An effective procurement process helps an organization to save costs, improve its suppliers’ performance, manage risk successfully, fulfill its contractual requirements, and shorten the lead time.
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How does an effective procurement process help an organization?
What are the nine steps for a typical procurement cycle, give the headings?
Step 1: Identify the need; Step 2: Outline a procurement plan; Step 3: Select suppliers; Step 4: Issue a Request for Quotation (RFQ); Step 5: Tender evaluation process; Step 6: Contract terms and conditions; Step 7: Supply chain management; Step 8: Warehouse management; Step 9: Asset management
At the third step, what should criteria of supplier selection include?
In this step, a list of potential vendors who may supply the products or services is created. The objective of this step is to determine proper suppliers. Criteria of supplier selection include pricing, quality of service, industrial reputation and recognitions, warranty and guarantee provisions, and customer service. After the assessment is complete, the supplier or suppliers who offer maximum value and the best market pricing are selected.
What is procurement process?Give a brief explanation.
The process of obtaining some products or services from other companies is called the procurement process. Companies that ensure products or services are called suppliers. While some companies supply only a few products or small services from their suppliers, others may choose to hand over an entire primary process such as logistics management and warehouse management. Whether small or large purchases are made from suppliers, the procurement process is a critical process for all companies.
Why do companies need procurement cycle?
A procurement cycle is the transition of tasks and processes that need to be performed throughout the procurement process. A successful and well thought out procurement and supply cycle can be the difference between success and failure. The procurement cycle steps and procedures in place may vary depending on each company’s requirements and objectives.
To start a procurement cycle what is required firs? How does a procurement cycle starts?
The procurement cycle starts with identifying a need for a product or service by the company. This need may be an existing product that simply needs to be reordered or the introduction of a new product or service.
Give a short description for supply chain management.
Supply chain management is the management of the flow of goods and services and includes all processes that transform raw materials into final products. It involves the active streamlining of a company’s supply-side activities to maximize customer value and gain a competitive advantage in the marketplace.
After a supplier submitted its tender bid the tender evaluation process will take its part. What does a tender evaluation process include?
The tender evaluation includes assessing the supplier’s quality of products or services, fulfillment capabilities, timescales, and financial details. Additional considerations can consist of the overall costs and any terms and conditions that may have been included.
What is the main aim of the supplier selection process?
The main aim of the supplier selection process is to determine the proper suppliers that can meet the needs of a company. However, this process does not end with the determination of suppliers, on the contrary, it is a continuous process that aims to monitor and develop the existing suppliers, and if they are not successful, to replace them with new suppliers that can benefit more.
Describe supplier selection process shortly?
Supplier selection is the process of selecting suppliers to purchase the needed products or services to support the outputs of companies and also includes the evaluation of the performance of current suppliers.
What kind of matters should be considered in warehouse management step of a procurement cycle?
Additional considerations within the procurement cycle include managing warehouse expectations. In this step, the fundamentals of warehouse management such as storage, product codes, delivery times, and order processing should be considered.
What does supplier relationship management aim to improve between buyers and suppliers?
Supplier Relationship Management (SRM) deals with all interactions between the companies and the organizations that supply goods or services. It basically aims to improve the processes and interactions between buyers and suppliers to maximize the value of those interactions. For a successful supply chain management, each supply chain member needs to develop a mutually beneficial relationship with its suppliers, especially with the ones that are seen to be most strategic to the company, in order to improve efficiency, quality, responsiveness and other benefits.
What are the three streams of decision making techniques for supplier selection?
Decision-making techniques that can be used for supplier selection can be divided into three streams, namely, multi-criteria decision making (MCDM), artificial intelligence (AI), and mathematical programming (MP).
Give some examples of multi-criteria decision making methods?
There are many MCDM methods such as Analytic Hierarchy Process (AHP), ELECTRE, PROMETHEE, and Technique for Order Preferences by Similarity to Ideal Solutions (TOPSIS), etc. in the literature.
Which of TOPSIS's features make the TOPSIS most preferred MSDM method?
TOPSIS is one of the most preferred MSDM methods because of its features, such as its simple process, ease of use, the fact that the number of steps does not increase regardless of the number of criteria, and use of Euclidean Distance.
List the fields and/or sector that TOPSIS has been used in?
TOPSIS has been used in supply chain management and logistics, design, engineering and manufacturing systems, business and management, environmental management, human resources management, and water resources management.
For multi-criteria decision problems, describe the distance of TOPSIS solution to the most ideal and most anti-ideal solutions?
An ideal solution for multi-criteria decision problems, the hypothetical option with the best values that can be reached in all criteria; the anti ideal solution is defined as the hypothetical option with the worst values in all criteria. The option chosen with TOPSIS should be both the closest to the ideal solution and the farthest to the anti-ideal solution.
List the six steps of TOPSIS method?
Before proceeding to the first step, the decision matrix must be created by the decision-maker. The rows of the decision matrix correspond to options, and the columns correspond to criteria to be used in decision making. It is created by evaluating each option according to each criterion. The size of the matrix is m×n to indicate the number of options, m, n the number of criteria.
Step 1: Creating the standard decision matrix; Step 2: Creating the weighted standard decision matrix; Step 3: Determination of ideal and anti-ideal solutions; Step 4: Calculation of the separation measure; Step 5: Calculating the relative closeness to the ideal solution; Step 6: Sorting options
In the TOPSIS technique of multi-criteria decision making, explain the 3rd step shortly?
In this step, the ideal solution (A+) and anti-ideal solution (A–), are defined as follows. A+ is the hypothetical option that takes ‘best’ values in each criterion. A– is another hypothetical option that takes ‘worst’ values in each criterion. The best values of each column of the matrix Vmxn constitute the best values, A+ and the worst values are A–.
Explain the meaning of Gi measure in TOPSIS method?
As an option approaches the ideal solution, the relative proximity value to the ideal solution (Gi ) approaches 1. If Gi = 1, the option is equal to the ideal solution. Here Gi will take a value in the range [0,1].