Group 4

Arcilla, Jeizzar
Balajadia, Renz
Camaya, Arthos
Catacutan, Renzo
Galang, Ivan
Rivera, Carlos
Sahagun Rainier
PROCUREMENT

Procurement is the process of

getting the goods and/or services
your company needs to fulfill its
business model. Some of the tasks
involved in procurement include
developing standards of quality,
financing purchases, negotiating
price, buying goods, inventory
control and disposal of waste
products like packaging.
PROCUREMENT

In the overall supply chain process,

procurement stops once your company has
possession of the goods. To make a profit, the
cost of procuring your goods must be less than
the amount you can sell the goods for, minus
whatever costs are associated with processing
and selling them.
SOURCING

Sourcing, as the name implies, is locating

sources of the goods and services your
company needs. It's a subsection of the
procurement process. Where procurement is
concerned with the logistics of acquiring
materials, sourcing focuses on finding the best
and least-expensive suppliers for those goods.
SOURCING

This part of the business can include scouting,

negotiating, testing for quality and market
research. Since the profits of a business can
rely heavily on finding the best possible
sources.
GLOBAL SOURCING

Since the 1990s, global sourcing has come to

eclipse the original meaning when
professionals use the term "sourcing." This is
the process of finding sources for goods and
services whether or not they're within the
boundaries of the country where you do
business.
GLOBAL SOURCING

Modern communication and transportation

technologies have made this strategy profitable
despite the logistic challenges of doing
business across international borders. This
applies both to ordering from factories in
countries with lower manufacturing costs and
to outsourcing customer service to areas with a
lower minimum wage.
TWO MAIN CATEGORIES OF PURCHASED GOODS

Direct Materials
Direct materials are components used to make
finished goods
Raw material and production goods
TWO MAIN CATEGORIES OF PURCHASED GOODS

Indirect Materials
Indirectmaterials are goods used to support the
operations of a firm
Maintenance, repair and operating supplies
 PURCHASE REQUEST TO PURCHASE ORDER
Purchase Request / Requisition
Document generated by a user department or
storeroom-personnel to notify the
purchasing department of items it needs to order,
their quantity, and the timeframe. It may also contain
the authorization to proceed with the purchase. Also
called purchase request or requisition.
You will need to create a standardized requisition
document, which all employees must then use. That
standardized procedure ensures that receiving
requisitions does not waste your employees time.
PURCHASE REQUEST TO PURCHASE ORDER

Budgets
Asemployees begin to draft requisitions, youll be
able to create an average monthly spend and track
what your employees are purchasing. This means
you can start analyzing how they use supplies and
identify opportunities for savings. An approver will
be the person managing the budget. If employees
go over budget, the approver may not approve all
the requisitions that are not immediately necessary.
PURCHASE REQUEST TO PURCHASE ORDER

Volume discounts
Once employees begin submitting requisitions, the
approver can more easily identify purchasing
patterns. The approver can then submit bulk orders
and request discounts if they are available. If the
requests are created digitally, it can significantly
reduce processing time because frequently
requested items can be added to a catalog from the
best supplier at the best price.
PURCHASE REQUEST TO PURCHASE ORDER

Purchase Order
Purchase orders are documents sent from a buyer
to a supplier with a request for an order. The type of
item, the quantity and agreed upon price are
generally (should be!) printed on the purchase
order the more specific the order, the more
details included, the more effective the purchase
order will be.
PURCHASE REQUEST TO PURCHASE ORDER

The four main types of purchase orders

Standard Purchase order
Planned Purchase order

Blanket Purchase order

Contract Purchase order

PURCHASE REQUEST TO PURCHASE ORDER

Standard purchase orders

a standard purchase order is typically used for
irregular, infrequent or one-off procurement. It
contains a complete specification of the purchase,
setting out the price, quantity and timeframes for
payment and delivery. A restaurant might raise a
standard purchase order when it purchases new
tables and chairs. If all goes well, this should be a
one-off purchase for the restaurant, and the
contract will be fulfilled once the chairs are
delivered in good order.
PURCHASE REQUEST TO PURCHASE ORDER

Planned purchase orders

like a standard purchase order, a planned purchase order is
relatively comprehensive. A planned purchase order
requires full details of the goods and services to be
purchased, and their costs. Dates for payment and delivery
are also included in a planned purchase order, but these are
treated as tentative dates. Issuing a release against the
planned purchase order places individual orders. For
example, a restaurant might require 50,000 disposable
place mats in one year the manager could create a
planned purchase order with a commercial printer detailing
the price and quantity with a tentative delivery schedule.
After using the first 5,000 place mats, the restaurant would
create a release against the purchase order to order more.
PURCHASE REQUEST TO PURCHASE ORDER

