INF 336: Project Procurement Management
Use at least one project you have been a team member of, or a project manager for, as an example to contextualize the research topics below:
All of the following topics must be addressed in order for the paper to be complete:
- Define the importance of purchasing and supply management and how this relates to selecting a qualified supplier.
- Discuss how to select strategies for negotiating prices.
- Assemble the steps of the creation of a project supply, service, and material budget from detailed requirements. Illustrate the benefits and costs of outsourcing, and the growth pattern of outsourcing.
- Evaluation of the various organizations that are benchmarks in purchasing and supply management, and their best practices. Provide specific examples of companies who show market leadership in purchasing and supply management.
This is an assignment with a length of eight to ten pages that should integrate the reading, multi-media and class discussions. It is mandatory to have research from the classroom text, as well as three sources from scholarly sources to support your views.
Consider the validity of your resources carefully before using them in academic papers. It is recommended to use examples from your professional experience where possible, or build from your learning in the discussion boards.
Writing the Research Paper
The Final Paper:
- Must be eight to ten double-spaced pages in length, and formatted according to APA style as outlined in the UAGC Writing Center.
- Must include a title page with the following:
- Title of paper
- Student’s name
- Course name and number
- Instructor’s name
- Date submitted
- Must begin with an introductory paragraph that has a succinct thesis statement.
- Must address the topic of the paper with critical thought.
- Must end with a conclusion that reaffirms your thesis.
- Must use at least three scholarly sources, other than the textbook.
- Must document all sources in APA style, as outlined in the UAGC Writing Center.
- Must include a separate reference page, formatted according to APA style as outlined in the UAGC
Project Procurement Management has covered many topics relating to supply and purchasing processes. This paper will address several topics while incorporating examples from the text as well as personal experiences. The importance of purchasing and supply management, strategies for negotiating prices, the steps involved in the creation of project supply, the benefits and costs of outsourcing, and best practices of the benchmarks in purchasing and supply management are the topics that will be evaluated and identified throughout this paper.
Purchasing & Supply Management
Purchasing and supply management is essential to operational efficiency in the business world [Joh10]. Organizations cannot be successful without suppliers and supply management in place. Purchasing and supply management is one of the most important jobs in a business. This process involves the observation of customer’s behaviors and ensuring high quality items are abundant while being cost effective to the organization [SAv09].
Purchasing is very relevant to an organization and is a comprehensive process. It is confined to buying and refers to the selection of suppliers and the location. For items needed to be purchased, price negotiation and terms of an agreement, and ending with payment with delivery. Supply management is required to know the needs of a customer, select an appropriate supplier, and negotiate a price in order to fulfill such needs [Pro04]. “Purchasing, supply management and procurement are used interchangeable to refer to the integration of related functions to provide effective and efficient materials and services to the organization[Joh10].
Supply management is responsible for many things. One of the most important being the procurement process. This process includes the steps of: recognition of need, translation of the need, searching for suppliers, selection of sources, agreeing on contracts, delivery of products and services, and the payment of the suppliers [Joh10]. Another important task covered by supply management deals with the receiving, inspecting, warehousing, inventory control, materials handling, packaging schedule, in and outbound transportation, and traffic and disposal [Joh10].
Supply management is also responsible for enhancing revenue for the organization. This is critical for an organization’s success. The desired outcome is an increase in revenue and a decrease in costs. By focusing on the reduction in cost, the customers will benefit as well as the organization. All of the avenues covered by purchasing and supply management are critical in the choosing the most qualified supplier. Factoring each area aspect will allow management to have a qualified supplier that contributes to the success of high customer satisfaction by producing quality products, as well as achieving success within the organization [Mikl4].
Strategies for Negotiating Prices
Negotiation is used in nearly every aspect of business whether it is for resource allocation, meeting places, or prices. Strategy can be thought of as the action process that is put in place to achieve long-term goals and objectives [Joh10]. There are several effective strategies used for negotiating in purchasing and supply management. Strategy in the supply world focuses on how supply chain can contribute to an organization. Supply managers can be faced with obstacles while choosing which strategy to use in order to achieve such objectives. There are strategies for choosing qualified suppliers as well as processes to negotiating the prices.
There are several concepts to analyze before selecting a supplier. At a minimum the supplier should be able to clearly meet quality and quantity standards, cost and price comparisons, and actual services being offered [Mikl4]. Negotiating strategies become a ritual and are performed by the buyer and seller respectively.
It is reasonable and expected for the supplier to operate in an efficient manner, keep prices in line with costs, not take advantage of a privileged position, make proper and reasonable adjustment of claims, and be prepared to consider the special needs of the buyer’s organization prior to entering into a contract [Joh10]. Establishing these strategies with the supplier will create a strong working relationship with open communication.
Other strategic questions to consider are what are the negotiation variables are, times, prices, performances, and payment plans that will be discussed [Pro04]. Negotiation can be present in any aspect of supply management, not just the price aspect. If supply management did not have objective or strategies in place, it would be rather difficult to negotiate and concede on a price [Joh10]. Negotiation should never take away from any of the objectives or strategies and must remain in line with customer needs.
Creation of Project Supply
In order to create an accurate budget for supply, service, and material project, the detailed requirements must be established [SAv09]. These requirements will be the grounds for communication to possible suppliers how the organizations needs can be met. Supply management is responsible for the following steps: recognition of need, description of need, identification and analysis of possible sources of supply, supplier selection and determination of terms, preparation and placement of purchase order, follow-up and/or expediting the order, receipt and inspection, invoice clearing and payment, and maintenance of records and relationship [Joh10].
In addition to the aforementioned steps, receiving, inspecting, warehousing, inventory control, materials handling, packaging scheduling, in and outbound transportation, traffic and disposal are all apart of purchasing and supply management [Joh10]. Minimizing costs and lead times to the supply chain are a major focus. This will help ensure that the customer will also benefit from these actions. Purchasing and supply management is much larger than the conventional term and the responsibilities exceed its textbook definition [Smi09].
Understanding the strategic requirements in supply management is detrimental to the success of the organization. The organization must exercise substantial judgment that encompasses resale, raw and semi-processed materials, parts, maintenance, and capital and service [Joh10]. Recognition and description of need is required due to detailed descriptions of needs, articles, commodities, or the services that are being requested from the supplier. The buyer will need all of this information before moving forward.