Procurement Management - Working for a Textile Industry - Assignment Example

Section 2 A) A ment of work for a textile industry Project scope: To procure new software solution to capture the data readings from the textileindustry’s emissions systems and consolidate them into government mandated internal Internet site. Deliverable: The software needs to read 10 emission gasses, in 5 different manufacturing processes. Period of performance: July 20 2012 through April 1 2013. UCSD project manager: A senior PM of textile industry. Title: N/A Physical location: Work will be carried out off textile factory at vendors address. Supplies and equipment: No factory equipment or supplies will be used. Charges: A fine of $5,000 per day for non-compliance by the government. Payment rate: Flat rate $20 000. Total not to exceed: $20 000. Payment terms: The factory will invoice the vendor upon delivery of the software. Employee-vendor relationship: Vendor does not have any current/past affiliation with any employee of the factory. Workers citizenship: United States. B) The remainder of the content of the RFP which is to be sent to perspective suppliers include: Technical Specifications Terms & Conditions Data Reporting Data Reviews Management Requirements C) The sellers that should be part of this procurement are the local IT Company that has worked with this textile factory before and the IT firm based in Toronto. This is because they have working experience of such jobs thus they would deliver the required quality software on time. The sellers that should not be part of procurement are the local IT Company and the small IT Company since they have limited local capacity without the required job experience. Section 3 A) There are various types of procurement. Major (high risk) complexity procurement This category of procurement is also referred to as strategic procurement. Major complexity procurement includes essential goods that are needed so as to achieve key needs and objectives of the project’s schedule, cost, quality and technical. The characteristics of major complexity procurement are: Specifications of needed goods or service are redefined and complex Contracts are high valued The new items to be created requires re-certification and re-testing There is strict adherence to timeline as well as quality There is need for efficient planning Competitive selection process for the vendor is needed There is consideration of sharing of risks between the involved parties It is vital for both parties to benefit mutually. Minor (low risk)complexity procurement This category of procurement is also called non-strategic procurement. It includes goods or items that exist in some way with another seller. The characteristics of minor complexity procurement are: Activities of procurement are not multifaceted Specifications of needed items or goods are not so complex Selection process of the source is comparatively simpler Value of procurement might be very high and even exceed high risk items May involve buying seller’s product without any modification This procurement will apply to buying machines to help in milking 10 cows, collecting eggs from 50 chickens, picking 10 varieties of vegetables, delivering the goods to the local wholesale market 2 miles away. This procurement will also apply to buying machines for plowing fields, planting seeds and harvesting hay. Routine procurement This category of procurement involves purchase of commercially available off-the-shelf items or routine services. Costs of routine procurement are usually low. This type of procurement will apply to incurring cost to hire people to attend to the animals, maintain his 4 work vehicles, maintain 4 general carpentry buildings and pick up general materials he needs around the farm like gasoline, office supplies, feed and building materials (Bower, 2003). B) C) This farmer could solicit responses from sellers or suppliers for his needs using internet solicitations. The farmer can create a database for all approved suppliers for his needs. The farmer can then create a proposal for request with well defined requirements that has been recommended by experts. The farmer can then send the Request for Proposal to sellers and review the suppliers response based on supply management, technical and executive management. Section 4 A) There are four main phases of the procurement cycle for any project as outlined below. Pre-contractual phase: Planning This phase is the first phase, also referred to as planning phase. It encompasses activities that are related to definition of requirement along with planning of preliminary procurement and issuance of bid solicitation. The impact of proper procurement management is that it promotes accountability and transparency throughout the activities of procurement throughout the project. In this phase, some activities that arise sometimes are: Verification of the statement of work. Verification of the funding, requisition and the security requirements form for products and services. Analysis of options and review of the requirement. Identification of all considerations of environmental performance. Selection of the suitable procurement instruments. Validation of the Intellectual Property Considerations. Review of evaluation criteria. Development of the procurement strategy. Evaluation