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Strategic Procurement Management

Table of Contents

Introduction

Assessment

Critically Evaluate Most Important and Relevant Contractual, Legislative and / or Regulatory Arrangements that Are Involved in Procurement and Supply of Goods and Services for An Organisation in 2020?

Conclusion

References

Introduction to Strategic Procurement Management

It is very important for organisation to have proper procurement and supply of product and service process so that goal and objectives could be attaining in most effective manner (Bakar and et. al., 2016). These all are part of supply chain management and logistics to carry out work in diligent manner. There is rise in more number of crimes and theft, so it is essential to have legislative and/or regulatory framework or agreement for procurement as well as supply of products and services in an effective and efficient manner. It will leads towards success and growth of business. In 21st century, procurement and supply of both goods and services for organisation required framework for carrying out different operations and activities in appropriate way.

Assessment of Strategic Procurement Management

Critically evaluate most important and relevant contractual, legislative and / or regulatory arrangements that are involved in procurement and supply of goods and services for an organisation in 2020?

Procurement is defined as procedure of finding as well as agreeing to acquiring and terms of products, services and working from external sources through tendering or competitive bidding process (Cernat and Kutlina-Dimitrova, 2015). It is very important for organisation to follow proper regulatory and legislative arrangements at time of procurement as well as supply of products and services. This helps to reach good safely to users and reach final goal and objectives. It is essential to make proper plans and strategy to gain positive results in effective manner.

Procurement is referred as procedure of acquiring products and services in organisation or business context (Public Procurement Legal and Regulatory Framework, 2020). In case of small enterprise, it can be minor section of day to day operations where as in case of large business, it can be regarded as complex functions which required some positive or considerable resources. Also for large business, procurement is regarded as devolved function. All the individual or single departments are liable for own immediate procurements help in different terms of monetary value. In case of other organisation, purchasing can be centralised for specialised team of procurement. In case of many businesses, purchase of services is known as contracting whereas purchasing of products from dealer or suppliers is known as procurement or purchasing. This is the responsibility of facilitate ms manager who are involved in category of decisions related with procurements that includes procurement of tools, maintenance of services, materials, building, spars and equipments.

Public procurement is defined as organised procedure to acquire products, services and works through public sector business usually done through contracts (Chen and Whalley, 2017). It is very important for organisation to follow proper legal as well as regulatory framework which are regarded as laws, policies, regulations and guidelines which govern procurement in organisation. Every business whether public, third sector and private sector should follow rules that are governed for acquisition of works, services and goods for fulfilment of goal and objectives. Whenever there is public procurement, legal and regulatory framework then there is set of regulations, policies and laws which govern implementation of processes as well as procedures necessary for acquiring works, service and products of organisation. Components of Procurement legal as well as regulatory framework are as follows:

Constitution

It is defined as organic law of country that is foundation of all types of laws in country. There is no such law which is supposed to contradict body of law but all are supporting it (Dim and Ezeabasili, 2015). As per Merriam Webster Dictionary, constitution is defined as basic law as well as principles of nation, social group or state which helps in determining power, duties and so on of government along with guarantees that are possessed by certain category of people in it. All national procurement laws, regulations and policies need to support constitution and anything related with contrary is regarded as void as well as null.

National Procurement Laws

It is defined as laws as well as policies which focus on defining as well as governing procurement with help of using public funds (Edquist and Zabala‐Iturriagagoitia, 2015). Such laws are not in contradiction to constitution of county. This includes national procurement laws such as Public Procurement Act, Public Procurement and Assets Disposal Act. These all laws used in procurement process for reaching final customer in an effective and efficient manner.

Procurement Regulations

These are defined as legal instruments which help in supporting national procurement law (Glas and Kleemann, 2016). They are originating from procurement regulation body of country and supporting procurement law through providing detailed explanations of provisions of laws.

Standing Bidding Documents as well as Related Standard Template

The standard bidding documents are mainly used in solicitation of offering from other market. Such documents are customised in order to define both terms as well as conditions of tendering of specified opportunity of procurement (Grandia, 2016). They focus on defining about what is needed, extended from invitation to tenderers, defining evaluation criteria and many more. All system possess standard document for bidding for products, service and services that can be customised in order to address particular needs of tendering. Such documents need not be contradict as all regulations along with national procurement laws and policies. There are many countries where standard related with bidding documents as well as templates are originating from regulatory body.

Procurement Manual

It is defined as document which is providing detailed or step explanation of procedure, process and other needed for required to implement procurement of services, goods, works under various methods of procurements (Hawkins and et. al., 2015).

