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In this assignment your group will integrate procurement tasks into a project.Consider the given case study (Procuring textiles made from recycled fibres: Ministry of Defence of the Kingdom of the Netherlands (MODNL); PDF file) and answer the following questions:
1. Explain each part of the “Flowchart for Optimal Utilization of Market Intelligence to Address Sourcing Challenges”.
Flowchart for Optimal Utilization of Market Intelligence to Address Sourcing Challenges
2. Analyze those factors that are important when MODNL needs to qualify and select suppliers for a project requirement.
3. Examine the key factors, including risk factors that affect buyer/supplier decisions concerning contract pricing and the selection of the proper contract type. Sourcing Execution

4. Given a procurement situation for a major contract, analyze the application of e-Procurement and other types of supplier bidding models available for MODNL.
5. Given a situation to solicit a bid proposal, evaluate technical, management, commercial and ethical requirements, and then prepare a RFP for MODNL.
6. Given the receipt of a proposal or competitive proposals for a major contract, determine the key factors used when negotiating an agreement or evaluating competitive proposals and establish a negotiating strategy for MODNL. 
7. Analyse and select effective contract management techniques to control contract cost,schedule and performance factors; as well as manage contract changes, contract claims and contract close out for MODNL.
8. Given a claim on a major contract, analyse the role of commercial terms and conditions, the uniform commercial code (UCC) and applicable government regulations on the outcome for MODNL.


Approach
• You can find a lot of information on the web about this. Do lots of Google searches.
• Be quantitative where possible. I would like to see percentages and numbers for the facts you use.
• Use in-text citations. Use APA referencing guide file.
• You should have at least 10 current references (journal papers and books) between 2014 and 2018. In addition to them, you can use websites.
• The report should be approximately 3500-4000 words in length (excluding references), so you will need to be concise.
• Provide specific answers to the above questions. You don’t need to provide an essay style report, and there is no need for introductions, abstracts or summaries. 

Explanation of the Optimal Utilization of Market Intelligence to Address Sourcing Challenges

Explanation of the Optimal Utilization of Market Intelligence to Address Sourcing Challenges

The below flow chart displays different aspects concerning the optimal utilisation of the market intelligence and address the sourcing challenges out of the same.

Scoping: The major scope of this project is to procure towels and overalls containing at least 10% recycled post-consumer textile fibres. MODNL mainly intends to acquire recycled fibre leading towards less environmental impacts.  Currently, there is a vast problem of environmental and social impacts which led the companies to focus upon the damages and take specific measures out of the same (Ngo, 2018). The team charter of the project is as follows:

Table 1: Team charter

Objective

Team members and responsibilities

Communication guidelines

Resources and support

· To reduce environmental impact issues

·         Procure recycled fiber

•   Project manager

•   project sponsor

•   Research team

•   The team is responsible to collect sufficient information about recycled textiles and contribute in the project 

•   Presentations and reports to convey the information

•    Weekly meetings with the authorities to exchange the information

•   Provide project status reports

·   Training sessions

·   Higher management support

·   Mentors

  1. Internal analysis: The major business requirement of MODNL is the acquisition of raw material or recycled textiles to explore its areas to wider senses. The public sector deals with the products and services having low impacts over the environmental and social conditions. It is mainly intended to collect the products having minimum of 10% recycled fibres for the production of textiles (Tran, Brihac, Nguyen and Hoon Kwak, 2018).
  2. External analysis: It has been identified that two major Belgian companies had come forwards with the supply of towels and wash cloths to MODNL. The companies ensure high percentage of recycled fibre nearly about 36% and 14% in the new textiles. The market acquires flexible supply and demand trends which lay positive impacts over the customers. The key players mainly involve Belgian companies, Seyntex, Jules Clarysse, etc. that supplies recycled fibre to the textile manufacturers (Ibrahimi, 2017).
  3. Strategy development: MODNL manages to acquire recycled raw material from different suppliers. The suppliers were asked to bid for the proposal and make contracts out of the deal. The best practice to initiate an effective contract made out of the bid from the suppliers seeking best deals out of them.  The zero based costing approach would help MODNL minimise the cost of procurement and conduct the project successfully. The approach is mainly carried out by using following steps such as identifying the decision unit, framing decision packages, ranking the decision packages, allocating the available raw material and monitoring and controlling the cost.
  4. Sourcing execution: Out of the bid only four suppliers were able to meet the requirements of MODNL. Two Belgian companies, Jules Clarysse and Seyntex were the suppliers which met the requirements and supplied the required products to the sector (Kerzner and Kerzner, 2017). It has been found that each bid was been assigned a score out of a possible 100 points based on price, the maximum percentage of recycled content and certification of this, and data sheets demonstrating the quality and materials used.
  5. Implementation: MODNL must ensure to make use of best practices of contracting such as formulating a clear strategy, develop an effective team, and make right choice of technology, continuous assessment of operations and results of the same. The project also includes effective practices of supplier management so that to make them satisfies out of the contract specifically. It includes the concerns over supply risk management, supplier information management and identifying an efficient supplier for the deal (De Araújo, Alencar and de Miranda Mota, 2017).
  6. 2. Factors that are important when MODNL needs to qualify and select suppliers for a project requirement