of non-competitive justification. Determination of suitable methodology of selecting a contractor. Development of the solicitation document. Authorization of the procurement process. Contracting phase: Bidding and awarding of contract. This is the second phase of procurement. It includes all the activities of issuing bid solicitation, contract debriefing and award. The activities that arise in this phase include: Responding to challenges of procurement decisions Respond to potential bidders’ inquiries Reviewing competitive bids Conducting Site Visits Reviewing a non-competitive proposal Awarding a contract Authorizing security clearances Debriefing all bidders that turn out to be unsuccessful Contract management phase: After the contract is awarded This is the third phase in procurement cycle. In this phase, major activities like monitoring of progress, payment action, delivery follow-up, exercising of optional periods/quantity, and monitoring are undertaken. The impact of proper procurement management in this phase of procurement is that it improves understanding and definition of requirements and eliminates risks of fraud and corruption in the contract. Other activities that may arise in this phase include: Authorizations of Tasks Resolution of disputes Work progress follow-up Amendment of the contract Post-contract phase: Close out, warranty and audit It is the fourth phase in procurement cycle. The impact of proper procurement management in this phase is that it provides visibility into all the daily transactions of the contract. This phase includes the final actions on the contract file. The activities that arise during this phase are: Confirmation on last payment Final changes on the contract Making of final payments Return of financial holdbacks and security of the contract Confirmation of delivery Ensure return of all Government Furnished Equipment and Crown-owned Intellectual Property Initiation of a cost-reimbursable contract audit Addressing of all claims by the Contractor Satisfying the Client Getting the contractor performance Keeping the contract file Ensure proper documentation of the contract file B) The factors that are important when firms need to qualify and select suppliers for a project requirement are: 1. Benefits and relative risks involved. Benefits should not focus only on lowest prices, but also on the basis of value for money. 2. Experience and resource level of the management team. Evaluation of suppliers based on resource and experience level leads to a transparent, fair and accountable manner. C) After the receipt of competitive proposals for a major construction contract, the key factors used when negotiating an agreement and establish negotiating strategies are: The benefits and risks of the options available The experience and resource of management team. The views of expert professional advisers like consultants about the owner of the project. D) On completion of large furniture manufacturing procurement project, there are many steps and processes involved in completely closing the project. On meeting the obligations of the contract, the first process is to conduct a review process. The review process helps the procurement audit is to recognize the successful elements of the process and the unsuccessful ones. The second process is to prepare documentation. Thereafter, documentation is assembled and included in the project records of the corporation. The service provider is made to ascertain in writing that the contract obligations have been fulfilled. The activities involved in the close out are: Making of final payments Return of financial holdbacks and security of the contract Confirmation of delivery Getting the contractor performance Filing of the contract file Ensure proper documentation of the contract file Section 5 Proper procurement management is important to any business. This is because procurement work is carried out by a third party supplier thus making the work of business to be performed in good quality and be completed within the required time (Morris and Pinto, 2007). There are various benefits of proper procurement management that contribute to the overall business success. Increases productivity of the business. Proper procurement management enables internal customers to get items they require from a catalogue of approved services and goods through an ordering system. Offers visibility into daily transactions. Proper procurement management guarantees compliance of established as well as existing contracts as it provides a centralized tracking of business transactions such as orders processed, items purchased, payments made and other requisitions. Enables users to get the right supplies they need. Proper procurement management ensures improved compliance of policies and controls making users to locate services and products with ease from suppliers they prefer. Reduces costs. Proper procurement management helps in leveraging volume and avails a structured relationship with the supplier thus eliminating external expenditure and minimizes errors. Works Cited Bower, Denise. Management of procurement, London: Thomas Telford publishing, 2003. Print. Morris, William and Pinto, Jeffrey. The Wiley Guide to Project Technology, Supply Chain & Procurement ..., New York: John Wiley & Sons, 2007. Print. Read More