BOOK
Procurement, Principles & Management
Peter Baily | David Farmer | Barry Crocker | David Jessop | David Jones
(2015)
Additional Information
Book Details
Abstract
Now in its eleventh edition, Procurement Principles and Management has been essential reading for practitioners and students of purchasing and procurement for nearly 50 years. This new edition will provide the reader with a reflection of mainstream practice alongside insight into developing ideas and approaches. This book has been updated to cover the continuous change and development in the field of purchasing, and carefully balances emerging philosophies with proven and established thinking and practice in the profession.
New features in this edition:
- A new and thorough consideration of contract law and negotiation
- Expanded treatment of many key topics, including ABC analysis, Kraljic, Bensau, and TCO
- A new section on risk
- New additional examples of services/tangibles procurement
- Additional material exploring off-shoring/on-shoring
- Increased focus on culture.
Procurement Principles and Management is published in association with the Charted Institute of Procurement and Supply (CIPS), which is the central reference point for the purchasing and supply profession. Details about courses, conferences and other service are available at www.cips.org.
Peter Baily, formerly Chief Examiner for CIPS
David Farmer, formerly Henley Management College
Barry Crocker, formerly Salford University
David Jessop, formerly University of Glamorgan
David Jones, Blackburn College
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover | Cover | ||
| Title Page | iii | ||
| Copyright Page | iv | ||
| Contents | v | ||
| Preface | xiii | ||
| Acknowledgements | xv | ||
| Part 1 Procurement objectives and development | 1 | ||
| Chapter 1 Procurement scope and development | 3 | ||
| Introduction | 3 | ||
| Objectives of this chapter | 3 | ||
| The scope of purchasing | 4 | ||
| The changing role of purchasing and supply | 9 | ||
| Proactive purchasing | 14 | ||
| Procurement positioning/targeting | 19 | ||
| Supplier preferencing | 23 | ||
| Total acquisition cost and total cost of ownership | 25 | ||
| Non-manufacturing organisations | 30 | ||
| The supply chain concept | 31 | ||
| Purchasing development | 32 | ||
| Best practice in strategic supply management | 41 | ||
| Summary | 41 | ||
| References and further reading | 42 | ||
| Chapter 2 Strategic procurement and supply chain management | 44 | ||
| Introduction | 44 | ||
| Objectives of this chapter | 44 | ||
| Strategic procurement | 45 | ||
| The concept of strategy | 47 | ||
| The mission statement | 49 | ||
| Levels of strategy | 49 | ||
| Category management | 50 | ||
| Strategic management | 52 | ||
| Strategic analysis | 52 | ||
| Strategic development | 59 | ||
| Strategy implementation | 61 | ||
| Objectives for purchasing/procurement | 61 | ||
| Strategies and their scope | 62 | ||
| Selecting a strategy | 63 | ||
| Effective supply market strategies | 66 | ||
| Purchasing and supply in different types of organisation | 67 | ||
| Organisation of the activity | 69 | ||
| Purchasing in the organisation structure | 74 | ||
| Purchasing devolution | 76 | ||
| The supply chain | 76 | ||
| Improving the efficiency of the supply chain | 83 | ||
| Types of supply chain | 83 | ||
| Strategic development of purchasing | 84 | ||
| Hierarchy of objectives | 91 | ||
| Summary | 109 | ||
| References and further reading | 110 | ||
| Chapter 3 Public sector procurement | 112 | ||
| Introduction | 112 | ||
| Objectives of this chapter | 112 | ||
| Part A | 113 | ||
| Context of public sector procurement | 113 | ||
| Historic background | 113 | ||
| UK National Health Service (NHS) | 117 | ||
| UK Metropolitan Police procurement | 118 | ||
| The Ministry of Defence (MoD) | 119 | ||
| Part B | 126 | ||
| The EU and procurement | 126 | ||
| EU competition procurement cycle for goods and services | 126 | ||
| EU procurement directives | 127 | ||
| The main provisions of the directives in relation to contracts | 130 | ||
| Summary | 140 | ||
| References and further reading | 141 | ||
| Part 2 Key Procurement issues | 143 | ||
| Chapter 4 Outsourcing | 145 | ||
| Introduction | 145 | ||
| Objectives of this chapter | 145 | ||
| Outsourcing | 146 | ||
