purchasingandprocurement-210514131047.pptx

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1. PURCHASE AND PROCUREMENT SYSTEM HA - 6006 MATERIAL AND SUPPLY CHAIN MANAGEMENT DR.TAMASMITA BASU 2035019 MHA 2nd SEMESTER

2. I NTRODUCTION CONTENTS OBJECTIVES TYPES OF PURCHASE SYSTEMS 1 2 3 STEPS INVOLVED 4 RFPs AND RFQs , BIDDING 5 CONCLUSION 6

3. INTRODUCTION PROCURENMENT - Act of obtaining / buing goods and services from external source which ensures that buyer recieves goods or services at best possible price.

4. PURCHASING - Purchasing refers to the process by which a company contracts with third parties to obtain goods and services required to fulfill its business objectives in the most timely and cost- effective manner”

5. DIFFERENCE BETWEEN PURCHASING AND PROCUREMENT “ Procurement ” is the overall function that describes the activities and processes to acquire goods and services. Importantly, and distinct from “purchasing”, procurement involves the activities involved in establishing fundamental requirements, sourcing activities such as market research and vendor evaluation and negotiation of contracts. It can also include the purchasing activities required to order and receive goods. " Purchasing ” refers to the process of ordering and receiving goods and services. It is a subset of the wider procurement process. Generally, purchasing refers to the process involved in ordering goods such as request, approval, creation of a purchase order record and the receipting of goods.

6. Objectives of Procurement - Procuring goods of the right quality in the right quantity at the right price at the right time from the right source. To maintain continuous supply of materials for supporting the various functions of the hospital. To avoid wastage and duplication. To ensure that all the above are carried out with utmost integrity . To develop reliable sources of supply good relationship with vendors and to continuously monitor vendor performance. To do so with the minimum of capital investment (good inventory control and achieving reduction in cost of materials while ensuring quality of materials suitable for use)

7. 1 RIGHT QUALITY 2 RIGHT QUANTITY 3 RIGHT PLACE 4 RIGHT TIME 5 RIGHT PRICE FIVE RIGHTS OF PROCUREMENT

8. STEPS IN PURCHASE AND PROCUREMENT SYSTEM NEED RECOGNISATION SPECIFIC NEED SOURCE OPTIONS PRICE AND TERMS .

9. 5. PURCHASE ORDER - The purchase order is used to buy materials between a buyer and seller. it specifically defines the price , specifications and terms and conditions of the product or service and any additional obligations. 6. DELIVERY - The purchase order must be delivered, ususally by fax , mail, personally, email or other electronic means. Sometime the specific delivery method is specifiedin the purchasing documents.The recipient then acknowledges reciept of purchase order. Both parties keep a copy of file. 7. EXPEDITING - Expedition of purchase order addresses the timelines 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

10. 8. RECIEPT AND INSPECTION OF PURCHASES - Once the supplier delivers the product , the recipient accepts or rejects the items. Acceptance of the item obligates the company to pay for them. TYPES OF PURCHASE AND PROCUREMENT SYSTEM - 1. TENDER SYSTEM - In this type of system the orgamization invites supplies to give their quotationsand the suppliers with the lowest quotations wins the contract. It is mostly followed by large organization. ADVN - competative, lower cost , transparent process. DISADV - low price ususally determinant of quality, time consuming

11. 2. SUBCONTRACTING SYSTEM - The process of entering a contractual agreement with an outside person and company to perform a certain amount of work is known as subcontracting system. Outside person and company are the subcontractors. ADVN - cost saving , increased efficiency, continuing and risk management DISADV - loss of managerial control , quality problem and hidden cost. 3. BLANKET ORDER SYSTEM - Items are purchased which are used regularly. Divided into 2 methods - Agreement is made to fixed quantity of the product at fixed price for a specific period. Agreement to made to supply for a specific period but quantity is unknown. ADVN - flexible , avoid placement of again and again reduce clinical activties,protection against higher pricing in future DISADV - poor vendor performance, difficult to determineand forecast to quantity.

12. 4. CAPITAL EQUIPMENT PURCHASE SYSTEM - Used to purchase large value assets such as machinary equipments. ADVN - flexible , one time investment , increased coordination and communication DISADV - requires lots of capital, decision making is difficult IMPORTS - Indicates purchasing the goods from the outside country. imports are governed by the central Govt. ADVN - high quality , more variety , cheaper goods DISADV - high tax , increase transportation cost , foreign exchange risk. PROCUREMENT SYSTEM - It is business to business or business to Govt - purchase and scale of suppliers work and service through the internet. ADVN - reducing cost , productivity , quick processing DISADV - no hard copies , training cost and system failure

13. 7. STOCKELESS PURCHASING SYSTEM - In this system a supplier holds the items ordered by customer in its own warehouse and release them as and where required by the customer. ADVN - required workhouse space , required inventory turnover ,lean manpower DISADV - high cost , need of complex technology 8. TELEPHONE ORDERED SYSTEM - order is placed over telephone. ususally items with small quantity is being ordered by this system. 9. RATE CONTRACT SYSTEM - Mutual agreements between the buyer and the seller to operate a set of choosen tems, during a given period of time , for a fixed price variation

14. . An RFP is a document that lists all of the requirements and needs of a project. It helps companies prepare for upcoming projects as a form of a proposal to potential contractors and agencies. What is included in an RFP process? Determining needs Writing Distributing Evaluating Reevaluating Decision-making What are the types of RFPs? Marketing RFP ,Social media RFP,Branding RFP,Design RFP,Website RFP,Workplace RFP, PR RFP,Government and non- profit RFP

15. An RFP: Informs suppliers that an organization is looking to procure and encourages them to make their best effort. Requires the company to specify what it proposes to purchase. If the requirements analysis has been prepared properly, it can be incorporated quite easily into the Request document. Alerts suppliers that the selection process is competitive. Allows for wide distribution and response. Ensures that suppliers respond factually to the identified requirements. Is generally expected to follow a structured evaluation and selection procedure, so that an organization can demonstrate impartiality - a crucial factor in public sector procurements.

