Evocurement

Quick question: What is the difference between cost modelling and cost analysis? I guess some of you would say they are similar. But in fact, there is a clear boundary between them. In this post, I will tell you what a real cost model looks like. Cost modelling is often an overlooked procurement skill since it is really hard to master. However, when a robust cost model are successfully developed, it can support strategic and tactical activities in procurement such…

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If you are in business environment or enroll in professional programmes such as MBA or CIPS Diploma, probably you have heard the words such as joint venture, vertical integration and horizontal integration. These are strategies in business management and supply chain management. These terms may closely related but differentiate from each other. Knowing these terms may help you make a strategic plan for your company in the next 5 years, or just helps you to pass the upcoming CIPS exams….

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Supply chain is becoming more and more complicated, some businesses have more than 150,000 suppliers. With such huge supply base, managing the relationship is more important than ever. The first step of successful relationship management is deciding which type of relationship should be applied. Partnership is not an ordinary business relationship. It requires investment from both parties. In this post, we will guide you to decide whether you should form partnership with the suppliers by assessing the drivers and facilitators of…

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Prepare for it right from the very beginning Most legal systems respect the right to engage in and withdraw from contractual relationships of contracting parties. Therefore, regarding contract termination, the express terms agreed by the parties take precedence over implied terms. The implied terms created by statutes and case laws only apply in the absence of express terms. It would be a good choice if you had a termination clause in place. The termination clause should have the following contents:…

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Identifying all relevant stakeholders involved in procurement and supply process is very important. Procurement professionals need to define and profile them so that they know more about how each stakeholder affects to the business or be affected by the business. The fact that different stakeholders have different priorities often leads to conflict. For instance, the organisation wants to maximise their profit by spontaneously increasing the revenue and reducing the total costs. However, the community adjacent to the organisation concerns about…

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A successful negotiation requires a lot from the participants, from the agenda to personnel, from questions to be asked to techniques to be used, etc. Framing is among the most commonly used techniques that may increase the chance of closing the deal. Unfortunately, some professional buyers underuse this technique. Now it’s time to re-learn the technique. In negotiation, framing is the way in which you describe your offer. For example, before offering a longer contract duration and simultaneously requesting a…

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Clear policies and guidance Though having mechanism for check and balance is important, it is simply not enough. An organisation should have its own rules regarding corruption and bribery. The rules must be well written into documents called policies. Guidance is further instruction to implement the policies. The auditors will depend on these policies and guidance to report about the misconducts of in-charge officers. Without policies and guidance, every actions would be acceptable. Regarding bribery and corruption, there are three…

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Procurement is a function that exposes to the risk of corruptions. The risk may occur in any sector, whether public or private or non-for-profit. Left unchecked, corruption may become a culture within an organisation and hard to be removed. Corruption damages trust within the organisation, leading to weaker collaboration and lower productivity. Anti-corruption is at the centre of ethical and responsible procurement. This post will suggest you some methods to curb and control the bribery risks in procurement and supply….

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Price fluctuation may cost your organisation thousands, or even millions of dollars each year, especially when your organisation mostly buys from overseas or you often buy large bulk of commodities. This is a risk that you cannot totally avoid but it can be managed with skills and knowledge. Futures, forward contracts and options are among the available tools to mitigate the risk of price fluctuation. In this post, we help you to define these tools and to see whether these…

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Gearing (or leverage) are among the most important factors in financial analysis. In financial management, using right leverage can help a business achieve their objectives. But if things are out of control, the punishment is so high that the business would possibly go bankrupt. To procurement professionals, a strategic supplier gone liquidated is no good news. It brings a serious risk to the supply side of the organisation. Therefore, sometimes it is the duty of procurement to analyse the financial…

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