Qualifying and selecting suppliers for the project requirements includes wide range of complexities and risks towards the effectiveness of the project. The authorities of MODNL require focusing upon various different aspects related to the demands of project while qualifying the suppliers for further contracts. Following are some specific factors which need to be considered while making selection for the suppliers:

  • Total cost of ownership: The direct procurement and strategic sourcing team identified that the price of the services or products do not always depict the total cost of the recycled raw material. Some of the other factors like logistics, transportation and product quality also contribute as an addition in the total cost of ownership. The team must evaluate the overall cost of the project so that to qualify best optimum suppliers out of all. The evaluation of cost of ownership would help in extracting the best deal for the procurement project to MODNL specifically (Bouma,  Jeucken and Klinkers, 2017).
  • Product quality: The quality of products and services goes hand in hand with the total cost of ownership. It is the most important factor to consider while qualifying and selecting the supplier for the project. It is important that the products and services meet the basic requirements and criteria of MODNL and provide with the best satisfaction out of the same. The supplier must be selected by evaluating its product quality standards and the criteria of recycled fibre for the project particularly.
  • Supplier capabilities: It is another important factor which must not be overlooked by MODLN as it must be ensured that whether the supplier is capable enough to meet the demand of the project effectively (Kerzner, 2018). It must be ensured that the supplier can actually meet the demand on time along with the quality standards. The manufacturing suppliers must be capable to meet the set standards of recycled fibre and involve maximum percentage of the requirements into it.
  • Consistency: The concerned team of MODNL must also focus upon the consistency of the supplier to provide with the best resources for the project. It is important to ensure that the supplier is consistent in delivering the same results or standards every time. Ensuring consistency would provide with the longer period of relationships between the suppliers and MODNL leading both of them towards profitability (Kannan, 2018).
  • Risk: With the modification in the ISO standards and focusing upon risk management, it is the most critical factor to be considered while making selection of the suppliers. It is essential to identify and mitigate the potential risks involved in the supplier partnership. The team must evaluate the risk and establish effective measures so that to avoid any issues in meeting the project requirements and deal with the suppliers effectively. Risk management is important to be focused by the team of MODNL and manage the selection of suppliers accordingly (De Marco, 2018). For example, selecting a supplier with the risk of product quality standards could lead MODNL towards losses and various other issues.
  • 3.  Key factors affecting the buyer or supplier decisions

The decision making process of both the buyer and suppliers includes various aspects which are been focused on the basis of profitability to both the parties and making fruitful deals out of the same. In reference to the current project of procurement by MODNL, it is been identified that both the supplier and the buyer acquires specific criteria to be met. MODNL is a large public sector buyer intending to focus upon the textile industry and reduce the social and environmental impact caused by the same.

The buyer has proposed to procure and assess the possibilities for requiring recycled fibres to be used in the production of certain items of textile industry (Kim and Chai, 2017). MODNL thus decided to pilot reused fibre requirements in three lots: towels and wash cloths, overalls, and scarves and handkerchiefs. This made the suppliers to bid over the proposal and avail the project effectively.

However, there are various factors which affected the decision of both buyer and supplier to enter into the contract.  The factors such as contract type, pricing, project requirements, capabilities, trade regulations, product quality and risk lays a major impacts over the decision of both the buyer and supplier for the project (Mir, Aloysius and Eckerd, 2017). For example, having low product quality or failure to meet the product requirement would influence the decision of MODNL to deal with the supplier.

On the contrary to this, placing lower pricing contract would affect the decision of suppliers to supply the products to MODNL.  The decisions are also affected due to the disagreements on the type of contract to be carried out by both of them. In case of MODNL, the buyer had a specific requirement of procurement that the towel and overalls must contain at least 10% of the recycled fibre. The suppliers required to demonstrate their products through a microscopic testing which indicates the quality of product and specific criteria out of the same. This act also impacted the decision of suppliers having failure in meeting the specific requirements in the products (Lee, Kim, Kim, Kim and Ahn, 2018).

