Make-or-buy decision • Source identification
• Source selection • Contracting • Contract management • Receipt, possibly
inspection • Payment • Fulfilment of need
SLIDES 11-15

2- Explain the concept of strategic management and identify various forms of purchasing strategy
aimed at gaining competitive advantage and to examine influences on strategic choice. (Chapter
2)

3- Why do organisations outsource? Explain the outsourcing process with the help of a
flowchart. (Chapter 4)

• There are many considerations that might influence an organisation, such as:

• External supplier has better capability.

• External supplier has greater or more appropriate capacity.

• Freeing resources for other purposes.

• Reduction in operating costs.

• Infusion of cash by selling asset to provider.

• Reducing or spreading risk.

• Lack of internal resource.

• Desire to focus more tightly on core business.

• Economies of scale.
4- Explain the importance of responsiveness of customer needs. Also explain the liquidated
damages, penalty and force majeure clause in a contract. (Chapter 7)

[BOOK PAGE # 264 onwards] it is implied by law that the supplier will be held liable for damages. In
some circumstances, the purchaser and contractor foreseeing the possibility of a breach may attempt to
assess in advance the damages payable in the contract. These are called liquidated damages. The
definition of liquidated damages is: a genuine pre-estimate of probable loss. The use of liquidated
damages creates a number of advantages. The number of damages for any breach, such as a delay to
the completion date, can be pre-agreed in the contract. If no such sum has been stated in the contract,
trying to agree the sum of money payable by the offending party can be a very time-consuming exercise.
If the two parties fail to agree, they may resort to litigation. Liquidated damages overcome this
uncertainty, since both parties to the contract will know the extent of their financial liability in the event
of a breach of contract.

Force majeure If either party is prevented from carrying out contract obligations by circumstances
beyond their reasonable control, including government intervention, strikes and lockouts but not
including weather conditions, then the party affected shall not be liable for any delay resulting from
such circumstances for as long as they last. If such delay extends for an unreasonable time the other
party may cancel the contract without liability to either party, and buyer shall pay to seller an equitable
sum for work done before cancellation

5- Explain the attributes of a good supplier and discuss vendor evaluation in supply chain. (Chapter 8)

The following list is given by way of suggestion only: ■ Delivers on time. ■ Provides consistent quality. ■
Gives a good price. ■ Has a stable background. ■ Provides good service back-up. ■ Is responsive to our
needs. ■ Keeps promises. ■ Provides technical support. ■ Keeps the buyer informed on progress

Typical checklist questions are: ■ Do they trade with our competitors? ■ Are confidential documents
properly controlled? ■ Does the buyer have technical support? ■ How do they search the market and
how often? ■ How long have they been established? ■ What are their investment plans?

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