Supply Chain Glossary

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Planning, Procurement


Source: Procurement Glossary
Author: Paul Rogers
Institute: CIPS - UK

Courtesy of


 

Procurement planning involves adopting a coherent approach to the acquisition of a category, the sequencing of events, the engagement of stakeholders and the governance of the project.  Typical tasks include initial opportunity analysis of the category spend, identification of stakeholders and their engagement, identification of the organisation’s needs from the category, analysis of the supply market, the development of a strategy for the category, execution of that strategic plan, including engagement of the supply market through a request for proposal [RFP] and/or negotiation, and award of the contract.  These sourcing phases will usually be supplemented by plans for mobilisation of the new arrangement, management of the new contract and the provider(s), and periodic review and evaluation of the benefits realised.  Procurement projects often result in change, and need to be planned as any other 90 -180 day change program might be, with roles and responsibilities allocated, clear milestones, clear governance and executive sponsorship, and alignment of the project with corporate goals.

As an example, an organisation buys fresh fruit and vegetables on a weekly quotation basis, as the auditors require evidence that prices are competitive.  There are separate agreements for fruits and vegetables, and this has led to multiple suppliers, low leverage and low supplier commitment.  A plan was therefore developed for working out a long-term agreement, so that the chefs could select the provider that offered the best value produce, as opposed to the lowest price.  The procurement plan involved understanding the spend, engaging with a small team, including audit, developing a strategy based on the needs of the business and the character of the supply market, and letting a longer term arrangement with a reduced number of suppliers.  See also Category Analysis and Market Engagement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 




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