After a barrage of concluding questions in my previous article of Stage III you might wonder how will I answer these questions and where will I start?
The start is here and now. In Stage III Article-2 I had discussed about the Rummler and Brache, a great tool to capture Sourcing and Procurement ‘AS-IS”.
The martix above captures essence of Rummler and Brache’s frame work. The bi-directional arrow heads that you see should be considered a spectrum, including those that are diagonally aligned. It is important to treat these arrow heads and the areas they cover as spectrum due to lack of clear demarcation in the responsibilities that one sees in real world organisations.
The following are some of the questions that I used in semi-structured interviews to capture the current state of affairs at X’s various purchasing departments.
1A. Org level goals & concerns
1. What is the role of Business Services department within X?
2. Which are the most critical functions with-in BS that will make a difference to X?
3. Why do you think these are critical?
4. What are you seeking to achieve through these functions?
5. What mechanisms or processes do you have in place to deliver these functions?
6. What problems/issues are you currently facing/ you anticipate facing when working on and with these functions?
7. How do you plan to overcome these issues?
8. How do you ensure the process goal/departmental goal is in line with business goal?
1B. Org level design & concerns (Focus on Procurement/P&P/IT) (1B)
1. What processes/mechanisms do we currently have in place that caters to organisation’s procurements/P&P/IT needs?
2. If yes, who are the current owners? Do we have a purchase department or function?
3. If no, it cannot be NO because then the business stops functioning!!! No, could be an answer that could come out of lack of knowledge.
4. How are resources allocated to each of these functions? – Man power, budget, IT, etc
5. Any specific areas of concerns? - Quality, Speed, Dependability, Flexibility, Cost?
6. Why is it an area of concern?
7. Do you see any duplication of efforts in the work flow? Why do you consider it to be so?
8. How do you detect duplication of work?
9. Do you see any miscommunication in the work flow? Why do you consider it to be so?
10. How do you detect miscommunication?
11. Where do you source your information from to make business decision?
12. Decision on demand variation in the market? – Capital goods, Outsourced service & Materials
13. Decision on supplier pricing? Of all above and IT
14. What decision making processes is in place? Who do you involve in the developing decisions?
15. When do you outsource manpower? Why do you outsource man power needs?
16. How do you approach manpower outsourcing?
17. How would you describe EINW’s relationship with your suppliers?
1C. Org level management & concerns (Focus on Procurement/P&P/IT) (1C)
1. How do you ensure accountability in your department?
2. What measures do you have in place to ensure Quality, Quantity & Timeliness? – of procured goods & services
3. How do you ensure the employee has all the information needed to carry on the task assigned?
4. How do you ensure documentation, training and employee needs are being met regularly?
2A. Process level goals & concerns
1. What is the role of your department/process/function within EINW?
2. What procurement strategy/policy do you have in place?
3. Which are the most critical functions with-in your function that you think makes a difference to EINW?
4. Why do you think these are critical?
5. What are you seeking to achieve through these functions?
6. What mechanisms or processes do you have in place to deliver these functions?
7. What problems/issues are you currently facing/ you anticipate facing when working on and with these functions?
8. How do you plan to overcome these issues?
9. How do you ensure the process goal/departmental goal is in line with business goal? Can you spell this goal out for me?
2B. Process level design & concerns [Sourcing]
1. How do you recognize and identify business need for procurement?
2. Do you differentiate between procurements for internal consumption or External Trading?
3. How do you validate need for procurement?
4. How do you budget procurement?
5. Do you carryout risk assessment before procurements? Yes – when? No – Why not?
6. How do you develop specifications for the goods/services being procured?
7. How do you source suppliers? First time purchase, repeat purchase?
8. How do you handle emergency, out of turn needs?
9. How do you ensure Value for Money (VFM) for the procurements that you make?
10. What procedure do you follow in requesting quotations?
11. How do you develop legal framework for the procurement being made?
12. Do you invite tenders? When? Why not?
13. How do you evaluate the quotations and the tenders received?
14. How do you carryout legal and financial check of the selected suppliers?
15. How do you select supplier/s?
16. Do you notify unselected supplier? How do you do it?
17. How do you complete legal formalities? Do you enter in to agreement for every purchase made or is it cash and carry?
18. Do you differentiate procurement based on value of purchase? What other criteria or classifications do you have?
19. Do you differentiate between purchase of goods and services that you make? What other criteria or classifications do you have?