| Outsourcing methodologies | 152 | ||
| Outsourcing – pitfalls | 155 | ||
| How to avoid pitfalls | 156 | ||
| Summary | 159 | ||
| References and further reading | 159 | ||
| Chapter 5 Quality management | 161 | ||
| Introduction | 161 | ||
| Objectives of this chapter | 161 | ||
| What is quality? | 162 | ||
| Statistical process control | 164 | ||
| Taguchi methods for the ‘off-line’ control of quality | 166 | ||
| Failure mode and effect analysis | 169 | ||
| Specification | 170 | ||
| Producing a specification | 171 | ||
| Early supplier involvement | 173 | ||
| Concurrent engineering | 175 | ||
| Standardisation | 175 | ||
| Supplier assessment | 180 | ||
| Economics of quality | 183 | ||
| Quality circles | 184 | ||
| The seven wastes | 185 | ||
| Value analysis/value engineering | 186 | ||
| Make-or-buy decisions | 188 | ||
| Six Sigma | 190 | ||
| Summary | 194 | ||
| References and further reading | 194 | ||
| Chapter 6 Inventory management | 196 | ||
| Introduction | 196 | ||
| Objectives of this chapter | 196 | ||
| Provisioning systems | 196 | ||
| Order quantities and stock control | 197 | ||
| Order quantities for production | 206 | ||
| Materials requirements planning (MRP) | 207 | ||
| Manufacturing resource planning (MRP2) | 210 | ||
| Distribution resource planning (DRP) | 215 | ||
| Enterprise resource planning (ERP) | 216 | ||
| Just-in-time (JIT) | 216 | ||
| Lean and agile supply | 225 | ||
| Vendor-managed inventory (VMI) | 232 | ||
| Summary | 234 | ||
| References and further reading | 235 | ||
| Chapter 7 Lead time and time compression | 237 | ||
| Introduction | 237 | ||
| Objectives of this chapter | 237 | ||
| Time and competitive advantage | 237 | ||
| On-time delivery | 238 | ||
| Expediting | 244 | ||
| Liquidated damages | 246 | ||
| Summary | 249 | ||
| References and further reading | 249 | ||
| Chapter 8 Sourcing strategies and relationships | 250 | ||
| Introduction | 250 | ||
| Objectives of this chapter | 250 | ||
| The nature of the sourcing decision | 250 | ||
| Attributes of a good supplier | 251 | ||
| Different types of sourcing | 252 | ||
| Sourcing decisions | 252 | ||
| The sourcing process | 255 | ||
| Source location | 255 | ||
| Sources of information on potential suppliers | 256 | ||
| Supplier evaluation | 257 | ||
| Carter’s 10 Cs model | 262 | ||
| The right relationship | 265 | ||
| Other aspects of sourcing | 268 | ||
| Partnering | 275 | ||
| The Bensaou model of relationship management | 277 | ||
| Tiering of suppliers | 280 | ||
| Summary | 282 | ||
| References and further reading | 283 | ||
| Chapter 9 Price and total cost of ownership (TCO) | 284 | ||
| Introduction | 284 | ||
| Objectives of this chapter | 284 | ||
| Factors affecting pricing decisions | 284 | ||
| How buyers obtain prices | 292 | ||
| Auctions | 293 | ||
| Discounts | 293 | ||
| Price analysis and cost analysis | 297 | ||
| Pricing major contracts | 304 | ||
| Investment appraisal | 308 | ||
| Learning curves and experience curves | 309 | ||
| Conclusion | 311 | ||
| Summary | 311 | ||
| References and further reading | 312 | ||
| Chapter 10 Negotiations | 313 | ||
| Introduction | 313 | ||
| Objectives of this chapter | 313 | ||
| Negotiation | 313 | ||
| Negotiation skills | 316 | ||
| Preparation | 317 | ||
| The introductory stage | 327 | ||
| Discussion stage | 328 | ||
| Agreement stage | 330 | ||
| The post-negotiation stage | 330 | ||
| Competition and cooperation in negotiation | 331 | ||
| Body language | 339 | ||
| Negotiation strategies | 339 | ||
| Negotiation mix | 340 | ||
| Best practice negotiation | 340 | ||
| Summaries of other examples of best practice negotiation approaches | 344 | ||
| Summary | 345 | ||
| References and further reading | 346 | ||
| Part 3 Applications | 347 | ||
| Chapter 11 Project procurement | 349 | ||
| Introduction | 349 | ||
| Objectives of this chapter | 349 | ||
| Introduction to projects | 349 | ||
| Project planning | 351 | ||
| Project control | 352 | ||
| Subcontracting | 358 | ||
| Network analysis | 361 | ||
| Risk | 364 | ||
| Summary | 371 | ||
| References and further reading | 372 | ||
| Chapter 12 Procurement of commodities | 374 | ||
| Introduction | 374 | ||
| Objectives of this chapter | 374 | ||
| The principal commodities | 375 | ||
| Why do commodity prices fluctuate? | 376 | ||
