SCM420 Question

PROCUREMENT PLAN 17

SCM420: Procurement and Acquisition

Colorado Department of Revenue

Theodore Hickman

8 June 2017

Table of Contents 2

Organizational Overview 3

Materials Purchased 5

Bid and Proposal Documents 7

This outline provides a detailed review of Procurement Plan of my final project. The details will be in reference to the Colorado state government is a government entity responsible for the affairs of the state of Colorado. It is responsible for governing within the state. It has departments such as the department of revenue which is responsible for regulating some industries in the state such as Gaming, motor vehicles, and even marijuana. It also contributes to helping the needy in the state by administering a lottery whose precede go to the needy.

The procurement process of the state departments is not very different from other types of procuring things in other government departments. The acquisition process is mostly modernized, and there is the use of electronic platform known as e-procurement. This is said to be better and also transparent. First, there is the identification of need. This can be anything that is necessary for the smooth operation and sustainability of the organization. The needs are mostly determined by daily activities. They can come from activities of an individual in the organization or department which are eventually the organization needs. This stage is primarily characterized by the need to purchase where the notification can be raised by the end user or from stock control in stores.

Next, there is need to determine the specifications of the need. The specification can range from technicality, performance, brand, functionality, sample or even designs (Dobler & Starling, 2006). There is the need to update the specifications now and then so as it can be easy to find the best which would fit the gap. A sample type of the need helps in guiding where specification can be troublesome. Once the need is stipulated, and the item is final, the system checks if there is a supplier who has been approved that is already in the system database. This is to make sure that the seller is not available. If the seller is available, it would be easy to purchase as they might be an already assigned contract. The contract will have established all the relevant issues, and they would be no need to repeat the work again. If there is no supplier purchasing looks for new suppliers. This is done by forwarding a request for quotation. This is done so as to inform providers of the need and also to invite them to submit bids for the contract at hand.

Before a vendor submits a bid, they may sometime evaluate to know the needs well. The most significant activity is the selection of suppliers as a mistake can be bad to the company. There is always a sourcing team that chooses the supplier and authorizes the purchase. Purchase approval is done through electronically drafting of the acquisition agreement (Pablos, 2013). The purchasing agreement is prepared using the standard legal conditions. Thus it is a legally binding document. It includes information such as price, order number, delivery date, and quality requirement. The next phase is the transmission of purchase requirements. Orders are mostly interchanges through electronic data transfer. This is done by sending the purchases document through fax so as to save time and shorten the purchasing cycle. When shipping or receiving some of the following documents are used such as the packing slip, bill of lading and the discrepancy report. After the cycle is complete, the department keeps track of the performance of the supplier. This help in knowing the supplier well for future purchases.

Colorado state government department’s does things slightly than the organizations. Such as: the depending highly on the electronic platform. Not only do they use it for bidding they also use it or sending important documents which are uncommon in many organizations both public and private.

Unit 1

The state government is responsible for the purchase and approval of everything that is being purchased by each department. Its procurement departments receive all the requests from all the other departments and makes enquiry for the products or services. Being a large organization that is guided by guidelines all materials and services purchased are done by competitive bidding.

The state government purchases services such as building and maintenance of roads within the state. These services are mostly given to large construction firms. The services might take a range of months to complete. The state government also purchases other types of services ranging from information technology services such as the designing and maintenance of the state websites and servers, to transport such as servicing of the state cars from time to time. This makes it a large purchaser of services in the state.

Apart from purchasing services the state also purchases materials that are used in day to day activities. They range from office furniture to new cars. All materials that are purchased must follow the required channels which are the electronic procurement process. This makes sure that the state government money is accountable for.

The state government does not produce any material used in any of its services. An organization which wins the tender is supposed to bring its own materials for usage in the service. This is common to the construction companies when they transact a business with the government. The state government is independent on its own and does not require the approval of anybody or organization when deciding what to purchase. This makes sure that all purchases are processed faster in the required time.

Most of the software that is purchased is the most common. They include the basic windows operating system and the office package. They are used in the smooth running of the office.

Unit 2

Request types to be used:

After the organization has made arrangements on each one of these aspects, the next most important step is informing the potential suppliers of the needed products the availability of the contract. The organization does this through the utilization of a bid request. The bid request is the formal means through which the Colorado state government announces all the available contracts through which the individuals that qualify can place bids. The bids placed are obtained through the competitive process where the procurement department selects the organization that is most qualified and one that favors the interest of the government in the most relied upon means.

There are some request types that can be utilized to announce a bidding contract. The first method is through the media utilization as the means of sending the request. This method is appropriate when all the qualified organizations are free to make bids of the contract. In some occasions, the organization may want to make the contract open to only a few suppliers who are used to making the supplies. In such occasions, a request method like that of mailings to the specific organizations is utilized. For the case of the Colorado state procurement department, however, the contract is open to all individuals who are qualified to make the bid. They are therefore posted in the media and online to ensure that almost all suppliers can view the availability of the contract bid request and that they make a bid if they are qualified (Garrett, & Parrott, 2007).