20. Who is authorized to issue purchase orders?
21. How are supplier payments initiated?
22. What IT systems, services or infrastructure do you have in place to support your P&P?
2C. Process level management & concerns
23. What is the average turn-around time between supplier identification and issue of purchase order?
24. What is the average turn-around time between issue of purchase order and receipt of goods/service?
25. Average cost of tendering?
26. How many tenders are issued in a year? Half year? quarter? And in a month? Any seasonality patterns?
27. How many goods and material suppliers used in one year? Half year? Quarter? Month?
28. How many service suppliers used in one year? Half year? Quarter? Month?
29. How many of these suppliers were customer nominated?
30. Do you maintain separate records for capital goods, materials or services purchased?
31. How many rejections per year? – Good/services break up?
32. Average total procurement cost? – Cap good/Material? & Service?
33. Breakdown of total procurement cost? – Cap good/Material? & Service?
34. Average total acquisition cost? - Cap good/Material? & Service? [goods + Transaction]
35. Average total transaction cost?
36. Average cost per transaction?
37. Average cost per supplier?
38. Average total tenders per supplier selected?
39. Average cost per tender?
40. Average creditor period?
41. Average labor cost per tender?
42. Average labor cost per supplier?
43. Average inventory hold period? Trading goods/materials.
44. What value evaluation mechanism do you have in place for the procurements that you make?
2B. Process level design & concerns [ICT]
1. How do you recognize and identify business need for ‘a’ IT solution?
2. What ICT strategy/policy do you have in place? What is the overall objective of IT in EINW?
3. What drives ICT strategy/policy?
4. What IT systems, services & infrastructure do you have in place? Which business function/s do they support?
5. How do you validate need for IT procurement?
6. How do you budget IT procurement?
7. Do you carryout IT risk assessment before procurements? Yes – when? No – Why not?
8. How do you develop specifications for the IT goods/services being procured?
9. How do you source IT suppliers? First time purchase, repeat purchase?
10. How do you ensure Value for Money (VFM) from your ICT?
11. IF IT DEPARTMENT CARRIES OUT ITS OWN PROCUREMENT, THEN GET ANSWERS TO QUESTIONS LISTED IN THE 2B PROCUREMENT SECTION.
12. How has ICT benefited your organisation?
2C. Process level management & concerns [ICT]
1. Do you have a comprehensive and coherent IT architecture for EINW?
2. How do you evaluate/measure the effectiveness of the current IT systems?
3. How do you ensure relevance & currency of IT strategy?
4. Do you have a breakup of Systems, Services & Infra that you use? Yes, -can you provide me those?
5. How do you measure cost effectiveness of the IT system in place? (any bench marks –reuse, -vs-)
6. Current Total cost of ownership of the IT systems? – Systems, services & Infra.
7. Current measure for ROI on IT spending?
8. Any other measures of value evaluation that you have in place for IT spends?
2B. Process level design & concerns [P&P]
1. How do you recognize and identify business need for ‘a’ Project/Program solution?
2. What P&P were carried out in the last 12 months? Break up?
3. Who approves initiation of internal projects?
4. What P&P methodologies do you have in place? Why do you use them?
5. What is the overall objective of P&P function within EINW?
6. What drives P&P strategy/policy?
7. How do you budget P&P initiative?
8. Do you carryout risk assessment before P&P initiatives? Yes – when & How? No – Why not?
9. Where do you source your P&P resources from?
10. How do you ensure Value for Money (VFM) from P&P initiatives?
11. IF P&P DEPARTMENT CARRIES OUT ITS OWN PROCUREMENT, THEN GET ANSWERS TO QUESTIONS LISTED IN THE 2B PROCUREMENT SECTION.
12. How has ICT benefited P&P?
2C. Process level management & concerns [P&P]
1. Do you have a comprehensive and coherent P&P policy for EINW?
2. How do you evaluate/measure the effectiveness of the current P&P methodologies used?
3. How do you ensure relevance & currency of P&P undertaken?
4. Do you have a breakup of Systems, Services & Infra that you use? Yes, -can you provide me those?
5. How do you measure cost effectiveness of any new P&P initiative? (any bench marks –reuse, -vs-)
6. Average life time cost of project undertaken in last 2/3 years?
7. Current measure for ROI on P&P spending?
8. Any other measures of value evaluation that you have in place for P&P spends?
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