OPS911 Strategic Procurement Management Report Sample
Assignment Brief
Directions to students 3 questions to be answered.
Each question is weighted equally. Answer each question on a separate page.
CASE STUDY – LOCAL GOVERNMENT PROCUREMENT CONSORTIUM (LGP)
Local Government Procurement (LGP) is a new initiative, which has been developed to create procurement efficiencies, saving councils significantly in time and dollars. Four Sydney Local Council’s have combined their procurement functions to achieve better value for money and to ensure that the resources available are used as efficiently as possible. LGP’s governing body believes that there will be opportunities for the consolidation of orders, bulk buying discounts and economies of scale. It is anticipated that LGP will establish contract panels, provide procurement consultancy services (including strategic sourcing, category management, contract management services) as well as ensuring compliance and providing governance and probity advice.
LGP has recently appointed a new procurement director, Nash Gaffney, whose previous experience was not in the public sector, but had been in the private sector. Nash previously worked for two public limited companies in the pharmaceutical industry, where he had been successful in improving and streamlining procurement functions.
Nash has decided that his priorities in his new role are to embed the new procurement structure, develop a sourcing plan for selecting appropriate suppliers and to engage with LGP’s stakeholders, to ensure that the new procurement operations will meet their needs.
Nash is aware that a serious problem faced by the four Local Council’s, before LGP was developed, was supplier failure. A number of key suppliers, who had been awarded three-year contracts, experienced financial problems because of a lack of liquidity and they were unable to complete the contracts. Nash is determined that this will not happen in future and he intends to ensure that the financial status of all potential suppliers is vetted rigorously before a contract is awarded.
Nash is in the process of recruiting a small team of procurement specialists to assist him with sourcing the supplies needed by the four Local Council’s. He is keen to recruit procurement specialists who have public sector – and preferably Local Council – experience, given his private sector background.
Once the team has been put in place, one of its first tasks will be to undertake analysis of the markets and suppliers. He is particularly keen that the team gathers, analyses and evaluates as much relevant data as possible about potential suppliers and markets. After his team has completed this process, Nash intends to use the data to start the supplier selection process.
Shortly after taking up his new post, Nash was informed that the waste services contracts of all four Local Council’s would come to an end within the next four months. The values of the four current contracts vary between $850,000 and $1.2 million, with the total value being $3.8 million. Nash has decided that a new single contract to provide waste services should cover all four Local Council’s and his aim is to achieve a saving of 10%, compared to the cost of the current contracts.
The new contract will be for a three-year period and, as required by the Local Council Procurement Guidelines, a tendering process will be used. Having previously worked only in the private sector, where he relied heavily on in-house legal counsel, Nash has a limited understanding of contract law and knows that he will need to refresh his understanding of procurement contracts prior to awarding a contract to a new supplier. He plans to ask his new team for advice on both the nature of the sourcing process to be used, the award criteria and the elements to create a binding contract.
Section A: Case Study Questions (compulsory)
These questions relate to the case study and should be answered in the context of the information provided.
Question 1: Procurement Strategy & Contract Law
Using the provided case study on LGP and Nash Gaffney's role as the new procurement director, answer the following questions:
a. Critically analyse the potential risks associated with consolidating waste services contracts for four Sydney Local Councils into a single contract.
b. Describe the elements that need to exist in order for a legally binding contract to be established.
c. Reflect on Nash Gaffney's priorities as the new procurement director for LGP, including embedding the new procurement structure, developing a sourcing plan, and engaging stakeholders. Discuss the potential benefits and challenges associated with each priority.
Question 2: Procurement Structures
Prior to accepting the role of Procurement Director, you were advised that a key objective of your role would be to restructure the existing procurement functions across all four Local Councils into one centralised procurement function. Even though the decision as to how the procurement operations will be structured has already been made, you expect to be challenged by Councillors and existing management as to the new structure.
a. Describe the advantages and disadvantages of decentralised procurement functions.
b. What alternative structures could be considered? What are the benefits of these alternate structures?
c. How would Nash rationalise the decision to centralise all procurement activities across the various councils?
Section B: Reflective Question (compulsory)
Question 3: Reflective Analysis on Strategic Sourcing Recommendation paper
In your own words, critically analyse your experience in completing the Strategic Sourcing Recommendation Paper (OPS 911, Assessment 1). Discuss the following aspects:
a. Identify key insights gained from completing the assignment and lessons learned for future strategic procurement endeavours.
b. Reflect on areas where you could improve your strategic procurement analysis and decision-making skills based on this experience.
