Procurement and Supply Manager's Desk Reference

FRED SOLLISH, MS, C.P.M. (San Francisco, CA), is the Managing Director of eParagon, LLC, a consulting firm specializing in providing training and working tools for the supply chain management profession. He is a working professional in supply chain management and procurement with over 30 years' experience as a manager. Fred is former president and CEO of the Institute for Supply Management (ISM) Silicon Valley affiliate. He is also an instructor for sourcing and procurement–related courses.JOHN SEMANIK, MBA, C.P.M. (San Jose, CA), is cofounder and Director of eParagon, LLC. He has served in senior corporate supply chain positions at leading-edge companies such as Hewlett-Packard and Sun Microsystems. He is the former Managing Director and instructor for San Jose State University's Professional Development curriculum in Supply Chain Management and Purchasing, and former CEO of the Institute for Supply Management (ISM) Silicon Valley affiliate.

• Preface to the Second Edition xiAcknowledgments xiiiChapter 1 Procurement and Best Business Practices 1Understanding Procurement 1Understanding and Conveying Requirements 2Creating Strategic Plans and Tactics 4Finding Innovative Methods and Exploring Alternatives 5Providing Procurement Services 6Accepting Orders 7Placing Orders 10Mastering Procurement and Business Tactics 13Budgets and Expense Allocation 13Internal Control Systems 14Establishing Procurement Methods 15Internal Cost-Related Analysis Tools 18Keeping Supplier Information 22Summary 23Chapter 2 Sourcing Management 25Establishing Requirements 25Creating and Organizing Requirements 25Developing Specifications and Formats 27Statement of Work 31Terms and Conditions 32Specification Traps 32Locating and Developing Sources of Supply 33Types of Competition 36Locating Suitable Suppliers 37Market Analysis: Determining Changing Marketplace Factors 39Obtaining Bids and Proposals 41Bidding Guidelines 41Formulating the Bid or Proposal Type 42Managing Sourcing Data 45Categories of Existing Sources 45Maintaining Sourcing Lists 47The Strategic Sourcing Plan 47Operational Sourcing Strategy 54Summary 57Chapter 3 Solicitation of Bids and Proposals 59Solicitation Planning 59Solicitation Methods 66Summary 68Chapter 4 Supplier Selection Criteria 69Selecting the Supplier and Awarding the Contract 69Operational Measures and Measures of Efficiency 75Applying Selection Criteria 77Administering the Contract 86Summary 87Note 88Chapter 5 Contracts and the Legal Aspects of Procurement 89Contract Essentials 89Contract Requirements 91Contract Types 92Other Contract Types 98Methods of Exchange 99Other Contract Elements 100Legal Authority and the Buyers’ Responsibilities 101Reviewing Contracts for Legal Requirements 103Aligning Contracts and Practices with Policy 105Maintaining Procurement Documents and Records 107Summary 108Chapter 6 Supplier Diversity 109Diversity Programs 110U.S. Small Business Support 112The U.S. Small Business Administration (SBA) 112Contracting 113The Business Case for Diversity 115Supplier Diversity Best Practices 116Global Supplier Diversity 118Diversity Advocacy Organizations 119Summary 123Chapter 7 Risk Management 125The Nature of Risk 125Why Is Understanding Risk Important? 125Risk Management Principles 126Resources for Additional Information 134Summary 136Chapter 8 Sustainability 137Issues in Sustainability 137Guidelines 146Lean Six Sigma 149Criteria for Supplier Evaluation 150Institute for Supply Management’s Principles of Sustainability and Social Responsibility 151Examples of Corporate Sustainability Efforts 152Summary 154Notes 154Chapter 9 Negotiation 155Assessing the Negotiating Environment 155Gathering Information and Analysis 158Preparing for the Negotiation 161Conducting the Negotiation 167Summary 172Chapter 10 Contract Formation and Administration for Optimum Supplier Performance 173Managing Contract Compliance 173Tracking and Expediting Deliveries 179Handling Supplier-Related Deviations 181Summary 188Chapter 11 Project Management 189The Five Project Management Processes 189Stage One: Initiating a Project 191Stage Two: Project Planning 193Stage Three: Project Execution 199Stage Four: Project Controlling 203Stage Five: Project Closeout 206A Key Knowledge Area: Project Procurement Management 207Using a Matrix Model for Project Staffing 210Summary 212Notes 212Chapter 12 Quality 215Managing Quality Performance 215Ensuring Quality Performance 220Summary 226Chapter 13 The Procurement Function’s Internal Relationships 227Understanding Key Departmental Roles 227Developing Good Working Relationships 233Participating in Cross-Functional Operations 237Reengineering Supply Management 240Summary 245Chapter 14 Supplier Relationship Management (SRM) 247Managing Productive Supplier Relationships 247Developing Continuous Improvement 254Pricing Factors and Supply 257Representing the Organization 261Summary 265Note 265Chapter 15 Leveraging Computer Systems 267Using Basic Information Technology Processes 268Using Software for Procurement 271Sourcing Supply Management Tools 279Summary 281Chapter 16 Financial Decisions for Sourcing 283Performing Make-or-Buy Analysis 283Performing Lease-or-Buy Analysis 288Formulating Financial Strategies 291Summary 296Chapter 17 Source to Settle 297Why Source to Settle? 297Implementing an S2S Process 303Managing the S2S Process 307Outsourcing the S2S Process 308Summary 309Chapter 18 Material Management and Supply Operations 311Inventory Control and Management Systems 311Physical Management and Inventory Accounting 321Disposition of Surplus Assets 323Summary 326Chapter 19 Logistics 327The Logistics Process 327Modes of Transportation 332Traffic Management 335Customs 336Logistics in the Context of International Trade 339Supplemental Information 345Links 347Summary 348Notes 349Chapter 20 Regulatory Compliance 351Regulatory Factors Governing Procurement 351Government Organizations and Roles, Regulations, and Controls 358Tax Laws 363FASB 364Conformance to Law 364Preventing Workplace Discrimination and Harassment 364Summary 368Note 368About the Authors 369About the Website 371Index 373