Qualifying and selecting suppliers for the project requirements

4. Analysis of e-procurement application and supplier bidding models

            There are different types of models and applications are used for managing the e-procurement functions and operations for an organization. According to the given case of the Ministry of Defense of the Kingdom of the Netherlands (MODNL) the organization has used the online application of bidding. The application works on functions that are based on the requirements of the company related to recycled operations and maintaining the environmental standards for manufacturing the washing clothes and supplying to consumers. The analysis of the e-procurement application of MODNL is as follows:

            The e-procurement refers to electronic data transfer to support the operational, tactical and strategic procurement that is based on the internet. The organizations are using this application for purchase of raw material, office supply, and facility maintenance. This function is important for the organization to improve the efficiency for validation of the whole process. There are several tools and approaches are used for managing the e-procurement functions for maintaining supply and bidding operations through the internet (Ortuzar Sevillano, Castro, and Uribe, 2017).

According to the analysis of existing e-procurement application of the company, the procurement messages are exchanged between the computers of two separate organizations related to required functions and data that requested by the other one. The EDI approach is used for transmission of data and confirming the order. The logistics and order invoices functions are also provided by the application for managing the documents as well as tracking the information on the system. Moreover, the system provides the separate module for handling the procurement functions related to the exchange and modification in the XML data for planning the functions and evaluation of the capacity of the suppliers.

            The function of e-sourcing is used for identifying the potential supplier during the selection phase and consideration of the requirements of the tenders. The application is offering separate information related to the supply schedule, contracting terms and selection phases for the particular order (Tokta?-Palut, Baylav, Teoman, and Altunbey, 2014). Apart from that, the application is helpful for managing the upward pricing mechanism for selling organization and downward mechanism for buying organization.

The application is beneficial for the organization to analyze the cost incurred on goods and services production, proper management of the procurement process for ordering, administration, and support for the team. Moreover, the application that used by MODNL is useful for specification formulation and supplier selection as well as the establishment of the relationship with suppliers.

Models for supplier bidding:

            For managing the contract and bidding of goods and services there are different types of models have been used by the organizations. Following are the key models that used by the organizations forbidding of the project:

  1. MBNP model:

            This model is based on Managing Bid and Negotiating Price (MBNP). This model is helpful for identifying the qualified suppliers and implementing the best method for determining the competitive request for particular bid. This model involve following steps of contracting:

Factors affecting buyer/supplier decisions concerning contract pricing and selection of the proper contract type

Specification: According to this model, it is essential for buying organization to provide the specified information related to tender (Kim, Suresh, and Kocabasoglu-Hillmer, 2015). For example, length, weight, standards, general criteria and time as well as cost limitations of the bidding for goods and services.

Request for Bid: The request of a bid will be enabled by consideration and acceptance of the specification of the buying organization for particular goods and services. However, the bidding application will allow all suppliers for sending the request but request criteria need to be accepted by them.

Bidding: This step of MBNP model involves functions related to bidding as the selected supplier after acceptance of specification can be able to bid against the tender pricing and negotiate with the buying organization as per their expertise (Rita, and Krapfel, 2015). The bidding will be allowed for 24 hours.

Review of the bids: In this process, the organization will evaluate the prices of the supplier and make the final contract.

Award of the contract: Each bid assigned with score and contract will be awarded to the bidder with the highest score.

  1. Commercial model:

            This model is also used for managing the procurement functions and biding for the tenders. Following are the key steps of this model that used for managing the procurement for goods and services:

Procurement notice: In this step, the buying organization publishes and notice for supply of goods and services by offering brief information regarding the needs and the final outcome (Alvarez-Rodríguez, Labra-Gayo, and de Pablos, 2014). 

Invitation to tender: After identifying some potential suppliers for services and goods, the buying organization invites for meeting or contact with them by using the online portals. In this process, the management analyzes their capacity against the requirements and shortlist two or three suppliers.

Interaction with bidders: In this stage, the buying organization makes the interaction with the identified supplier and negotiates for prices and quantity of the goods and services. This approach helps to evaluate the capabilities and actual costing of products and services that required for them.

Evaluation of tenders and contract award:  The final contract is developed by evaluating the tenders of the selected supplier and best cost that offered by one (Yu, Mishra, Gopal, Slaughter, and Mukhopadhyay, 2015). The evaluation also involves consideration of requirements and standards that proposed for the final supply of goods and services. The contract will be awarded to the organization that offers optimum price and specific goods as per the needs of buying the organization.