After the information is sent to the suppliers, the organization aims to have the suppliers compete to provide the most favorable terms of making the supplies. This aspect is important in that the organization can force the individuals who bid the contract to make offers of the best terms. From these offers, the organization makes its selection of the supplier organization that is considered to be the most qualified and favorable according to the specific provisions of the contract. With this understanding, the process requires having a means through which the individual supplier organizations can provide feedback to the organization regarding the contract. This section of the process is known as the sealing of the bids. In this section, the supplier organizations send specification to the state government regarding the price and the time after which the organization can deliver the supplied product. Each one of the organization that is interested in making provisions for the government, provides this information as the activity of bidding for the contract.

After this information is passed from the suppliers to the organization, the next major step is assessing the information to select the organization that will be given the contract of making the suppliers. The state government has many resources. These resources are however scarce compared to the many needs that it requires to meet with them. With this understanding, therefore, the first major aspect of concern is the cost that the organizations are willing to make the suppliers of the indicated products. The cost that the organizations indicate is, therefore, one of the elimination criteria that the state government utilizes to eliminate some organizations from being considered as the ones to supply the requirements of the contract. The cost of the products is thus a major aspect of concern for the suppliers when they are about to make bids for the contracts at hand (Gross, 2012).

Criteria of Assessment of bids

Unit 2

The state government utilizes criteria while considering the bid information on the organizations that placed bids for a contract. This criterion helps the organization only to consider the organizations that are most qualified for a contract and not in any way offer a contract to an organization when there is a possibility of having the same contract delivered by another organization with better terms. The first term and aspect of consideration within the criteria is the qualification for placing a bid on the contract. The organization assesses all the organizations that bid for the contract and verifies whether these organizations are qualified to attain a qualified. The qualification is determined through the utilization of certain conditions that the government set for all the organization that can attain a bid of its products. An example is a requirement for the organizations to be a fully established company that has been in operation for certain duration of time. Any organization that is realized to lack the documentations which verify its qualifications to attain a government contract is eliminated from the list of the organizations that are to be considered for the contract at hand.

The second main aspect of concern after this is the cost that the organizations are willing to offer their products with. The cost will help the government not to pay significantly large amounts of money for services that they can receive with fewer amounts from other organizations. After the aspect of cost, the other part of this criterion is the determination of the reliability of each organization. Like for the case of all other organizations, the state government would prefer to carry out business activities with organizations that are highly reliable, compared to the organizations whose reliability has not been verified. This aspect is important because in case the government offers a contract to an organization that is less reliable, problems might occur which might require the repeating of the whole bidding process again. This clarifies the need to understand that reliability is of significant concern in these projects (Arthur, 2017).

Types of contracts

Unit 3

The Colorado department of revenue has the mandate of ensuring that it selects the best contracts that are best suited for its operations. The Colorado department of revenue purchases products such as firefighting, refrigeration, pumps and compressors, nuclear reactors, and salvage services among others from the suppliers. It suggests that there is the need for the department to identify the best contracts that it should use to conduct its transactions with the suppliers. The main aim of the Colorado department of revenue should be to ensure that it works towards reducing the cost of its products and projects. In other words, it should ensure that it understands how best it can conduct its procurement activities so as to ensure that it attains effectiveness towards the achievement of success.

Different contracts can be used by the Colorado department of revenue to conduct its transactions. The most effective contracts that can be used include by Colorado Department of Revenue includes the fixed-price contracts, cost-plus-fixed-fee contracts, cost-no-fee contracts, and cost-plus-incentive-fee contracts (Blum, 2007). The fixed-price contracts will allow the Colorado department of revenue to have the prices of the different projects and acquisitions determine in advance before the business can start. The cost-plus-fixed-fee contracts refer to the situation by which the transactions entered into by the Colorado department of revenue will have their prices determined once the projects are complete so as to have some amount added to the cost of acquisition.

It is effective since it allows the organization to be in a position to evaluate the amount of profit that should be associated with the cost. The cost-no-fee contracts refer to the contracts that require the organizations to receive the equipment and tools at the same price that they cost to build. The cost-plus-incentive-fee contracts refer to the contracts that require the price to be determined based on the performance effectiveness of the tools and equipment. Most of the organizations are required to take the time to calculate how much it is going to cost them to do different activities with the use of the authorities’ contracts.

Why are these contract types most relevant for your organization?

