Risks and Strategies of Procurement

Problem Identified in the Jam and Marmalades Company

Jams and Marmalades Company has an array of risks as far as procurement of the food products is concerned. The risks identified in the company’s procurement processes are in line with the following: the risks involved with the determination of the needs of the company and the planning for the procurements. Other risks are in the development of specifications, selection of the right procurement methods; in the preparation of the solicitation documents and the invitation of offers. There are more risks at the company’s evaluation of the offers and selection of the appropriate suppliers. Once the suppliers are selected, the company faces another risk in the negotiation of the contract and its administration.

The core role of management in procurement is to handle the risks and solve problems so that the customers’ and suppliers future and current needs are met. It is no exception at the Jams and Marmalades company, the leadership of the company is supposed to put in place proper plan and strategies to deliver the clients expectations. The strategies and the plan are to incorporate ways of minimizing the risks at the company or better still solving them for good.

To understand some of the risks facing the procurement department of the Jams and Marmalades Company, their detailed specification and their consequences and possible solutions are detailed. Under the company’s identification of its needs and the drafting of the plan on how to procure; there are several risks that are singled out from the case.

Problems, Evaluation and Possible Solutions

The first risk that comes out is the tendency of understatement of the company’s need; a risk that is causing the company to procure unsuitable services and products, unsatisfied Company’s need, and the crucial one is the loss of money through wastage. The only solution to this risk is to have proper plan that will ensure accurate analysis of the need.

The risk of overstatement of the need is also evident in the company, seen by the escalated expenses and the uncompetitive state of the company. The procurement management at the company needs to employ performance and functional requirements, besides accurate analysis of the need. The company reveals the risk of misinterpretation of the needs of the users, as shown by the increased cost and the total unacceptability of purchase of the products, and also the downtime experienced. To solve this risk, the management in procurement is supposed to consult with the customers extensively, and they should obtain statement of work and clarification of the need.

The company shows some delays in the purchases and additional costs in the process of re-tendering, which could only mean one thing; risk of insufficient funding. The risk can be minimized by the procurement officers obtaining approvals for every process undertaken, and also upgrading its planning process. The company is frequented with failed delivery schedule, low competitiveness, and response from the tenderers is inadequate; one could only deduce the risk of impractical timeframes. To solve this risk, Jam and Marmalades Company should better its forecasting, consultation with others and planning. The company’s communication with tenderers should also be made better.

The prevalence of the procurement costs’ escalation, resources’ misuse, unethical conduct, and unavailability of most suitable products at the company shows probity problems. The company can best minimize this risk by implementation of the best practice policies, practices and guidelines. It could also maintain ethical working environment, improve personnel s’ skills through trainings; and hiring probity advisors, besides bettering communication with probable tenderers.

The company reveals some risks related to the development of specifications. The few alternatives of the products witnessed in the company, unavailability of suitable products, and escalation of costs of procurement is sign of the risk of narrow definition in the procurement department. The procurement team should use required outputs while defining specifications, and put to use the performance and the functional specifications. Under specifications the company also reveals signs of the risk of defining of the inappropriate product or service by the procurement department. To solve the risk properly, the team should that the specifications are consistent with the needs analysis, boost the knowledge of the market and put to use the performance and the functional specifications.

The specifications of the company might be biased, since there is inadequate tenderers’ response and there are unfair dealings claim in the company. To manage this risk properly, the company should incorporate control mechanisms that will review the specifications of the procurement before they are released; and also make use of the functional and performance specifications. Jam and Marmalade food company shows some signs of insufficient response from suppliers, variety of offers, problems in the evaluation, and the products failure to meet the needs of the company; these clearly reveals risk of inadequate statement of requirements. The procurement team can manage this risk through familiarizing with the requirements of the company, employment of an expression of interest seeking clarifications.

The procurement of the company also has the risk of failing to identify possible sources as illustrated by the unavailability of offers from the right tenderers. The department should upgrade procurement planning processes to eliminate this risk. It can also promote market knowledge and encourage industry participation in the procurement process. Witnessed need for second offers, variations in the costs, and the unachieved value for money reveal the presence of the risk of employment of inappropriate means in the procurement process. The risk can be managed properly by bettering of the implementation of the policies involved in procurement, and tendering; proper documentation and sound evaluation criteria dealing with tenders.

The rampant cases of modifications in the terms and conditions of tenders, disruptions, and low response in the company show that the procurement department is facing the risk of terms and conditions being unacceptable to tenderers. The best ways to manage this risk is through, use of standard documentations that are designed by the Crown Law. The procurement team should also pick a good documentation for purchase type, improve planning on tendering, assessment and proper allocation of the risks, expand consultations with the Crown Law, and employ terms that are acceptable commercially at the same time equipping the team members with the right tendering skills. The conditions in the company reveal the risk of provision of inadequate information. Such a risk can be solved through training the staff and equipping them with right planning and documentation experience, promoting the planning and preparations involved in the tendering process; and also the management insisting on the thorough review of the tender documents before they are issued.

The availability of the unfairness claims, withdrawal of some offers and presence of offers with qualifications by tenderers is a clear sign that there is risk of failure in addressing enquiries from tenderers and even withdrawal. To manage such risks, the procurement team has to use standardized procedures while responding to enquiries, and equip the team members with the right tender management skills and experience. Another better way of managing such risks is through timely response to enquiries and provision of adequate time for the tendrerers’ response. The same signs can also be an indication of the presence of risk of perceived or actual favoritism while providing information. To reduce the risk, while answering enquiries it is proper to put it in written and offer copies for confirmation by others; at the same time providing the information necessary to all the possible tenderers.

There is the risk of perceived and actual breach of confidentiality in the Jam and Marmalades Company as shown by the mistrust shown by the tenderers. The procurement team should manage this risk through establishment of official security procedures; ensure the employees have the right skills to carry their obligations, and to do timely checks of the security systems of the company and the procurement process. The company is forced at some point to do subjective instead of objective evaluation of tender offers, increasing the complaints from the tenderers. Such events show presence of the risk of failure to follow proper evaluation procedures. The risk can be managed or solved better by the procurement team if they provide the members with the right tender assessment techniques and improve the tender assessment process of the company as a whole.

The company has witnessed several cases of failed fulfillment of the contract with the tenderers selected. The event signifies availability of the risk of inappropriate supplier being selected. The risk should be managed or solved fully to ensure that contracts are adhered to by the suppliers. To achieve this solution, the procurement department of the Jam and Marmalade Company should train the staff on the appropriate evaluation approaches; technical and financial skills, and commercial expertise. The strategies discussed throughout the paper are the ultimate solution to the risks encountered in the procurement departments especially in the food industry.

Exchange rates between UK and Greece has been a big risk for the Jam and Marmalades Company. While importing the supplies from Greece, the prices given by the tenderers keeps on changing as per the state of the exchange rate. Whenever the Greece currency gains value against the Britain pound, the prices of supplies are increased and vice versa when the pound’s value increases. The instability in the prices due to exchange rates fluctuation poses a threat to the budget plans. The procurement should devise a better plan to handle the fluctuations, for instance, they should not make a budget that is fixed but give some allowances in their tender budget to accommodate the fluctuations and avoid failed supply contracts.


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