Blanket purchase orders

a blanket purchase order involves a purchaser agreeing
to purchase particular goods or services from a specific
vendor, but not at any specific quantity. Pricing may or
may not be confirmed in a blanket purchase order. This
type of order is typically used for repetitive procurement
of a specific set of items from a supplier such as basic
materials and supplies. The restaurant discussed
above could equally choose to use a blanket purchase
order to procure the disposable place mats not
having to confirm a specific quantity may make this a
preferable option if the quantity required is not clear.
PURCHASE REQUEST TO PURCHASE ORDER

Contract purchase orders

a contract purchase order sets out the vendors
details and potentially also payment and delivery
terms. The products to be purchased are not
specified. A contract purchase order is used to
create an agreement and terms of supply between
a purchaser and vendor as the basis for an ongoing
commercial relationship. To order a product, the
purchaser may refer to the contract purchase order
when raising a standard purchase order.
PURCHASE REQUEST TO PURCHASE ORDER

From requisition to purchase order

Once requests have become a standard process in
your organization, the next step is to create the
purchase order process. This is likely as simple as
contacting suppliers and informing them that from
now on youll be submitting a purchase order before
sending payment for goods. The supplier will likely
be happy about this because it will significantly
help both parties.
PURCHASE REQUEST TO PURCHASE ORDER
Once your approver has some requests that need to
be fulfilled, they complete a purchase order and send
it off to the seller. The seller, if necessary, will
communicate any concerns or issues with the
purchase.
Integrating both requisitions and purchase orders will
significantly increase your ability to track expenses
and remove a lot of headaches associated with
employee/company purchasing. Visibility in your
companys spending is critical and this process will
help you achieve that.
PURCHASE ORDER TO DELIVERY

Purchase Orders are documents sent from a

buyer to a supplier with a request for an order

Delivery is the process of transporting goods

from a source location to a predefined
destination.
PURCHASE ORDER TO DELIVERY
Types of delivery
CARGO (physical goods) are primarily delivered
via roads and railroads on land,
SHIPPING LANES on the sea
AIRLINE NETWORK in the air.
Certain specialized goods may be delivered via
other networks, such as pipelines for liquid
goods, power grids for electrical power
and computer networks such as the Internet
or broadcast networks for electronic information.
 PURCHASE ORDER TO DELIVERY
Delivery Date : Specify the number of days or a due date
by when you expect goods to be delivered.
PURCHASE ORDER TO DELIVERY

AFTER PURCHASE ORDER

DELIVERY
The purchase order must be delivered, usually by
fax, mail, personally, email or other electronic
means. Sometimes the specific delivery method is
specified in the purchasing documents. The
recipient then acknowledges receipt of the
purchase order. Both parties keep a copy on file.
PURCHASE ORDER TO DELIVERY

Expediting
Expedition of the purchase order addresses the
timeliness of the service or materials delivered. It
becomes especially important if there are any
delays. The issues most often noted include
payment dates, delivery times and work
completion.
PURCHASE ORDER TO DELIVERY

RECEIPT AND INSPECTION OF PURCHASES

Once the sending company delivers the product,
the recipient accepts or rejects the items.
Acceptance of the items obligates the company to
pay for them.
PURCHASE ORDER TO DELIVERY

INVOICE APPROVAL AND PAYMENT

Three documents must match when an invoice
requests payment - the invoice itself, the receiving
document and the original purchase order. The
agreement of these documents provides
confirmation from both the receiver and supplier.
Any discrepancies must be resolved before the
recipient pays the bill. Usually, payment is made in
the form of cash, check, bank transfers, credit
letters or other types of electronic transfers.
 Sales Invoice
A sales invoice can be simply defined as the request
of payment by the customer for goods sold or
services provided the seller. An invoice generally lists
the description and the quantity of the item sold or
service provided. The document is also a record of
the sale for both the seller and the buyer.
PURCHASE ORDER TO DELIVERY

