The Procurement and Supply Manager's Desk Reference

482 Pages·2007·5.63 MB·English

by  Fred Sollish C.P.M.

T P
HE ROCUREMENT AND
S M
UPPLY ANAGER’S
D R
ESK EFERENCE
FRED B. SOLLISH, C.P.M.
JOHN SEMANIK, C.P.M.
JOHN WILEY & SONS, INC.

T P
HE ROCUREMENT AND
S M
UPPLY ANAGER’S
D R
ESK EFERENCE
FRED B. SOLLISH, C.P.M.
JOHN SEMANIK, C.P.M.
JOHN WILEY & SONS, INC.
This book is printed on acid-free paper.
Copyright  2007 by John Wiley & Sons, Inc. All rights reserved.
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Library of Congress Cataloging-in-Publication Data:
Sollish, Fred.
The procurement and supply manager’s desk reference / Fred B. Sollish, John Semanik.
p. cm.
Includes bibliographical references and index.
ISBN: 978-0-471-79043-3 (cloth)
1. Industrial procurement–Handbooks, manuals, etc. 2. Purchasing–Handbooks,
manuals, etc. 3. Materials management–Handbooks, manuals, etc. I. Semanik, John. II. Title.
HD39.5.S66 2007
658.7’2—dc22
2006034362
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1
CONTENTS
Preface ix
Acknowledgements xi
CHAPTER 1 PROCUREMENT AND BEST BUSINESS PRACTICES 1
1.1 Understanding Procurement 2
1.2 Understanding and Conveying Requirements 3
1.3 Creating Strategic Plans and Tactics 5
1.4 Finding Innovative Methods and Exploring
Alternatives 6
1.5 Providing Procurement Services 7
1.6 Accepting Orders 8
1.7 Placing Orders 12
1.8 Mastering Procurement and Business Tactics 15
1.9 Budgets and Expense Allocation 15
1.10 Internal Control Systems 16
1.11 Establishing Procurement Methods 17
1.12 Internal Cost-Related Analysis Tools 19
1.13 Keeping Supplier Information 23
1.14 Summary 24
CHAPTER 2 SOURCING MANAGEMENT 26
2.1 Establishing Requirements 27
2.2 Creating and Organizing Requirements 28
2.3 Developing Specifications and Formats 29
2.4 Specification Traps 34
2.5 Locating and Developing Sources of Supply 35
2.6 Types of Competition 38
2.7 Locating Suitable Suppliers 39
2.8 Determining Changing Marketplace Factors 41
2.9 Obtaining Bids and Proposals 42
2.10 Bidding Guidelines 43
iii
iv Contents
2.11 Formulating the Bid or Proposal Type 44
2.12 Managing Sourcing Data 47
2.13 Types of Sourcing 47
2.14 Maintaining Sourcing Lists 48
2.15 Regulatory Factors Governing Procurement 49
2.16 Import/Export Issues 54
2.17 Summary 54
CHAPTER 3 SELECTING SUPPLIERS AND MEASURING
PERFORMANCE 56
3.1 SelectingtheSupplierandAwardingtheContract 57
3.2 Applying Selection Criteria 62
3.3 Administering the Contract 73
3.4 Summary 78
CHAPTER 4 CONTRACT ADMINISTRATION 79
4.1 Contract Essentials 80
4.2 Reviewing Contracts for Legal Requirements 93
4.3 Aligning Contracts and Practices with Policy 95
4.4 Maintaining Procurement Documents and
Records 97
4.5 Summary 98
CHAPTER 5 ADMINISTERING CONTRACTSFOR OPTIMUM
SUPPLIER PERFORMANCE 100
5.1 Managing Contract Compliance 101
5.2 Tracking and Expediting Deliveries 110
5.3 Handling Supplier-Related Deviations 111
5.4 Summary 119
CHAPTER 6 PROJECT MANAGEMENT 121
6.1 The Five Project Management Processes 121
6.2 Stage One: Initiating a Project 124
6.3 Stage Two: Project Planning 126
6.4 Stage Three: Project Execution 133
6.5 Stage Four: Project Controlling 137
Contents v
6.6 Stage Five: Project Closeout 140
6.7 A Key Knowledge Area: Project Procurement
Management 141
6.8 Summary 144
CHAPTER 7 NEGOTIATIONS 145
7.1 Assessing the Negotiating Environment 146
7.2 Gathering Information and Analysis 149
7.3 Preparing for the Negotiation 153
