Tutorial

1. Introduction to procurement (outsourcing, definition, case study)

Procurement: The acquisition of appropriate goods or services at the best possible total cost in
conformity with applicable laws & regulations.

It covers all purchasing activities to give buyer the best value for money

2. Purchasing development model

3. Purchasing ethics (case study)

Ethics: a set of moral principle or values guiding behaviour

 An ethical buyer treat supplier in a just decent, fair, honest & fitting manners
 Being ethical means following a code viewed as fair by those within the profession as well as
the community.

3 rules of ethical behaviour

1. Commit to organization's benefit rather than personal interest

 Do not accept outside gifts that violate firm’s ethics policy.
 Not influenced by the unethical practices of salespeople.
2. Buyers must act ethically towards suppliers or potential suppliers.
3. Buyers must uphold the ethical standards set forth by their profession.

Types of Unethical Behavior

1. Reciprocity - giving preferential treatment to suppliers who are customers of the buying
company, which resulted in higher purchasing prices or inferior service.
2. Personal buying - purchases for personal needs
3. Accepting supplier favours - accepting gifts & favours
4. Sharp practices - dishonest or barely honest dealings
5. Financial conflict of interest - buyer or buyer’s family have a direct financial interest with
the supplier

Risks of Unethical Behavior

 The risks that the act is also illegal

 Personal risk to a buyer’s professional reputation
  Risk to a firm’s reputation & public images
 Affect company’s performance
 Difficulty to retain loyalty: suppliers, clients, employees
 Risk to maintain harmony & teamwork spirits
 Jeopardize trust.

Firm’s Actions to Enhance Ethical Behavior

 Developing a statement of ethics

 Top management commitment
 Closer buyer seller relationship
 Ethical training
 Developing consistent behaviour
 Internal reporting of unethical behaviour
 Preventive measures (commodity rotation & limit of authority)

4. Inventory (classification, order cycle)

5. EOQ calculation
6. Record accuracy (definition, advantages & disadvantages)

7. Countertrade (definition, types)

8. Negotiation (phases, definition)

9. Supplier selection and evaluation (criteria, condition)

10. E-procurement (case study)

11. Break even point calculation
12. Negotiation (case study)