Organisational Procurement Policies

It is defined as procurement policies which are related to specified public sector which is spending huge amount of funds (Iossa, Biagi and Valbonesi, 2018). They focus on outlining particular process of organisation which is related with procedure that consists of authorities as well as trail in order to follow process of procurements. It is important for organisation to support procurement policy and should not contract national law of procurement.

Contracts

It is defined as agreement which is enforceable by law. The successful process of procurement ends with formal contract that binds government along with contractors, suppliers and service provider for performing obligation (Lewis-Faupel and et. al., 2016). It is very important for both parties to defined terms as well as contract condition under obligations in an effective and efficient manner.

It is very important for procurement legal as well as regulatory framework to define rule which govern all procedures, processes of all procurement management and ensuring about attainment of principle in best manner (Liu and et. al., 2015). This is very important for both legal as well as regulatory framework to possess procurement in every country that is needed for supporting economic development of various policies in best manner. It is essential to be noted that public procurement is regarded as fraction of actual functioning of expenditure in government in GDP economic model.

Procurement in case of public sector is mainly governed through large number of statutory requirements like EU and Council’s Contract Standing Orders and National Procurement Directives (Loader, 2015). Here, contracts are based on principles of low cost or economical advantageous which are determined through criteria which are relevant to services, kind of supplies and work done. They are as follows:

Contract Standing Orders- This order came in November 2018 that provide legal as well as operational procurement framework setting rules and regulations which council should follow in order to seek tenders and letting contracts (Procurement Regulatory Framework, 2020). This order ensures about achievement of value for money of Council in which they spend public funds which mainly focus on complying with all regulations that are govern through spending public money as well as process in both open and transparent way. For complying with all regulations as well as principles, staff should be procured through Council which are needed for adhering to follow procurement process which is as follows:

Estimated Value

Procedure to Follow

Below £16,500

Is there possess contract in place?
Yes – Using contract.
No – requirements of 4 written quotes. Use Quick Quotes for values above £5,000.

Above £16,500 to EU limit

There is opportunity for Advertise on Public Contracts Scotland Portal, as well as on Council website. If value is less than £50,000 as well as requirements are well particular Quick Quotes may be used.

EU Directives Thresholds

There is advertisement on Public Contracts Scotland Portal and as well as Official Journal of European Union and/or other route which is easy for them to be considered.

EU Procurement Derivatives- These are regarded as European Union which focus on governing public division contracts above certain value for ensuring about that procedure to be transparent, fair and open for competition among member states (Ndumbi and Okello, 2015). The values in EU are defined as thresholds and updated in every two years. European Directives enacted at Scottish Law through Statutory instrument. If contracts are done above threshold limit then it should be advertised in Supplement to Official Journal of EU and attained through Public Contracts Scotland Portal. The EU public procurement limits applying from 1st January, 2020 which is as follows:

Supplies Contracts

Service Contracts

Works Contracts

 £189,330

£189,330

£4,733,252

There are five R’s of procurement which should be applied by business while doing procurement of products and services which are as follows:

Right Quality- The organisation should get right quality of products and services through procurement process in appropriate manner (Nyamasege and Biraori, 2015). This will help to gain positive outcomes in best manner.

Right Price- The organisation should charge right price for products and services so that their requirement could be fulfilled in best manner. This is important for each and every business to charge right price for right products (Zitha and Mathebula, 2015).

Right Source- While doing procurement, it is important to have right sources, so that their requirements could be fulfilled in positive way and leads towards success and growth.

Right Quantity- It is the basic aim of procurement where business should get right quantity of products and services so that best results are attained (Patrucco and et. al., 2017).

Right Time as well as Place- It is very important aim of procurement where business should provide right products at right time and place in appropriate way for best results.

This is essential to follow procurement processes which involve following step such as:

Determining User Requirements- Whenever there is involvement in procuring equipments or materials for facilitates managers, use then it should be very clear about requirements (Procurement of Goods: In-depth, 2020). They can obtain specifications from technical publications as well as guides. For avoiding misinterpretation, it is important for FM to get in details about order in appropriate manner. In order to avoid costly mistakes as well as disagreements, all need to sign up for project plan before making final decisions in appropriate manner. It is very important to follow all types of legislations such as equality act 2010, health and safety regulations 1992, healthy as well as safety regulations 1996 and regulation reform order 2005 and so on.

Identifying Suitable Products- This is second stage where purchasers has to purchase product and services at right quality and cost effective price for needed one (Pheng, 2018). In this case, there should be optimum combination of whole life cost as well as quality for value of money. FMs need to maintain up to date catalogues supplying products which are used on frequent basis like stationery, furniture and so on with organisation for timely supplying so that goal and objectives can be attained. This will assist business to maintain their stock level and leads towards success and growth in appropriate manner (Wynstra, Rooks and Snijders, 2018).

