Procurement Principles and Management in the Digital Age 12th Edition PDF by Peter Baily, David Farmer, Barry Crocker and David Jessop

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Procurement Principles and Management in the Digital Age, Twelfth edition

Peter Baily, David Farmer, Barry Crocker and David Jessop

Procurement principles and management in the digital age

Contents

Preface xiv

Acknowledgements xvii

Part 1 PROCUREMENT OBJECTIVES AND DEVELOPMENT 1

1 Procurement scope and development 3

Introduction 3

Objectives of this chapter 3

The scope of purchasing 4

Sustainable procurement 5

The procurement cycle 9

Procurement transformations 16

The changing role of procurement and supply 19

Proactive procurement 23

The changing nature of relationships 24

Procurement positioning 26

Supplier preferencing 31

Total acquisition cost and total cost of ownership 33

Procurement development 35

Best practice in strategic supply management 39

Summary 40

Self-assessment tasks 41

References and further reading 41

2 Strategic procurement and supply chain management 43

Introduction 43

Objectives of this chapter 43

Strategic procurement 44

The concept of strategy 46

The mission statement 46

Levels of strategy 47

Category management (CM) 48

Skills for category management 50

Strategic management 51

Contents

Strategic analysis 51

Strategic development 58

Strategy implementation 59

Objectives for purchasing/procurement 59

Selecting a strategy 61

Effective supply market strategies 62

Integrated approaches 63

The supply chain 64

Supply chain resilience 65

The supply chain concept in action 69

Improving the efficiency of the supply chain 70

Hierarchy of objectives 75

The future of procurement and supply management 80

Summary 85

Self-assessment tasks 85

References and further reading 86

3 Public sector procurement 89

Introduction 89

Objectives of this chapter 89

Part A 90

Historic background 90

Public sector sustainability and social value 93

Third sector – not-for-profit procurement 94

UK National Health Service (NHS) 96

UK Metropolitan Police procurement 97

The Ministry of Defence (MoD) 98

Part B 103

The EU and procurement 103

EU competition procurement cycle for goods and services 104

EU procurement directives 104

Public procurement after Brexit 105

Summary 107

Self-assessment tasks 107

References and further reading 108

Part 2 KEY PROCUREMENT ISSUES 111

4 Outsourcing 113

Introduction 113

Objectives of this chapter 113

Outsourcing 114

Outsourcing methodologies 121

Outsourcing – pitfalls 124

How to avoid pitfalls 126

Outsourcing update 128

Summary 130

Self-assessment tasks 130

References and further reading 131

5 Quality management 133

Introduction 133

Objectives of this chapter 133

What is quality? 134

Continuous improvement 138

Statistical process control 140

Taguchi methods for the ‘off-line’ control of quality 142

Failure mode and effect analysis 143

The House of Quality 144

Specification 145

Producing a specification 146

Sustainable specifications 147

Early supplier involvement 148

Standardisation 149

Correction of defects 150

Quality circles 151

Value analysis/value engineering 151

Make-or-buy decisions 152

Six Sigma 154

Quality update: Quality 4.0 157

Summary 157

Self-assessment tasks 158

References and further reading 159

6 Inventory management 160

Introduction 160

Objectives of this chapter 160

Provisioning systems 161

Order quantities and stock control 161

Materials requirements planning (MRP) 167

Manufacturing resource planning (MRP2) 170

Enterprise resource planning (ERP) 173

Just-in-time (JIT) 174

Lean and agile supply 178

Vendor-managed inventory (VMI) 187

Covid-19: just-in-case inventory? 189

Summary 192

Self-assessment tasks 192

References and further reading 192

7 Lead time and time compression 194

Introduction 194

Objectives of this chapter 194

Time and competitive advantage 194

On-time delivery 198

Lead-time improvement 204

Effect of Covid-19 pandemic on supply chains 205

Supply chain resilience 205

Summary 205

Self-assessment tasks 206

References and further reading 206

8 Sourcing strategies and relationships 208

Introduction 208

Objectives of this chapter 208

The nature of the sourcing decision 209

Attributes of a good supplier 210

Sourcing decisions 210

Sources of information on potential suppliers 212

Supplier evaluation 213

Carter’s 10 Cs model 219

Impact of supply chain disruption – Covid-19 pandemic 223

Award criteria 223

Sustainable sourcing 225

The right relationship 227

Other aspects of sourcing 229

Collaboration and partnering 232

The Bensaou model of relationship management 236

Tiering of suppliers 240

Summary 242

Self-assessment tasks 243

References and further reading 243

9 Price and total cost of ownership (TCO) 245

Introduction 245

Objectives of this chapter 245

Factors affecting pricing decisions 245

How buyers obtain prices 253

Auctions 253

Discounts 253

Price analysis and cost analysis 255

Pricing major contracts 265

Investment appraisal 268