The organization makes use of the request for proposal (RFP) so as to conduct transactions that relate to professional accommodations and information technology. Therefore, the different types of contracts allow the organization to choose the best product based on the different procurement activities it intends to conduct. For instance, the RFPSs are best suited with the fixed-price contracts since they allow the organization to focus on ensuring that it takes into consideration factors such as the price of acquiring the accommodations. In other words, the contracts guide the organization when bids take place so as to know the best methods that should be used for it to attain profits.

What specific cost management tools and techniques will be used by your organization?

Some of the best techniques and tools that can be used by the Colorado Department of Revenue include the use of budgets and the use of project management teams. The budgets are meant to ensure that the organization works in a manner that will not lead to a situation where it can go beyond the budget that has been implemented (Springer, 2005). The project management teams will be mandated to ensure that they continuously conduct effective allocation of resources to the different departments. Also, it will be the responsibility of the project management teams to ensure that they closely monitor how the funds are used by the different units so as to ensure that costs are reduced. Therefore, with this in mind, the Colorado Department of Revenue will be in a position to succeed.

Third-party logistics

Unit 4

Third-party logistics refers to the situation by which organizations tend to use other companies to conduct some of their activities. In other words, it is the process by which companies outsource some of the activities to third-party firms so as to aid in the distribution of the goods and services (Folinas, 2013). The Colorado Department of Revenue is required to continually receive goods so as to ensure that effectiveness is maintained as it continues to perform its activities. Therefore, it is necessary for the department to make use of the third-parties as a way of improving its procuring activity.

Describe the use of third parties for logistical purposes

There are different uses of the third-parties in logistics which improve the effectiveness of the Colorado Department of Revenue. The third-parties are used for warehousing activities since they own different warehouses that can be used to store materials. The warehouses are used to keep enough stock so as to ensure that the goods can be acquired with ease when they are needed. Moreover, the warehouses are used to ensure that there is continuous production and supply of goods since there is always enough to cater for the demand. Therefore, the third-parties aid the Colorado Department of Revenue to acquire all the materials that they need to procure with ease.

The other purpose of the third-parties is to provide transportation services. In other words, the third-parties are used to transport the materials that are ordered to the respective locations. Therefore, the Colorado Department of Revenue will make use of the third-parties so as to ensure that they transport the materials to the business premises. With the activity, the department will always make sure that it can access the materials that have been procured with ease. Therefore, the third-parties are used to ensure that they add value to the supply chain. In other words, they are used to ensure that the supply chain activities are conducted effectively which leads to improved supplier relationships.

Supplier Relationship Management

Unit 4

It is the mandate of the Colorado Department of Revenue to ensure that it maintains good relationships with the suppliers. The primary aim of the improved supplier relationships is so as to ensure that they suppliers are always willing to supply goods and services when asked to do so (Liu, 2012). In other words, good supplier relationships lead to a situation where the suppliers are always willing to perform all their activities as it is expected of them. Different ways can be used to improve the supplier relationships which include paying them in advance. In other words, when suppliers receive a certain portion of the full payment before they supply the goods; they are always motivated to ensure that they take all the best steps possible to deliver the goods on time.

Also, the relationships can be improved by paying on the goods that are received on credit either on or before the agreed date. It is so as to ensure that the suppliers improve their trust and loyalty to the organization since they will be aware that all the contracts agreed upon will be respected. Also, the relationships can be managed by ensuring that the organization provides information on how the services can be improved based on the already services that have been received. Also, the suppliers should continuously review their services so as to realize and identify any areas that need improvement.

References

Arthur, L. (2017). Five Steps of a Bidding Process: Chron. Retrieved from http://smallbusiness.chron.com/five-steps-bidding-process-23870.html

Blum, B. (2007). Contracts: examples & explanations. New York: Aspen Publishers.

Burt, Dobler& Starling (2006) WorldClass Supply Management, 7th Edition: Tata McGraw-Hill, New Delhi.

Folinas, D. (2013). Outsourcing management for supply chain operations and logistics services. Hershey, Pa: Business Science Reference.

Garrett, G. & Parrott, G. (2007). Solicitations, bids, proposals and source selection: building a winning contract. Austin: Wolters Kluwer.

Gross, M. (2012). Optimisation of procurement processes by the example sanitartechnik eisenberg. Place of publication not identified: Grin Verlag Ohg.

Hershey, Pa: IGI Global (701 E. Chocolate Avenue, Hershey, Pennsylvania, 17033, USA

Johnson, P. F., & Flynn, A. E. (2014). Purchasing and supply management (15th ed.). New York, NY: McGraw-Hill.

Liu, J. (2012). Supply chain management and transport logistics. Milton Park, Abingdon, Oxon New York: Routledge.

Pablos, P. (2013). E-procurement management for successful electronic government systems.

Springer, M. (2005). A concise guide to program management: fundamental concepts and issues. West Lafayette, IN: Purdue University Press.