Your response should demonstrate a critical reflection on your experience, highlighting insights gained and areas for personal and professional development.
Solution
Section A:
Question 1: Procurement Strategy & Contract Law
a. Synergising the contracts for waste services within four Sydney LGAs based on a single agreement potentially faces multiple risks. Besides that, aligning different threat requirements and questions could cause arguments about works and performance varieties. Furthermore, the danger of depending on a single vendor is highly real as all the councils become helpless in the face of drops in services or changes in pricing. Furthermore, the impeded competition may slow down the innovation and other smaller supply members may be discouraged from taking part in the inventions (Rane et al. 2020). While the contractual complexities like changing the termination pipelines could be advantageous, such changes could also enhance the legal and financial risks for the councils. Therefore, it is necessary to have an accurate risk assessment and mitigation methodologies such as service level agreements and backup plans in place to achieve the transition success.
b. The concept of a valid contract has several essential elements that should be included while setting it lawfully. This offer and acceptance of the contract should be demonstrated and also each party proves an agreement on the terms of the contract. However, the other factor that secures the agreement is the consideration, which refers to the value exchanged or given to that agreement. This might be the third thing the two sides should have the legal capacity and mandate to form the agreement (Changalima et al. 2021). Meanwhile, the agreement should define the details of the task to be done and the terms of remuneration. Additionally, the will to form a legal bond of contractual obligations is a necessary condition for both of the parties. Providing the part that follows away reduces the possibility of any disputes on the contractual relationship by employing these elements thus cutting off legal suit for university assignment help.
c. Achieving procurement competency is not only a key priority of Nash Gaffney but also requires more than the ordinary level of accomplishment. Integration into the new procurement platform through the standardized process improves compliance with specifications and leads to better efficiency and accountability for the organization. The development of a supply-sourcing strategy supports the practice of intentional supply acquisition and negotiation, which results in optimal expenditure and minimized risk. Having the stakeholders for a hand brings consistency and working trust, which increases the level of clear representation and respect to the council. The fact that each top-level mission consists of many other "supporting" missions leads to resistance to change, resource scarcity, and the complexity of stakeholder management. These priorities involve the harmonious exercise of communication methods, stakeholder engagement, and the change management approach. Addressing these concerns is important for Nash to control of LGP procurement agenda and successfully deliver value to stakeholders and councils.
Question 2: Procurement Structures
a. Decentralized procurement functions bring a lot of unique features that are noteworthy and where not everything or rather anything can be beneficial. Since decentralization facilitates rapid decision-making, a local majority administers procurement at the local level without the need for centralized authority approval. This adaptability may be most useful in cases that demand immediate action towards the needs on the ground. In addition to that, decentralization allows for the adjustment of a procurement process so that each department or location of an organization may have different needs (Cui, Li, and Zhang, 2022). This targeted approach can give a raise to stockholder satisfaction and accelerate procurement processes by tightening them to the specific needs of an organization. On the one hand, it is decentralized procurement that has them; on the other hand, there are pros and cons. As such, one important hurdle is duplication of work and imperfection.
Localized characteristic influence on expenditure would result in cases wherein different departments buy identical products or services repeatedly, and hence larger costs and wasting of valuable resources may become rampant. Moreover, the procurement process decentralization can result in different processes and standards in various places of an organization making the attainment of economies of scale or advantageous terms with procurement agencies quite a struggle. Among organizations, scattered purchasing practices could reduce the ability of them to effectively use their buying power by groups more efficiently (Akenroye, et al.2020). The benefits of decentralized procurement consequently of their fast and powerful management consist in customization and agility, as well as the drawbacks of them such as inefficiency and non-standardization. Organizations not only need to balance out these factors but they are also required to assess which model of procurement will suit their exact situation best.
b. Distribution of authority in alternative procurement is among the decentralized and centralized procurement, hybrid models, and common features. In other words, central procurement can be understood as acquiring all the procurement processes in one organization department or team department. It is equally true that this centralized system of work has some advantages such as uniformity of procedures, high effectiveness and enhanced advantages concerning suppliers. Organizations can eliminate duplicate efforts, identify the processes, and make use of their multiple buying capability to negotiate favorable terms with the suppliers during the centralization of procurement functions (Qazi and Appolloni, 2022). Hybrid procurement models integrate the features of centralized and decentralized methods. Thus, they give organizations the ability to balance flexibility and centralized controls at the same time. This intermediate approach gives organizations a balance between standardization and customization that allows them to adjust their selection processes for departments or locations while maintaining top control over centralized decision-making and supplier relations.