16. sample RFP for reference - https://juniperhealth.org/wp-content/uploads/2019/07/X- ray- Equipment-RFP.pdf

17. RFQ - REQUEST FOR QUOTATION A request for quotation (RfQ) is a business process in which a company or public entity requests a quote from a supplier for the purchase of specific products or services. RfQ generally means the same thing as Call for bids (CfB) and Invitation for bid (IfB). A request for a quote (RFQ) is a business process in which a business solicits quotes from select suppliers and contractors for a specific task or project. An RFQ can be sent alone or in tandem with a request for proposal (RFP). A business generally sends an RFQ when the quantity for a standard product is known and needs are ongoing. RFQs do not generate unsolicited bids and quotes as businesses target specific vendors and contractors. An RfQ typically involves more than the price per item. Information like payment terms, quality level per item or contract length may be requested during the bidding process. An RfQ typically involves more than the price per item. Information like payment terms, quality level per item or contract length may be requested during the bidding process.

18. To receive correct quotes, RfQs often include the specifications of the items/services to make sure all the suppliers are bidding on the same item/service. Logically, the more detailed the specifications, the more accurate the quote will be and comparable to the other suppliers. Another reason for being detailed in sending out an RfQ is that the specifications could be used as legal binding documentation for the suppliers. After the RfQ process, professional procurement organizations have to compare the quotations, and try to get the best price for the job (by negotiations, or by conducting an e- auction (a reverse auction or a ticker auction). Aim is to determine the fair market value of the goods or services and thus generate savings for the company. RfQs are best suited to products and services that are as standardized and as commoditized as possible, as this makes each supplier's quote comparable. In practice, many businesses use an RfQ where an RfT or RfI would be more appropriate. An RfQ allows different contractors to provide a quotation, among which the best will be selected. It also makes the potential for competitive bidding a lot higher, since the suppliers could be quite certain that they are not the only ones bidding for the products.

19. TECHNICAL AND FINANCIAL BIDDING In a tender offer, the TECHNICAL BID talks about how you understand the delivering, how you are going to deliver it, by what resources and with which qualifications, to which timeline and with which KPIs and they has better include all the ones expected in the tender and in the format expected, if given. Your expectations from what the client or other contractees of the client need to have put in place in order for you to do the job also go there. The FINANCIAL BID is often in a completely separate envelope and contains the price you want, the timing of payment, and anything else like the bank account it should be paid on. You should not mention fees at all in the technical bid as these are often assessed separately so as to ensure best value for money not just lowest price. Technical bids can be ten or twenty times fatter than the financial bid.

20. FOR BETTER UNDERSTNDING - Technical bid speaks of every thing except money. It covers details specs of product , testing, gurantee / warranty, payment terms, penalty, advance, bank guarded etc etc. once technical bids are evaluated and successful once selected, price bids are opened for only technically accepted offers for final processing. The financial bid is often in a completely separate envelope and contains the price you want, the timing of payment, and anything else like the bank account it should be paid on. Bid and offer are quotes on a single type of financial asset, just that bidders want to buy the asset at one price while sellers want to sell the same type of asset for a different price. For example with foreign currency- a British bank may buy 1 US dollar (bid for dollars) for say 1 pound then sell (offer to sell) that same US$1 for say 1.03 pounds so that the bank makes a net profit.

21. CONCLUSION The role of procurement and supply chain management will help businesses maximize profits. This is done by balancing cost reduction, supplier quality, assurance of supply and increasingly unlocking supplier innovation. As the manufacturing and supply chain environment grows more complex, procurement and supply chain management functions are also growing more strategic in manufacturing companies that need to find new ways to optimize the supply chain. Procurement also helps manage compliance and reduce overall supply chain risk. Procurement helps organizations become “the customer of choice” to suppliers, which helps manufacturers drive innovation and bring products to masrket faster— and with higher margins.

22. The smooth functioning of the production department depends upon a large extent on the right type of materials purchased at right time at right quality and at right cost. The right cost of materials leads to good saving. It is possible through efficient buying. The purchase manager must be technically skilled, innovative, intelligent, vigilant and efficient inbargaining. Heavy competition has generated the importance of efficient purchasing. Forany industrial project, the purchasing is main function that contributes in the timely execution and delivery. The corporate policy indicates the guidance map for purchasing. Itincludes the purchasing strategies, plans, programmes and goals. The purchasing department must have good coordination with other departments like finance, engineering, production, quality department, etc. The purchasing department is responsible for avoiding any type of over-inventory or under- inventory. The purchasing department helps in the clearance of all the bills of external parties like suppliers, etc. Every organisation must adopt scientific and analytical way of identifying the need and type of materials, right supplier and smooth flow of materials.

23. REFERENCES https ://www.in ves topedia.com/terms/r/request- for- quote.asp#:~:text=A%20request%20for%20quote%20(RFQ)%2C%20also%20k nown%20as%20an,fulfill%20certain%20tasks%20or%20projects. https ://www.linkedin .co m/pulse/five-rights-procurement-eman-abouzeid- cscp- cips- https ://www.g2 .co m/articles/rfp-request-for-proposal https://perso.crans.org/fortineau/ressources_maxnce_nouchet/Introduction% 20to%20Materials%20Management.pdf

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