Understanding the Procurement Process in Logistics Operations
Explore the comprehensive process of procurement in logistics, covering topics such as sourcing methods, quality control, contract management, and more. Enhance your knowledge on defining needs, solicitation methods, and the step-by-step procurement process. Engage in group discussions and exercises to deepen your understanding of procurement practices within organizations.
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Procurement Process WFP Logistics, We Deliver
Lesson Objectives By the end of this lesson, you will be able to: 1 Describe the process of procuring goods Describe the different sourcing methods and analysis of offers 2 Describe the role of quality control across the supply chain 3
Exercise: Your Own Procurement Process Take five minutes to discuss in your groups the procurement process that your organization follows. See if you can identify the main steps and procedures to be followed. At the end of the lesson you will return to this discussion to identify what was the same and what was different from the process and procedures identified here. 5 minute discussion
Procurement Process Choose Procurement Method Prepare Solicitation Documents Determine Specifications Pre-Tender Process Identify Needs Seek, Clarify and Close Offers Tender Process Committee Approval Evaluate Offers Negotiate Contract Manage Contract Evaluate Procurement Contract Management Award Contract
Defining Needs Review & Award Contract Issue Contract / PO Define Needs Source Suppliers Solicit Offers Evaluate Offers Receive Goods Process Payment 1. 1. Technical / Physical characteristics requesting service Background for Goods Goods Specifications Specifications 2. 2. Function Objective of service 3. 3. Performance Expected output from the service 4. Standard Activities required for this output 4. 5. Compliance Services Services Scope of Work Scope of Work 5. Input required 6. Deliverables 7. Timing
Sourcing Methods Review & Award Contract Issue Contract / PO Define Needs Source Suppliers Solicit Offers Evaluate Offers Receive Goods Process Payment Existing Stocks Loans Procurement Procurement In-kind Donations Strategic emergency stocks Prepositioned Stocks
Solicitation Review & Award Contract Issue Contract / PO Define Needs Source Suppliers Solicit Offers Evaluate Offers Receive Goods Process Payment What are the 3 methods of solicitation? Request for Quotation (RFQ) Invitation to Bid (ITB) Request for Proposal (RFP)
International Tendering Why conduct an International Tender? Goods / Services not available locally Moderate or no Competition Access to global Technology
Evaluation Review & Award Contract Issue Contract / PO Define Needs Source Suppliers Solicit Offers Evaluate Offers Receive Goods Process Payment Maximum value for money while providing quality sufficient to specifications Best Value How are proposals submitted? Technical Financial
Technical Evaluation: Example Review & Award Contract Issue Contract / PO Define Needs Source Suppliers Solicit Offers Evaluate Offers Receive Goods Process Payment Transporter 1 (A) Transporter 2 (I) Transporter 3 (N) Transporter 4 (O) No Criteria Range Points Remarks 1 Background (max. 20 points) 20 10 Year Established> 10 Yrs 1.1 20 20 10 10 < 10 Yrs 2 General Capacity (max. 30 points) Number of trucks owned Up to 11 Tons Capacity> 10 Trucks 10 2.1 10 10 10 10 < 10 Trucks 05 Transport Subcontractors usually used: Up to 11 Tons Capacity> 10 Trucks 10 10 0 10 10 < 10 Trucks 05 2.2 Over 25 Tons Capacity> 10 Trucks 10 10 0 10 10 < 10 Trucks 05 3 Experience (max. 50 points) General (years of experience in providing the transportation services to UN agencies, INGO's and other organisations during emergencies. No of transportation contracts - UN agencies, INGO's) > 05 Yrs 10 3.1 10 10 5 10 < 05 Yrs 05 > 10 Tons 20 3.2 Average Monthly Tonnage of Transportation 20 10 20 20 < 10 Tons 10 3.3 Ability to deliver in KPK and FATA 20 20 0 20 20 Total: 100 50 85 90
Award of Contract Review & Award Contract Issue Contract / PO Define Needs Source Suppliers Solicit Offers Evaluate Offers Receive Goods Process Payment Recommendations Committee Review Committee Approval Authorization Pre Award Meeting Contractual Terms & Conditions
Contract Issue: Purchase Order Review & Award Contract Issue Contract / PO Define Needs Source Suppliers Solicit Offers Evaluate Offers Receive Goods Process Payment 1 Specifications / SOW 2 Cost of the goods/services 3 Delivery date & location 4 Conditions to be fulfilled 5 Incoterms 6 Payment & currency 7 Consignee 8 Packing
Receipt of Goods/Service Review & Award Contract Issue Contract / PO Define Needs Source Suppliers Solicit Offers Evaluate Offers Receive Goods Process Payment Requester: Technical Specifications Logistician: Supplier selection, sourcing and contracting Technical Verification: Does the product meet the specifications as per bid submitted If not OK If OK Select supplier whose product meets the specification Delivery to Warehouse Delivery Inspection: Documents, quantity, quality If not OK If OK Acceptance and storage in the warehouse Replacement by the supplier
Payment Review & Award Contract Issue Contract / PO Define Needs Source Suppliers Solicit Offers Evaluate Offers Receive Goods Process Payment Finance Checklist: Order Management: Invoice Supply Request Form Quotations / Tender Advertisement Bid Analysis Minutes of meetings Awards Purchase Order Delivery Note Goods Received Note Approved Budget Waybill Transport Contract Frame Agreement Inspection Report Procurement Warehousing Reception Quality Control Stocking Picking/Packing Transport Dispatch Air Operation Fleet/Workshop Generate Documents
Quality Control Across the Supply Chain Define & improve processes to ensure quality Quality Management Improved processes to prevent defects Quality Assurance Quality Control Evaluate quality
Review of Your Procurement Process Consider again the procurement process and procedures that your organization follows. What is the same as that presented here? What is different and why is this the case? 5 minute plenary discussion
Lesson Recap Questions: 1 What is the process of procuring goods? What are the different sourcing methods and analysis of offers? 2 What is the role of quality control across the supply chain? 3
Questions WFP Logistics, We Deliver