| Price stabilisation schemes | 378 | ||
| The role of the speculator | 379 | ||
| Hedging with futures contracts | 380 | ||
| Some buying techniques | 382 | ||
| Indifference prices | 384 | ||
| Traded options | 387 | ||
| Glossary | 387 | ||
| Summary | 388 | ||
| References and further reading | 389 | ||
| Chapter 13 International and global sourcing | 390 | ||
| Introduction | 390 | ||
| Objectives of this chapter | 390 | ||
| Global sourcing and international procurement | 390 | ||
| Why source internationally? | 393 | ||
| Increases in offshoring | 395 | ||
| Problems with international sourcing | 395 | ||
| Incoterms 2010 | 404 | ||
| Arbitration | 407 | ||
| Importing | 407 | ||
| How to change | 408 | ||
| Transport | 410 | ||
| Customs | 410 | ||
| Countertrade | 411 | ||
| Latest developments | 414 | ||
| Summary | 420 | ||
| References and further reading | 420 | ||
| Chapter 14 Capital procurement | 422 | ||
| Introduction | 422 | ||
| Objectives of this chapter | 422 | ||
| The acquisition of capital equipment | 422 | ||
| What are capital items? | 424 | ||
| Leasing and hiring of capital equipment | 425 | ||
| Capital requisitions | 426 | ||
| Specification of capital equipment | 427 | ||
| The project approach | 430 | ||
| Lifetime costs | 431 | ||
| Investment appraisal | 432 | ||
| Investment appraisal criteria | 433 | ||
| Conclusion | 438 | ||
| Summary | 439 | ||
| References and further reading | 439 | ||
| Chapter 15 Retail procurement and efficient consumer response (ECR) | 440 | ||
| Introduction | 440 | ||
| Objectives of this chapter | 440 | ||
| Retailing | 441 | ||
| Retailing research | 442 | ||
| Supply chains in retailing | 442 | ||
| Electronic point of sale (EPOS) | 443 | ||
| Merchandise planning | 445 | ||
| Stock analysis and sales analysis | 446 | ||
| Brands | 448 | ||
| Supplier selection | 449 | ||
| Developments in the retail sector | 450 | ||
| Efficient consumer response | 450 | ||
| Conclusion | 453 | ||
| Summary | 453 | ||
| References and further reading | 454 | ||
| Chapter 16 Services procurement | 455 | ||
| Introduction | 455 | ||
| Objectives of this chapter | 455 | ||
| What is meant by ‘services’? | 456 | ||
| Special factors | 456 | ||
| Service quality | 462 | ||
| Managing perceptions and satisfaction | 463 | ||
| Procuring public relations (PR) | 476 | ||
| How to buy legal services | 479 | ||
| European Union Public Contracts Directive | 480 | ||
| Management in service provision | 481 | ||
| Summary | 482 | ||
| References and further reading | 483 | ||
| Chapter 17 Corporate social responsibility | 484 | ||
| Introduction | 484 | ||
| Objectives of this chapter | 484 | ||
| Corporate social responsibility (CSR) | 485 | ||
| Public accountability | 488 | ||
| Business drivers for socially responsible procurement | 491 | ||
| Social Accountability 8000 (SA8000) | 493 | ||
| Three pillars of CSR | 496 | ||
| Summary | 502 | ||
| References and further reading | 503 | ||
| Part 4 E-Procurement systems and contract management | 505 | ||
| Chapter 18 E-Procurement systems | 507 | ||
| Introduction | 507 | ||
| Objectives of this chapter | 507 | ||
| What is e-procurement? | 508 | ||
| The benefits of e-procurement | 510 | ||
| Complex procurement | 512 | ||
| Reverse auctions | 513 | ||
| The current state of e-procurement initiatives | 515 | ||
| The barriers | 518 | ||
| Measuring the benefits of e-procurement | 519 | ||
| What to measure | 519 | ||
| Electronic auctions (e-auctions) | 521 | ||
| The Electronic Commerce (EC Directive) Regulations 2002 | 529 | ||
| Conclusions | 529 | ||
| Summary | 530 | ||
| References and further reading | 530 | ||
| Chapter 19 Contract management and performance measurement | 531 | ||
| Introduction | 531 | ||
| Objectives of this chapter | 531 | ||
| Contract law | 532 | ||
| Contract management | 556 | ||
| A balanced performance measurement system | 557 | ||
| Examples of performance metrics | 564 | ||
| Performance measurement: effectiveness | 565 | ||
| Measuring procurement performance | 567 | ||
| Procurement as the intelligent customer | 572 | ||
| Benchmarking in procurement and supply | 573 | ||
| Administration instructions | 576 | ||
| Disposing of redundant stock, scrap or waste | 577 | ||
| Summary | 578 | ||
| References and further reading | 579 | ||
| Index | 581 |