5. Bidding requirements and proposal for MODNL

            For e-procurement management and proper management of bidding approach to make the sustainable contract for supply of the goods and services, there are various types of bidding requirements are considered for increasing the effectiveness and outcome of the process. Following are the key requirements for bidding for supply of goods and services:

Technical requirements:

            The technical requirements of bidding project involve the consideration of State and National Regulations for maintaining the publication standards. The guidelines for technical functions for bidding involve the consideration of technology and tools that are used for managing the specify factors of information and data exchange (Nurmandi, and Kim, 2015). The design and development functions of the technical tools are also considered for approval of e-procurement process for an organization. In addition to this, the following standards are majorly considered for technical sustainability:

  • Safe database
  • Sustainable robust design
  • Easy maintenance
  • Online ordering
  • Invoice generation
  • Involvement of preparation phases

Analysis of e-procurement application and supplier bidding models

Management requirements:

            The management requirements for the bidding process involve the product definition, estimation of the local structure of contracting, customer perception, services view, and flexible billing process. The requirements that need to be considered for managing sustainable biding in terms of management, the organization will analyze the RFQ status, pricing and calculation methods and deliver view from the supplier side (Kochanova, Hasnain, and Larson, 2017). For example, the consideration of billing and delivery schedule for MODNL will be helpful for the organization to analyze the quality and duration. The specific analysis of customer needs and the material view will be beneficial for decision making.

Commercial requirements:

            The commercial requirements are based on market trends and owner specification for managing the supply of the goods and services. The commercial requirements can be measured in units, quality standards of the particular goods and services, total cost ownership and competitor analysis for maintaining the effectiveness for own bidding approach. The offered goods and services need to be according to market standards and regulations that followed by the industry to meet the objectives (Brandon-Jones, 2017).

Ethical requirements:

            The ethical requirements of contracting and bidding of a project involve the timeframe, proper determination of objectives and specification of the supplier section against the issues and criteria. The buying organization needs to maintain the proper communication with all potential suppliers and answer their questions regarding approach. The management cannot offer the extension for a specific supplier (Fernandes, and Vieira, 2015). Moreover, there will be information about the currency that used for managing the bidding event and percentage difference between one bidder and lowest bidder.

Request for proposal for MODNL:

Contract period: 12 months from contract commitments

The requests for offering raw material for textile productions are allowed from the waste creation of each year from the various suppliers. The MODNL decided to pilot reused fiber requirements in three lots: towels and wash cloths, overalls, and scarves and handkerchiefs. The criteria that will be used for selection of supplier for the bidding will involve following requirements: 

·         The towels and over halls had to contain 10% recycled post consumer cellulose fibers

·         Micro scoping testing is required

·         The contract will be awarded on the score of supplier after final evaluation

·         The contract will be awarded for €430,000 for towels and €1.38 million for Over halls

·         The recycled products are heavily used for production

The suppliers can upload their requests on website of organization and the specific section of tender.

Bid must be received no later than 1 November 2018, 10 AM.

Late bids will not be accepted

Issues by department of procurement of MODNL

Manager

President         

6. Factor used for negotiation and strategy for MODNL

            The top management of MODNL will consider the following factors for negotiation on agreement for recycled towel and wash cloths:

Authority: The factors that consider for negotiation is the authority as both parties are having the power to conclude the deal for the bid and project. Both particles are bound to deliver the highest authority in their operations.

Creditability: In the negotiation process, the mutual confidence and sustainability of both parties are essential that plays the critical role in negotiation. The parties need to be honest, reliable and sincere in negotiation. The proper knowledge and understanding is required for managing the process of negotiation (Wright & Shiner, 2017).

Information: The information about the future trends, past data, and facts of supply of the goods and services is essential for managing the negotiation. To make the negotiation for bid and development of final contract, it is important for both organizations to share the information about the requirements.

Time and communication: The factors like time and communication of data are having the significant impact on the negotiation approach of an individual and organization. The time constraint is having the negative impact on the negotiation process and creates pressure on the supplying party to manage the operations. The communication skills and approach of the organization also plays the vital role in negotiating with the supplier and maintaining optimum cost for making the deal (Bellantuono, Ettorre, Kersten, and Pontrandolfo, 2014).

Evaluation of technical, management, commercial and ethical requirements for soliciting bid proposals

Strategy:

            The strategy that MODNL could use for managing the negotiation approach for current bidding and developing the contract with the potential supplier could be the Win-Win negotiation strategy based on the multiple offers simultaneously. According to this strategy, the top management of the organization will make communication with the multiple suppliers who send their required for offering the raw material as per the requirements published on the website.

