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Aung Kyaw Moe / Task 5 Procurement

Memo
To: From: Date: RE: Francois Damba Aung Kyaw Moe
29 May 2013

TASK 5 PROCUREMENT

The Information Required for a Report on Supply Market According to the learning materials, there are major information to collect about a supply market in order to create a reliable report on a given supply market. They are (1) Type of goods and products available in the market, (2) Competition among various suppliers and (3) The size of market and access. We can see each part related to the salt and sugar supply market. Type of Goods and Products is one of the main factors that determine the market. Certain Goods like salt and sugar are not very specific like drugs and medicines where there can be only a few limited numbers of the suppliers. Even for salt and sugar which are quite common household products, the large scale suppliers that can supply the goods up to the level we need in a regular basis are not easily available. Some of them are real manufacturers but some are just wholesales dealers connected to the main producers in the market. We need to collect data and information about all sort of possible supplies available in the market. Even salt and sugar may have many varieties and quality. Some are locally produced whereas some are imported from foreign countries. Some have recognizable brands and approval from FDA authorities whereas some are unbranded and unauthorized production. Some are of very high quality and durability whereas some are very low in quality and not suitable for human consumption especially for children. We need to enquire all these information about the type of goods and products available in the salt and sugar markets. For programmatic usages, the breakdown chemical compositions and energy values of these food products are very important and we have to provide all these specific technical information to our colleagues. These products must be specified in order to fit for the purpose but we have to avoid unnecessary restrictions on the type of goods and supplies. Competition among the suppliers of same kind of products is also a determining factor that can influence on price and availability of the products. Since Betaland is an agricultural country that mainly depends on her fertile soils, there are many local producers of sugar and salt. So hopefully the supply market for Salt and sugar is not that of Monopoly Market where a single supplier reigns and dictates on the prices of the products. But it might be Oligopoly markets where a few numbers of great suppliers dominate on the market. We have to investigate whether there are some cartels or coordination among competing suppliers to fix prices. At the same time, we need to check that what is the role of government and how much

it has control over the market or the market behaves itself freely and fairly by the principles of supply and demand. The Market Size is another factor to be monitored and obtain fast moving data and information about where the prevailing market is leading, it is expanding or it is contracting. Actually Betaland is a poor agricultural country where 68% of the people are working in the agricultural sector, so the main segment of the whole population are consisted of vulnerable farmers. We have to collect information about whether market is decreasing or increasing. Possibly there will be a natural disaster like Bharat Hurricane and that will make the local supply market to be effected. Market can be shrinking as the beginning of emergency, but it can expand because of the flooding of international humanitarian aids funding into the countrys supply market. Obtaining Information about the Suppliers in the Market According to the learning material, there are three types of suppliers as follows: (1) Manufacturers are the ones who produce the goods and commodities. As they are standing at the starting point of the whole supply chain, they are able to make decisions on the volume of goods they will produce and stock. They can control the price and quality of a product. (2) Wholesalers, distributors and retailers are the ones who purchase product from a manufacturer and then sell these products to organisations or to individuals. As part of their business, they have to maintain a minimum level of stock. (3) Traders do not have production capacity and will not hold stock. Traders will source products from the above sources. The goods they supply may be inferior in quality, for example, damaged or out of date, or they may be old stock/products that the manufacturer has stopped producing. Organisations may have sourcing policies that traders should not be used as sources of goods and services. In this sense we need to identify our respective supplier are manufacturers or wholesaler or retailers or just traders. Another thing we need to see about them is are they single source suppliers (the only supplier able to supply the particular product in the market) or multiple source suppliers where there are more than one supplier in the given market. As long as there are multiple suppliers in the market, we should try to get them in a competitive way. It is too risky to have a single source supplier since he can monopolize the market and dictate on prices. The advantages of multiple sourcing are that we can have back-up suppliers if one supplier fails and there are other suppliers who can supply what we need. Here below are the important points of information we should get from our supplier to create a profile of our suppliers in the market and we can measure their strength and weaknesses: We can get these information by paying visit to them in person and interview them. Ownership= Sole proprietorship/ private company/ public company Legal Status= Company registration/ Sole Authorized dealer/ distributor Financial Strength= Annual Turnover/ assets and liabilities Human Resources Strength= Staffing level/ professionalism/ Training Assets= Factory/ Warehouses/ means of production and transportation Quality Control of Products and Monitoring System Inspection and Evaluation by Professional bodies/ Certificates like ISO Reputation among customers= UN/ INGO/ Government procurement bodies Networking= Local Market and International markets Best Regards, Aung Kyaw Moe Logistics Officer Sub-Office (SCILaid Betaland)