Evaluating Goods- While doing evaluating goods, it is important to value for money, whole life costing and modernisation & upgrading. In case of value for money all elements need to be included for quality of goods such as price, quality, running cost, environmental characteristics, cost effectiveness, delivery date and so on (Ravenswood and Kaine, 2015). For whole life costing, the large purchases and equipment should be evaluated as per respective principles. It is defined as technique that is used for establishment of total cost of ownership. This is regarded as structured approach which mainly focus on addressing elements of cost as well as used for producing spend profile of goods and services over anticipated life span. The different types of cost included in whole life costs are initial price, cost of operations, delivery as well as installation, spare parts, consumables, in house management resources, license, taxes, maintenance, disposal, depreciation and many more. In case of modernisation as well as upgrading, procurement decisions should be made by FMs by including assessing costs in appropriate manner. For example, new generation purchase LED lamps for their default energy efficient lamp choices for different purposes (Whyles, Van Meerveld and Nauta, 2015).

Placing Orders- It is the way to place order when systems are appropriate. In today’s scenario, most of the things are purchased online as it is easy and convenient for users in appropriate manner for positive outcomes (Sanderson and et. al., 2015). While making orders, it is important to consider different details such as invoice & delivery address, contact details, date required, products required, quantity, total price, price per item and so on. Placing order document possess unique number reference that is send by dealer to suppliers. These orders are useful in process of procurement which enables organisation in managing income orders as well as pending order and establishment for standard process across departments. There are some e-procurement systems such as telephone orders, fax orders, web based, email orders, revoking order and many more.

Accepting Goods- It is the process which means buyer has accepted goods when they are intimate to sellers and accepting them (Selomo and Govender, 2016). If products are made or delivered to buyers then it is not that they have accepted it until they examine in appropriate manner. This includes two aspects such as ascertaining whether to conform to contract and contract is done through sale by sample in case of bulk purchase. If products are kept for reasonable time as well as buyer does not inform seller about their rejection then they could be deemed to be accepted until they provide valid reason for delay to purchaser.

Rejecting Goods- All supplier possess return policy as well as good practice for FMs in order to familiarise themselves before making any order (Uttam and Roos, 2015). Whenever product is made delivered then it is responsibility of FM to check until delivery person waits. In case they are hurry then delivery note need to be signed and note should be made unchecked on it. Also if item are damaged then supplier need to inform on immediate basis and all phone calls should be backed up through written confirmation. There is law that allow buyers to provide sufficient amount of time for checking deliveries as well as report faults. Deliveries should be made after proper checking of product and services in proper manner. If product is matched wrong then it is important to return it and get right products. Supplier does not possess any legal requirements in order to accept back which has been ordered.

Reporting as well as Record Keeping- This is last stage in which order placed should be update by FMs in terms of budget spreadsheet, supplier database and purchase ledger (Vaidya and Campbell, 2016). When order has received then it should be update at stock record by FMs in appropriate manner. This is regarded as good practice for keeping departmental records of internal procurements request forms that has been received as well as purchase order forms for current tax year.

Therefore, it is very important for organisation to follow proper sequence of procurement so that final results are attained and achieved (Warner, 2017). The buyer should get their order in right quality, quantity at right price and place so that they can trust supplier and buy from them only. This possesses all right to check product before accepting from supplier to know whether they have got right products or not in best manner.

Conclusion on Strategic Procurement Management

The report concluded that organisation needs to follow proper rules and regulations for carrying out their activities and operations in prompt manner. In case of procurement and supply of products and services, it is essential to follow all legal legislative and framework so that better results are attained in effectual manner. This will lead towards success and growth of business at competitive marketplace. Moreover, all principles, rules and regulations need to be applied while doing procurement in business for positive results.

References for Strategic Procurement Management

Bakar, N. A., Peszynski, K., Azizan, N., Sundram, K. and Pandiyan, V., 2016. Abridgment of Traditional Procurement and E-Procurement: Definitions, Tools and Benefits. Journal of Emerging Economies & Islamic Research. 4(1).

Cernat, L. and Kutlina-Dimitrova, Z., 2015. International public procurement: From scant facts to hard data. Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS.

Chen, H. and Whalley, J., 2017. The WTO Government Procurement Agreement and its impacts on trade. In THE ECONOMIES OF CHINA AND INDIA Cooperation and Conflict: Volume 1: China and India—The International Context and Economic Growth, Manufacturing Performance and Rural Development (pp. 93-117).

Dim, N. U. and Ezeabasili, A. C. C., 2015. Strategic supply chain framework as an effective approach to procurement of public construction projects in Nigeria. International Journal of Management and Sustainability. 4(7). p.163.

Edquist, C. and Zabala‐Iturriagagoitia, J. M., 2015. Pre‐commercial procurement: a demand or supply policy instrument in relation to innovation?. R&D Management. 45(2). pp.147-160.