The pooling of resources for procurement with expertise shared across multiple organizations and departments within the same organization is referred to as the shared business process. Through sharing procurement activities organizations can improve sourcing thus achieving cost savings through economies of scale, leveraging specialized expertise, and improving efficiency by standardizing processes and increasing collective bargaining power with suppliers. Moreover, shared services promote knowledge exchange and joint work, allowing the entities concerned to have all lessons learned and better practices taken into account. To conclude, alternative procurement systems boast several advantages, such as streamlining the processes, reducing expenses, and intensifying collaboration. Enterprises should, depending on their objectives and preferences, tactfully go for the procurement structure that best suits them.
Section B
Question 3: Reflective Analysis on Strategic Sourcing
a. Analyzing the final Strategic Sourcing Recommendation Paper, I believe that I could make some dedicated efforts to increase my strong points in strategic procurement. First and foremost, I plan to strengthen my data analytics skills for better analysis of market investigation and supplier assessment procedures. Strengthening my capabilities in the use of data analysis instruments and techniques will provide me with the capacity to work in data and lead to strategic procurement decisions which are based on data (Fourie and Malan, 2020). Moreover, my target is to acquire competence in negotiations in order to build long-term relationships with vendors and obtain satisfactory conditions for contracts. Through extensive preconviction, attentive listening, and the creation of added value, I can develop my competence to get a level playing field in Supply contract negotiations. I aim to enhance my skill level i.e. strategic analysis and problem-solving so that I can foresee and move to the aforementioned difficulties in the procurement process. Through a change of attitude towards creativity and originality, I am able to think out of the box and develop smart ways of boosting procurement success and drive organizational success as well.
b. Analyzing the final Strategic Sourcing Recommendation Paper, I believe that I could make some dedicated efforts to increase my strong points in strategic procurement. Primarily, I target the augmentation of my data analytics acumen so I can get more intuitive information from market research and supplier evaluation modules. Strengthening my capabilities in the use of data analysis instruments and techniques will provide me with the capacity to work with data and lead to strategic procurement decisions that are based on data. Moreover, my target is to acquire competence in negotiations to build long-term relationships with vendors and obtain satisfactory conditions for contracts (Fourie, and Malan, 2020.). With the keenness for thorough preparation, and empathy in listening coupled with the know-how of engaging in value creation, I believe I can walk my way through to fruitful procurement talks of mutual gains. Also, I want to develop myself in the field of strategic thinking, and problem-solving which are usually used to avoid and handle risks as they may crop up in the course of procurement. Through a change of attitude towards creativity and originality, I can think out of the box and develop smart ways of boosting procurement success and driving organizational success as well.
References
Rane, S.B., Narvel, Y.A.M. and Bhandarkar, B.M., 2020. Developing strategies to improve agility in the project procurement management (PPM) process: Perspective of business intelligence (BI). Business Process Management Journal, 26(1), pp.257-286.
Qazi, A.A. and Appolloni, A., 2022. A systematic review on barriers and enablers toward circular procurement management. Sustainable Production and Consumption, 33, pp.343-359.
Lysons, K. and Farrington, B., 2020. Procurement and supply chain management. Pearson UK.
Changalima, I.A., Mushi, G.O. and Mwaiseje, S.S., 2021. Procurement planning as a strategic tool for public procurement effectiveness: Experience from selected public procuring entities in Dodoma city, Tanzania. Journal of Public Procurement, 21(1), pp.37-52.
Buzzetto, R.R., Bauli, M.R. and Carvalho, M.M.D., 2020. The key aspects of procurement in project management: investigating the effects of selection criteria, supplier integration and dynamics of acquisitions. Production, 30, p.e20190112.
Fourie, D. and Malan, C., 2020. Public procurement in the South African economy: Addressing the systemic issues. Sustainability, 12(20), p.8692.
Jing, S., Hou, K., Yan, J., Ho, Z.P. and Han, L., 2021. Investigating the effect of value stream mapping on procurement effectiveness: a case study. Journal of Intelligent Manufacturing, 32, pp.935-946.
Cui, R., Li, M. and Zhang, S., 2022. AI and procurement. Manufacturing & Service Operations Management, 24(2), pp.691-706.
Akenroye, T.O., Owens, J.D., Elbaz, J. and Durowoju, O.A., 2020. Dynamic capabilities for SME participation in public procurement. Business Process Management Journal, 26(4), pp.857-888.
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