RECORD MAINTENANCE
In the case of audits, the company must maintain
proper records. These include purchase records to
verify any tax information and purchase orders to
confirm warranty information. Purchase records
reference future purchases as well.
NEGOTIATIONS
discussion aimed at reaching an agreement.
Is a process which you and your supplier will agree
in mutual interest
As a buyer or seller you should negotiate to your
supplier or consumer to get the better deals
because the success or failure of the deal
depends on how effective you are in negotiating
The objective of the negotiation process is to
ensure the right product or service, right quantity
needed, delivered at the right time, at the right
location and all for the best price and quality.
4 CRUCIAL STEPS TO SUCCESSFUL
NEGOTIATIONS
1. Preparation
Establish your goals.
Before entering into negotiations, determine what your goals
are and how reaching them will benefit your business.
Prepare. Consider the interests and objectives of your
negotiating partners. Put yourself in their shoes. This
homework will prove invaluable during the discussions.
Look at different scenarios that may arise during the
negotiations and how you will respond to each.
Know your deal breaker. Decide from the start what the
most desirable outcome would be and what an acceptable
one would be. Where will you draw the line and walk away?
 4 CRUCIAL STEPS TO SUCCESSFUL
NEGOTIATIONS
2. Opening discussions.
Go for Win-Win
Explain your interests and point of view and listen carefully to the other
sides position. Seek to understand their key issueswhats crucial for
them may not be important to you.
Always ask for more than youre willing to settle for, but dont get backed
into a corner early in the process. Start by resolving the easiest points first.
Build common ground and trust. Use positive, inclusive terms such as: Our
areas of agreement, beneficial to both sides, our shared vision.
While some preliminary groundwork can be done over the phone or by
email, try to discuss important matters face to face. Observing reactions
to your proposals gives you a significant advantage, Israel says.
Make sure youre negotiating with the decision maker. After a lengthy and
hard-fought negotiation, the last thing you want to hear is: Ill have to
check with my boss and get back to you.
 4 CRUCIAL STEPS TO SUCCESSFUL
NEGOTIATIONS
3. Concessions
Have them planned beforehand.
Everybody needs to put water in their wine, Israel
says. The question is how much? Look for trade-
offs. When agreeing to a concession, ask for
something in return.
Stick to the facts and dont get emotional. Youll risk
losing your objectivity and missing opportunities.
If it seems youve reached a dead end, look for
something to offer thats less important to you, but
relevant to the other party. Still stuck? Ask: What do
you suggest we do?
 4 CRUCIAL STEPS TO SUCCESSFUL
NEGOTIATIONS
4. Agreement
Never commit until the end.
Summarize the most important points of the
agreement.
Confirm. Is that a yes? Do we have a deal?

Finally, remember that when negotiating you are also

looking to build a future relationship. Most people
think negotiating is about confrontation, Israel says.
This couldnt be further from the truth. Always
negotiate in good faith and look at the other side as a
potential partner and source of repeat business.
PROCUREMENT SAVINGS
Irrespective of the industry sector, the size of an
enterprise or the maturity of the procurement discipline,
realizing cost savings will always be one of the most
important objectives of the procurement function. This
is hardly a surprise. In most organizations the
percentage of revenue that is spent on procurement has
grown to 50-70%, depending on the type of business.
The most important reason for this growth is the
continuing trend of outsourcing tasks that were formerly
performed within the organization. Cost control is an
important shared responsibility of both procurement
and finance.
OUTSOURCING

What is 'Outsourcing'
Outsourcing is a practice used by different
companies to reduce costs by transferring
portions of work to outside suppliers rather
than completing it internally.
Outsourcing is an effective cost-saving strategy
when used properly. It is sometimes more
affordable to purchase a good from companies
with than it is to produce the good internally.
OUTSOURCING
BREAKING DOWN 'Outsourcing'
An example of a manufacturing company
outsourcing is Dell buying some of its computer
components from another manufacturer to
save on production costs. Alternatively,
businesses may decide to outsource
bookkeeping duties to independent accounting
firms, as it may be cheaper than retaining
an in-house accountant.
OUTSOURCING
Disadvantages
Outsourcing also has several disadvantages.
Signing contracts with other companies may take
time and extra effort from a firm's legal team.
Security threats occur if another party has access
to a company's confidential information and then
the party suffers a data breach. A lack of
communication between the company and the
outsourced provider may occur, which could delay
the completion of projects.
 SAVINGS ON NEGOTIATIONS

TOTAL NEGOTIATED SAVINGS / TOTAL PURCHASES

REJECTION

It is act of rejecting.
The state of being reject.
REJECTION
Having a low percentage or almost null rejected items in
your procurement will result to an effective service.
To make this this possible, your supplier must ensure
the product or the supplies that will be delivered.
If this rejection of items occurs, the management should
immediately notify the supplier. Preferably in way of
writing and if verbal, confirm it in writing immediately.
Most effective supplier nowadays, the targeted defective
is only about 25 PPM(Parts Per Million).
 Rate of Rejection

TotalNumber of Rejected Items/ Total Delivered

Items