Glas, A. H. and Kleemann, F. C., 2016. The impact of industry 4.0 on procurement and supply management: A conceptual and qualitative analysis. International Journal of Business and Management Invention. 5(6). pp.55-66.

Grandia, J., 2016. Finding the missing link: Examining the mediating role of sustainable public procurement behaviour. Journal of Cleaner Production. 124. pp.183-190.

Hawkins, T. G., Gravier, M. J., Berkowitz, D. and Muir, W. A., 2015. Improving services supply management in the defense sector: How the procurement process affects B2B service quality. Journal of Purchasing and Supply Management. 21(2). pp.81-94.

Iossa, E., Biagi, F. and Valbonesi, P., 2018. Pre-commercial procurement, procurement of innovative solutions and innovation partnerships in the EU: rationale and strategy. Economics of Innovation and New Technology. 27(8). pp.730-749.

Lewis-Faupel, S., Neggers, Y., Olken, B. A. and Pande, R., 2016. Can electronic procurement improve infrastructure provision? Evidence from public works in India and Indonesia. American Economic Journal: Economic Policy. 8(3). pp.258-83.

Liu, W., Xie, D., Liu, Y. and Liu, X., 2015. Service capability procurement decision in logistics service supply chain: A research under demand updating and quality guarantee. International Journal of Production Research. 53(2). pp.488-510.

Loader, K., 2015. SME suppliers and the challenge of public procurement: Evidence revealed by a UK government online feedback facility. Journal of Purchasing and Supply Management. 21(2). pp.103-112.

Ndumbi, C. W. and Okello, B., 2015. Effect of staff training on level of compliance to public procurement system in parastatals in Kenya. International Journal of economics, Commerce and management. 3(6). pp.613-626.

Nyamasege, O. J. and Biraori, O. E., 2015. Effect of supplier relationship management on the effectiveness of supply chain management in the Kenya public sector. International Journal of Managing Value and Supply Chains. 6(1). p.25.

Patrucco, A. S., Luzzini, D., Ronchi, S., Essig, M., Amann, M. and Glas, A. H., 2017. Designing a public procurement strategy: lessons from local governments. Public Money & Management. 37(4). pp.269-276.

Pheng, L. S., 2018. Project procurement management. In Project Management for the Built Environment (pp. 177-193). Springer, Singapore.

Ravenswood, K. and Kaine, S., 2015. The role of government in influencing labour conditions through the procurement of services: Some political challenges. Journal of Industrial Relations. 57(4). pp.544-562.

Sanderson, J., Lonsdale, C., Mannion, R. and Matharu, T., 2015. Towards a framework for enhancing procurement and supply chain management practice in the NHS: lessons for managers and clinicians from a synthesis of the theoretical and empirical literature.

Selomo, M. R. and Govender, K. K., 2016. Procurement and Supply Chain Management in Government Institutions: A Case Study of Select Departments in the Limpopo Province, South Africa. Dutch Journal of Finance and Management. 1(1). p.37.

Uttam, K. and Roos, C. L. L., 2015. Competitive dialogue procedure for sustainable public procurement. Journal of Cleaner Production. 86. pp.403-416.

Vaidya, K. and Campbell, J., 2016. Multidisciplinary approach to defining public e-procurement and evaluating its impact on procurement efficiency. Information Systems Frontiers. 18(2). pp.333-348.

Warner, M., 2017. Local content in procurement: Creating local jobs and competitive domestic industries in supply chains. Routledge.

Whyles, G., Van Meerveld, H. and Nauta, J., 2015. Forward Commitment Procurement: a practical methodology that helps to manage risk in procuring innovative goods and services. Innovation: The European Journal of Social Science Research. 28(3). pp.293-311.

Wynstra, F., Rooks, G. and Snijders, C., 2018. How is service procurement different from goods procurement? Exploring ex ante costs and ex post problems in IT procurement. Journal of purchasing and supply management. 24(2). pp.83-94.

Zitha, H. E. and Mathebula, N. E., 2015. Ethical conduct of procurement officials and implications on service delivery: a case study of Limpopo provincial treasury. Public and Municipal Finance. 4(3). pp.16-24.

Procurement of Goods: In-depth. 2020. [Online]. Available at: <https://app.croneri.co.uk/topics/procurement-goods/indepth>.

Procurement Regulatory Framework. 2020. [Online]. Available at: < https://www.eastdunbarton.gov.uk/business/procurement/procurement-regulatory-framework >.

Public Procurement Legal and Regulatory Framework. 2020. [Online]. Available at: < https://procurementclassroom.com/public-procurement-legal-and-regulatory-framework/>.

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