Willi Darr

Advanced Issues of Procurement Management

Willi Darr

Advanced Issues of Procurement Management

tredition Verlag
Hamburg

Preface

This book reasons, discusses and delves deeper into specific problems of procurement management. Therefore, the title “Advanced Issues of Procurement Management” was chosen.

Key aspects of the procurement management are presented for advanced students, meaning interested students in the main course or in the master’s degree study as well as for practitioners bearing responsibility.

At the beginning, the conception concerning the spectrum of procurement services is outlined, without which a management is not feasible. Based on this, the importance, in particular the strategic importance of procurement within the corporate governance is discussed. Much emphasis is subsequently put on the topic of supplier management, more precisely on the discussion about the evaluation, the relation and the selection. Obligatory modules of procurement management are the topics risk and compliance management and negotiation. They warrant a profound discussion. High attention is given to the chapters “Strategies of Procurement - Procurement Strategies” and “Procurement Controlling”. They holistically unite the philosophy about sustainable procurement management.

In each chapter, introductory and further literature references are provided for interested readers.

I would like to express my special thanks to Carolin Ruppert and Florian Stöfer for providing their continuous support in translating this book. Their work and contributions have always been appreciated.

Finally, I wish all interested persons lots of fun and helpful insights into their own conceptional thoughts concerning procurement.

Willi Darr

Contents

1. Procurement Services

a. Short Introduction

b. The Problem of Procurement Services and their Measurement

c. The Conceptual Fundamentals: User & Utility

d. Data as Basis for the Measurement

e. The Management of Procurement Services

f. Conclusion: The 3-D Fundamental Problem of the Procurement Performance Measurement

2. Significance of Procurement Management

a. Short Introduction

b. The Issue of the Significance of Procurement as Challenge of the Management

c. Conceptual Approach for the Determination of the Significance of Procurement

d. Additional Discussion Regarding Cost Reduction (Stage One

e. Additional Discussion Regarding Cost Risks and Other Risks (Stage Two)

f. Additional Discussion Regarding the Value Added (Stage Three)

g. Visibility of the three Categories

h. Conclusion

3. Strategic Significance of Procurement

a. Short Introduction

b. The Problem of Establishing a Procurement with Strategic Significance

c. Conception of Procurement as “Preferred Customer”

d. Additional Discussion Regarding ”Local Clusters”

e. Consequences for the Procurement Organization and the Qualifications of Purchasers

f. Conclusion

4. Management of Supplier Evaluation

a. Short Introduction

b. The Problem of Supplier Evaluation

c. The Relevance of Criteria

d. Additional Discussions Regarding Individual Issues of Supplier Evaluation

e. Conclusion

5. Management of Supplier Relationships

a. Short Introduction

b. The Issue of Supplier Relationships

c. The Analysis of Power

i. The Basic Conditions for the Creation of Power

ii. Power Strategies of Procurement

d. Supplier Relationships and Value Added

e. Conclusion

6. Management of the Supplier Structure

a. Short Introduction

b. The Issue of Supplier Structure

c. Methods for the Decision of Supplier Structure

d. The Portfolio Conception of Kraljic and Further Developments

i. The Portfolio Concepts Based on Power

ii. The Advancements of the Supplier Portfolios

e. Conclusion

7. Risk Management and Compliance

a. Short Introduction

b. The Problem of Risk Management

c. Statutory Bases Regarding Risk Management

d. Basic Types of Risk Management

e. Deepening in Compliance

f. Conclusion: Risk, Crisis and Compliance

g. Supplementary References for Interested Readers

8. Negotiation

a. Short Introduction

b. Process of a Negotiation

c. Additional Discussions on Specific Aspects of Negotiation

d. The Harvard Concept of Negotiation

e. Conclusion

9. Strategies of Procurement - Procurement Strategies

a. Short Introduction

b. The Problem of Procurement Strategies

c. Features of Strategies

d. Features of Procurement Strategies

e. Selected Strategy Concepts

f. Conclusion on the Framework of Procurement Strategy

g.  Outlook

10. Procurement Controlling

a. Short Introduction

b. The Problem of Procurement Controlling

c. Main Features of Controlling

d. Summarizing Overview of the Tasks of Procurement

e. Basic Tasks of Procurement Controlling

i. Framework Concept of Strategic Tasks of Procurement Controlling

ii. Framework Concept of Operational Tasks of Procurement Controlling

f. Outlook for Procurement Controller

11. Last but not Least

12. Bibliography

List of Tables

Table 1.1: Level of impact of procurement pervice

Table 1.2: User categories of the procurement services

Table 1.3: Categories of the significance of procurement services

Table 1.4: Conceptual framework of the procurement services

Table 2.1: Stages of the significance of procurement

Table 4.1: Three categories of criteria for supplier evaluation

Table 6.1: Example of a supplier scoring

Table 6.2: Suitability of methods to establish the supplier structure

Table 6.3: Overview of supplier portfolio concepts

Table 10.1: Overview of the tasks of procurement management

Table 10.2-1: Overview of tasks of strategic procurement controlling (part 1)

Table 10.2-2: Overview of tasks of strategic procurement controlling (part 2)

Table 10.3-1: Overview of tasks for operational procurement controlling (part 1)

Table 10.3-2: Overview of tasks for operational procurement controlling (part 2)

List of Figures

Figure 1.1: Management process of procurement services

Figure 1.2: Comparison of three procurement service profiles

Figure 1.3: 3-D fundamental problem of procurement performances

Figure 2.1: Framework of the argumentation regarding the significance of procurement

Figure 6.1: Structure of the supplier portfolio