Learning curves and experience curves 269

Conclusion 271

Summary 271

Self-assessment tasks 271

References and further reading 272

10 Negotiations 273

Introduction 273

Objectives of this chapter 273

Negotiation 273

Negotiation skills 275

Preparation 276

The introductory stage 284

The discussion stage 284

The agreement stage 286

The post-negotiation stage 286

SPEED negotiation process 286

Competition and cooperation in negotiation 287

Distributive and integrative approaches 293

Body language 294

Negotiation strategies 294

Best practice negotiation 295

Summaries of other examples of best practice negotiation approaches 299

Virtual negotiations 300

Summary 302

Self-assessment tasks 302

References and further reading 302

Part 3 APPLICATIONS 305

11 Project procurement 307

Introduction 307

Objectives of this chapter 307

Introduction to projects 308

Project planning 309

Project control 310

The ‘should cost model’ (SCM) 316

Subcontracting 316

Network analysis 318

Risk 323

Disaster recovery 328

Blockchain in project management 329

Predictive analytics 330

Summary 330

Self-assessment tasks 331

References and further reading 331

12 Procurement of commodities 333

Introduction 333

Objectives of this chapter 333

The principal commodities 334

Why do commodity prices fluctuate? 337

Price stabilisation schemes 338

The role of the speculator 339

Hedging with futures contracts 339

The difference between futures and forwards 341

Some buying techniques 342

Indifference prices 344

Traded options 347

Rare earth metals 348

Application of Blockchain for sustainability and traceability 348

Glossary 349

Summary 349

Self-assessment tasks 350

References and further reading 350

13 International sourcing, global sourcing and onshoring 352

Introduction 352

Objectives of this chapter 352

Global sourcing and international procurement 353

Why source internationally? 355

Increases in offshoring 356

Issues with international sourcing 357

Incoterms (2020) 362

How to change 365

Countertrade 367

Latest developments – onshoring and nearshoring 368

Summary 371

Self-assessment tasks 372

References and further reading 372

14 Capital procurement 375

Introduction 375

Objectives of this chapter 375

The acquisition of capital equipment 375

What are capital items? 377

Leasing and hiring of capital equipment 377

Capital requisitions 378

The project approach 379

Lifetime costs 380

Investment appraisal 380

Investment appraisal criteria 382

Conclusion 387

Summary 387

Self-assessment tasks 387

References and further reading 388

15 Retail procurement 389

Introduction 389

Objectives of this chapter 389

Retailing 390

Retailing research 392

Supply chains in retailing 392

Indirect procurement 394

Application of technology 394

Brands 395

Developments in the retail sector 396

Conclusion 400

Summary 401

Self-assessment tasks 401

References and further reading 401

16 Services procurement 403

Introduction 403

Objectives of this chapter 403

Special factors 403

Service quality 405

Managing perceptions and satisfaction 407

Procurement of marketing services 413

Procuring public relations (PR) 418

How to buy legal services 421

Procurement of consultancy services 423

Summary 429

Self-assessment tasks 429

References and further reading 430

17 Corporate social responsibility and sustainability 431

Introduction 431

Objectives of this chapter 432

Corporate social responsibility (CSR) 432

Sustainability 434

Business drivers for socially responsible procurement 442

Social Accountability 8000 (SA8000) 444

Three pillars of CSR 447

Diversity 449

Social value 452

Summary 452

Self-assessment tasks 453

References and further reading 453

Part 4 INDUSTRY 4.0: E-PROCUREMENT SYSTEMS AND

CONTRACT MANAGEMENT 457

18 Industry 4.0: e-procurement, digitalisation and analytics 459

Introduction 459

Objectives of this chapter 459

What is e-procurement? 460

The benefits of e-procurement 462

Complex procurement 462

Reverse auctions 463

Measuring the benefits of e-procurement 466

Industry 4.0 468

Analytics 479

Conclusion 482

Summary 483

Self-assessment tasks 483

References and further reading 483

19 Contract law 486

Introduction 486

Objectives of this chapter 486

Contract law 486

International contract law 514

Summary 515

Self-assessment tasks 516

References and further reading 516

20 Contract management 517

Introduction 517

Objectives of this chapter 517

Contract management 517

Critical success factors 518

The Contract Management Cycle 520

Trust 529

360-degree relationship assessment, measurement and feedback 531

Performance management 533

A balanced performance measurement system 534

Benefits of contract management 535

Examples of performance metrics 537

Service level agreements (SLAs) 539

Procurement as the intelligent customer 543

Benchmarking in procurement and supply 544

Summary 545

Self-assessment tasks 545

References and further reading 546

Index 548

Publisher’s acknowledgements 563

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