7.4 Conducting the Negotiation 160
7.5 Summary 165
CHAPTER 8 LEVERAGING COMPUTER SYSTEMS 166
8.1 Using Basic Information Technology Processes 167
8.2 Using Software for Procurement 171
8.3 Sourcing Supply Management Tools 180
8.4 Summary 182
CHAPTER 9 QUALITY 183
9.1 Managing Quality Performance 184
9.2 Ensuring Quality Performance 189
9.3 Summary 195
CHAPTER 10 PROCUREMENT’S INTERNAL RELATIONSHIPS 196
10.1 Understanding Key Departmental Roles 197
10.2 Developing Good Working Relationships 204
10.3 Participating in Cross-Functional Operations 206
10.4 Reengineering Supply Management 210
10.5 Summary 216
CHAPTER 11 SUPPLIER RELATIONSHIP MANAGEMENT 217
11.1 Managing Productive Supplier Relationships 218
11.2 Developing Continuous Improvement 223
11.3 Pricing Factors and Supply 225
11.4 Representing the Organization 230
11.5 Summary 234
vi Contents
CHAPTER 12 FINANCIAL DECISIONS FOR SOURCING 235
12.1 Performing Make-or-Buy Analysis 236
12.2 Performing Lease-or-Buy Analysis 241
12.3 Formulating Financial Strategies 244
12.4 Summary 249
CHAPTER 13 MATERIAL MANAGEMENT AND SUPPLY
OPERATIONS 251
13.1 Inventory Control and Management Systems 252
13.2 Physical Management and Inventory
Accounting 262
13.3 Disposition Surplus Assets 264
13.4 Summary 268
CHAPTER 14 LOGISTICS 269
14.1 The Logistics Process 270
14.2 Modes of Transportation 277
14.3 Traffic Management 281
14.4 Customs 283
14.5 Logistics in the Context of International Trade 286
14.6 Government Organizations and Roles,
Regulations, and Controls 294
14.7 Supplemental Information 300
14.8 Summary 303
14.9 Links 304
CHAPTER 15 PROVIDING VALUE TOTHE ORGANIZATION 306
15.1 Standardizing Purchased Materials 307
15.2 Improving Procurement-Related Processes 311
15.3 Controlling and Reducing Cost 313
15.4 Supporting New Product Introduction 317
15.5 Summary 318
CHAPTER 16 STRATEGIC PLANNING FOR PROCUREMENT 320
16.1 Developing Demand- and Forecast-Based
Procurement Strategies 321
Contents vii
16.2 Planning Procurement Requirements 327
16.3 Conducting Market Analysis 333
16.4 Summary 347
CHAPTER 17 THE PROCUREMENT ORGANIZATION 349
17.1 Planning Procurement Strategies
and Objectives 350
17.2 Developing Departmental Goals
and Objectives 355
17.3 Formulating Operational Policies
and Procedures 357
17.4 Preparing Departmental Reports 360
17.5 Responding to Audits 366
17.6 Evaluating Procurement Department
Performance 369
17.7 Administering Departmental Budgets 371
17.8 Budgeting Processes 372
17.9 Working with Operational Forms 373
17.10 Summary 375
CHAPTER 18 HUMAN RESOURCES FOR PROCUREMENT 377
18.1 Leading the Supply Management Team 378
18.2 Recruiting, Hiring, Promoting, and
Terminating Employees 384
18.3 Training for Professional Competence 387
18.4 Job Performance 390
18.5 Handling Employee Performance Issues 393
18.6 Preventing Workplace Discrimination and
Harassment 396
18.7 Summary 400
APPENDIX A Sample Purchase Requisition Form 402
APPENDIX B Sample Purchase Order Form 403
APPENDIX C Electronic Catalog Example 404
APPENDIX D Common Auction Types 407
APPENDIX E Commonly Used Financial Ratios 409
viii Contents
APPENDIX F Request for Proposal (RFP) Example 411
APPENDIX G Request for Quotation Example 434
APPENDIX H Outline of Uniform Commercial Code and
Article 2 435
APPENDIX I Important U.S. Import/Export Regulations 440
APPENDIX J Sample Terms and Conditions 441
APPENDIX K Links to Related Professional Organizations 448
Bibliography 453
Index 458