The management will offer equal value to the supplier and ask for their estimated cost for the supplying the goods and services (Rita, and Krapfel, 2015). The flexible mature will help to improve the knowledge about preference and lower cost operation for the project. By sharing data for minimum cost and having proper communication with other suppliers the management will be able to find the lowest prices and able to make the contract will supplier who is able to meet their requirements at the optimum cost.

7. Effective contract management techniques

Contract management is a critical part of any business procedures. The current case of MODNL displays a significant scenario of contract management for the procurement project of recycled fibre. There are various techniques which could be used to manage the contracts and avail best optimum results out of the same. The contract management techniques used for different aspects are as follows:

  • Control contract cost: In order to control the cost of contract, the most effective techniques considered by the buyers is bidding. The bids provides with the selection of best minimum cost of contract proposed by the suppliers and reduced the cost for business as well. Other techniques like cost planning, cost control, cost analysis, cost reporting, cost benefit analysis and design to cost technique could also be used by the authorities (Havranek, 2017). However, MODNL had made the initiation with the bid technique to acquire the best effective contract out of the all.
  • Schedule and performance factors: The team would make use of critical path method technique for scheduling and performance factors of the contract. The technique is mainly used by the MODNL authorities to plan, schedule, coordinate and control the work activities of project. It is performed in such a manner that the contract is been completed the most economical and quickest manner. The performance depends upon the completion of contract within the timeframe and the set cost specifically.
  • Manage contract changes: Change is a vital process and requires to be managed effectively. There are various techniques to manage the contract changes which help in controlling and managing the contract changes specifically (Ellsworth, Porter, Suver and Newcombe, 2018).  Managing the change includes the steps such as commencing the contract change, planning the change, approving and negotiating the contract change, administrating the contract change and closing out the contract change. Utilising these specific steps would contribute in managing the contract change more effectively and would lay a positive impact over the outcome as well.
  • Contract claims: MODNL must focus upon the procurement methods, legal system, standardised practices and governmental regulation for the claims out of the contract. It is very important to ensure that the contract is not breached or violated in any terms which lead towards the severe claims from the buyers as well as the suppliers as well. The major technique to manage the contract claim is to abide by the contractual terms and conditions along with the legal system (Turner, 2017).
  • Contract close: The contract close process makes sure that the contractual obligations are been met effectives. It helps in ensuring that the obligations like after sale services, warranties and support are been defined in terms of liability, responsibility and timeframe of the contract. The contract close is the managed by confirming that each activity of the contract is been completed and closed (Haapio and Siedel, 2017). The team of MODNL would compare the activities to be fulfilled in the contract and develop a final report to close the contract effectively.8. Evaluation of the role of commercial terms and conditions, the uniform commercial code (UCC) and applicable government regulations on the outcome for MODNL

In context to the project of MODNL, it has been identified that the commercial terms and conditions plays an important role in the project allowing the public sector to conduct the contract effectively. It is very important for the contractors to abide by the governmental regulations and rules so that to meet the legal standards of business and avail the best results out of the same. The commercial terms and conditions allow the team of MODNL to carry out the deal in the legal framework avoiding any illicit acts or claims out of the contract (Bonell, 2018).

The uniform commercial code or UCC is basically a standardised set of business laws which regulates the financial contracts effectively.  The policies set under the UCC are mainly focused upon the activities of small entrepreneurs or businesses. The code in the contract of MODNL played an important role as it protects both the supplier and the buyer equally.

It serves the buyers with the assurance about the quality of products and the right to sue of the products don’t meet the set standards. Similarly, it serves the suppliers also with the right to sue the buyer if it breaches the contract and provides with the lien process to protect interest in security. It is important to focus that the companies conducting business activities across the boundaries must comply with the uniform commercial code and meet the set criteria of the same (Walt, 2018).

In addition to this, there are various governmental regulations and policies which supported the initiative of procurement project of MODNL. The policies like knowledge and innovation policy, equipment and procurement policies, general policy, works council act, equal pay and treatment act are some of the basic regulations which must not be overlooked by the authorities of MODNL. It is very important for the contractors to bring the rules and regulations into considerations while commencing the contract and its related activities.

Selection and management of effective contract management techniques for MODNL

The rules and legal aspects play a significant role in making the business activities more specific and free from any biasness as well. The contract between MODNL and the suppliers includes specific policies and regulation which bind them with the legal system and restrict them to conduct any illegal contract breach specifically (Smits, 2017). The uniform commission code also governs the commercial transactions leading the contractors to avoid any illegal offenses or claims out of the contract.

References

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