Procurement and Contracting Process Assessment Case Study

Pages: 8 (2550 words)  ·  Bibliography Sources: 7  ·  File: .docx  ·  Level: College Senior  ·  Topic: Business

SAMPLE EXCERPT . . .

Hot news may land on the hand of the competitors before reaching the consumers.

Company may not able to develop talent for this function

Business Process #5 Editing

Cost saving. Hire only when the editing service is needed

Get high quality service for this function

Provide fresh perspective on the editing service

Inability to develop skilled employee for this function

From all the business processes of Travel Magazine, there are five business functions the company should outsource. They are Advertising, Distribution, Article, Editing, and Photograph. The company should outsource these functions to lower costs and concentrate on the core functions of the companies. Moreover, the company should outsource these functions to have time to develop the competence of in-house employees. The business processes that the company should keep in-house are Accounting, Printing, Publishing; Layout, and Editorial.

Table 2: Business Processes that should be Outsourced vs. In-House

Outsource Business Process

In-house Business Process

Advertising

Accounting

Distribution

Printing

Article

Publishing

Editing

Layout

Photography

Editorial

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Careful selection of vendor is very critical before Travel Magazine could enjoy overall benefits of outsourcing. The paper discusses the vendor selection for the outsourced business processes.

C: VENDOR CONSIDERATION

TOPIC: Case Study on Procurement and Contracting Process Assessment Assignment

Vendor selection may be very complicated. However, with careful selection of vendors, Travel Magazine will enjoy the benefits of outsourcing. Since the company will need to outsource different business processes, one vendor may not have all the competent to carry out all these functions. Thus, Travel Magazine will need to seek for the service of number of vendors to carry out outsourcing. Based on the business processes to be outsourced, there is a need to describe the vendor selection procedures.

Vendor Selection Procedures

There are several criteria that could assist Travel Magazine in the selection of vendors. Travel Magazine will need to form the vendor evaluation team to search and select the appropriate vendors for each of the business process. There are steps that the evaluation team should employ to select the appropriate number of vendors for the company.

1. Vendor Search

The first step is to conduct a search for vendors. By searching for vendors, the evaluation team will be able to identify the number of vendors that will meet their requirements. The requirements to identify the competent vendors are operational, technical, commercial, and legal criteria.

Operational criteria involve experience, ability to execute, management strength etc. The technical criteria involve certifications, technical qualifications, profile of employees, development capabilities and development maturity. Commercial and legal criteria for vendor selection are financial stability years in operation, Terms and Conditions, pricing mechanisms, and contract terms. (Cheung, & Hidders. 2011).

Next selection procedure is to write a Request for Information (RFI) and distribute it to the selected vendors. The evaluation team will evaluate the responses and shortlist the small number of vendors for the next round.

2. Request for Proposal (RFP)

After selecting certain number of vendors, the next stage is to Request for Proposal (RFP) as well as Request for Quotation (RFQ) to evaluate each vendor. From the content of the proposals, the company should be able to identify the list of vendors that will serve the company interest.

3. Proposal Evaluation and Vendor Selection

The next stage is to evaluate the proposal submitted and examine whether the proposals meet the business requirements. Based on the proposal, the evaluation team will calculate a Total Performance Score and select the winning vendors.

4. Contract Negotiation

The final stage is contract negotiations with the number of vendors that will deliver the business processes. Travel Magazine should negotiation the best possible deal with the selected vendors. The interest of the stakeholders should be put into consideration in the negotiation deal.

After the company has established the contracts with the selected vendors, the next stage is to track the performances of the vendors to ensure that they deliver the required performances.

Performances Target

The most effective method to track the performance of each vendor is to create a balanced scorecard. The balance scorecard provides the most effective method for measuring the performance of a vendor. The methodology to monitor the key performance areas include:

Productivity

Service quality (effectiveness of application delivery)

Achievement of financial targets

Client satisfaction

Future value

Timeliness of delivery

The scale 1, 2, 3, 4 and 5 could be used to rate the vendor performances where 1 is rated very good, 2 rated good, 3 rated average, 4 rated poor, and 5 rated very poor.

(Business Objects 2010).

Moreover, the company could also track vendor's performance-based whether the company has been able to lower costs. The operational costs before and after the contract deal will be compared. From the difference, the company will be able track the performances of the vendors.

Procurement Plan

Project Name

Business Process Outsourcing

Procurement Statement

To procure BPO of Advertising, Distribution, Article, Editing and Photograph

Estimated Costs

$2,500 for each BPO

Start Time for each BPO

05 January 2012

End Date for each BPO

05 July 2012

Contingency Planning

Contingency planning in case of unsatisfactory vendor's performances include:

Creating test period to evaluate the vendor performances

Create agreement with a vendor to refund after 30 days in case its service is not satisfactory

Start the vendor with small contract to evaluate the performances before outsourcing the entire BPO

Agree to pay the vendor on instalment

Create a back up for all IT software

Last resort. Change the vendor

(Office of Information Technology Services 2006).

References

Business Objects (2010). Optimizing Profits Through Vendor Performance Management. RIS White Paper. USA.

Corbett, M.F. (2004). Outsourcing Revolution: Why it Makes Sense and How to it Right. A Kaplan Professional Company. Chicago.USA.

Cheung, M. & Hidders, J. (2011) Round-trip iterative business process modelling between BPA and BPMS tools. Business Process Management Journal. 17(3):461 -- 494.

Jacks, T. Palvia, P. Schilhavy. R et al., (2011) A framework for the impact of IT on organizational performance. Business Process Management Journal, 17 (5):846 -- 870.

Khalfan, A. (2003).A case analysis of business process outsourcing implementation and project failure profile problems in… [END OF PREVIEW] . . . READ MORE

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