“Budget”

Karen Scott

INF/336 Project Procurement

Professor Christopher Powell

December 1, 2014

“Questions for Review Week 3”

Describe the differences between needs identification and defining commercial equivalents and discuss why it is preferable to separate into two stages. It has become generally recognized that about 70 percent of the opportunity for value improvement lies in the first two phases of the acquisition process: (1) need identification and (2) specification. Therefore, great attention needs to be paid to ensure that value op- opportunities are not overlooked. Many options exist for fastening two pieces of wood together. Using a nail is only one option. Grooving the two pieces of wood using a staple, bolt or screw, or glue are others. Specifying the need first and then identifying the variety of options to meet the need leave the door open to lower cost and better, or more innovative, solutions. If the supply professional has reason to believe that further opportunities exist to improve on the commercial equivalent presented by a designer or specifier, he or she has the responsibility to bring this to the attention of the designer or specifier. Early supply and supplier involvement prevents the hassles associated with trying to reverse a design decision after it has been made and approved technically. (Johnson, Leenders, Flynn 2010)

When you are able to identify more ways than one to achieve a particular goal, you then open the door to see more opportunities to gain revenue. For example you may identify the need of your car needing to be washed, but what are the specifics of needing the car washed. If you just say I will go to the car wash, you leave out the fact that you could wash it yourself and save money or you can call a mobile detailer to come to your home.

Interpret the value to the organization when early supplier involvement (ESI) is implemented effectively.

Early supply involvement and early supplier involvement (ESI) help assure that what is specified is also procurable and represents good value. Various organizational approaches, such as staffing the supply area with engineers, co-locating supply people in the engineering or design areas, and using cross-functional teams on new product development or product or service reviews, have been used to address effective early supply involvement. (Johnson, Leenders, Flynn 2010)

Examine the advantages and disadvantages of specifying by performance. One of the advantages of specifying by performance is the ability to base a decision of whether to use a company based on how they have performed the tasks or work you have contracted them to perform. An example would be “Some performance areas, such as delivery, are more easily quantified than others such as service. For example, the on-time delivery window might be defined by a particular company as anywhere between two days early and zero days late as committed by master scheduling. Deliveries are tracked and performance is rated according to a pre-established rating system (Johnson, Leender, and Flynn 2010). Describe how a supply professional understands strategic requirements. The way a supply professional understands strategic requirements is they know that they have a unique opportunity to bring to light strategic implications of certain requirements, given specific market conditions and corporate strategic aspirations (Johnson, Leender, and Flynn 2010).

References:

Johnson, P. F., Leenders, M. R., & Flynn, A. E. (2010). Purchasing and Supply Management (14th ed.). Boston: McGraw-Hill Irwin.