Procurement and Supply of A4 Size Paper: Roles, Responsibilities, and Procedures

This assignment evaluates the roles and responsibilities for the supply and procurement of A4 size paper, examines ethical codes and rules of corporate governance, and studies negotiation and quotation procedures. It also discusses the breakdown of budget and cost, priorities of internal and external consumers, and different organizations involved in supply chain management.

Printing and Paper stationery in supply chain
management
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Executive summary
In this assignment the roles and responsibility for the supply and procurement of A4 size paper
has been evaluated in details. Different procedures and policies of organizations involved in the
procurement of A4 paper have been studied. The ethical codes of procurement and the rules of
corporate governance have been examined. The process of negotiation and quotation procedures
from supplier has also been studied. Different terms such as incoterm, bar coding, invoicing, and
purchase requisitions have also been studied in details.
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Table of Contents
Executive summary.........................................................................................................................0
Determining value by procurement and supply...............................................................................3
Introduction..................................................................................................................................3
Roles and responsibility for the supply and procurement........................................................3
Breakdown of budget and cost for supply and procurement of goods and services................3
Priorities of the external and internal consumers for the purchase and supply........................3
Dealing with the dispute’s or conflicts with the stakeholders and promoting commitment....3
Different organizations who are involved in supply chain and the significance in the supply
chain management....................................................................................................................4
Monitoring and controlling the purchased services and goods................................................4
Advise to the employee and colleagues of the organization relating to use of documents in
supply and procurement...........................................................................................................4
The requirement of approval of orders, requisitions, and invoices..........................................4
Ethical codes and rules of corporate governance in supply and procurement.........................5
Use of financial budget in supply and procurement of goods..................................................5
Expenditure management with suppliers.........................................................................................5
Introductions................................................................................................................................5
Different kinds of market.........................................................................................................5
Different kinds of marketing systems......................................................................................5
Understanding the impact of different analytical tools............................................................6
Impact of factors of macro-economic......................................................................................8
Effect of corporate social responsibility (CSR).......................................................................8
Breakdown of cost of services, goods and construction..........................................................8
Benefits of effective supply and procurement..........................................................................8
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Application of portfolio analysis..............................................................................................9
Pricing arrangement.................................................................................................................9
Breakdown of direct and indirect cost......................................................................................9
Comparison of new prices with the historical prices of goods.................................................9
Link between price, markup, cost, and margins.......................................................................9
Negotiating with the suppliers and analyzing the cost of services or goods purchased...........9
Defective quality and non-performance cost..........................................................................10
Assessment of different kinds of inventories, inventory techniques, and cost of inventory
holding....................................................................................................................................10
Application of bar coding and forecasting technique of inventories......................................10
Kinds of incoterms.................................................................................................................10
Developing agreement in supply and procurement.......................................................................11
Introduction................................................................................................................................11
Contract terms used in goods and services.............................................................................11
Review of procedures and process to ensure compliance with legal requirements...............11
Core clauses use at the time of procurement..........................................................................11
Performance assessment based on SMART...........................................................................12
Sourcing Essentials in Supply and procurement...........................................................................12
Introduction................................................................................................................................12
Identifying requirements from stakeholders...........................................................................12
Effect of procedures on sourcing process...............................................................................12
Single, dual or multiple sourcing options...............................................................................13
Developing invitations to tender............................................................................................13
Participation of stakeholders in sourcing plans......................................................................13
Evaluating quotations and tenders..........................................................................................13
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Purchase to Pay (P2P) systems...............................................................................................14
E-tendering software..............................................................................................................14
E-auctions...............................................................................................................................14
Unit: Supplier Appraisal.........................................................................................................15
Evaluation of capabilities of potential suppliers....................................................................15
Effective negotiation......................................................................................................................16
Introduction................................................................................................................................16
Handling disputes while negotiation with suppliers and stakeholders...................................16
Stages of negotiation..............................................................................................................16
Sources- Negotiation power...................................................................................................16
Negotiation- behavioral aspects.............................................................................................17
References......................................................................................................................................18
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Determining value by procurement and supply
Introduction
In this module, the different roles and functions for the supply and procurement in organizations
have been analyzed in details. The priorities of the external and internal customers for the supply
and procurement have also been evaluated. The benefits of the triple bottom line by purchasing
the services and goods have also been studied.
Roles and responsibility for the supply and procurement
To achieve the business goals and long term objectives paper industry should focus on their core
areas such as procurement of goods, manufacturing, management of inventory, manufacturing of
goods, and logistics. For the procurement of A4 size paper, organization should ask quotations
from all the suppliers and then choose the best suppliers and after selecting the best suppliers’
organization should negotiate and then place orders for the supply of goods
Breakdown of budget and cost for supply and procurement of goods and services
It is essential to separate the two kinds of procurement as the law relating to the sales of good
and sales of services are different. The categories of the expenditures are different for both the
procurement of services and goods. For purchasing the A4 paper, management has to consider
the materiality of the items and for rendering the services the benefits which will arise from the
services are examined by the management.
Priorities of the external and internal consumers for the purchase and supply
It is important to identify the external and internal customers of the A4 paper company. The
functional groups of the organization who receive the output are known as internal customers.
The internal customer of the A4 paper organizations are the owners, employees and the
representative of the organizations and the external customers are the suppliers, society,
government, shareholders, customers and the creditors of the organization.
Dealing with the dispute’s or conflicts with the stakeholders and promoting commitment
The A4 paper company should first identify and recognize its stakeholders of the business. These
stakeholders can influence the profit of organizations. The organizations should deal effectively
with all the stakeholders whether internal or external stakeholders. The company should then
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identify the problems and their influence on the organization. Organization should design so as
to find the influence of stakeholder and after that implement the design and monitor the
stakeholder’s relationship.
Different organizations who are involved in supply chain and the significance in the supply chain
management
Supply chain management helps to boost the service of customers. There are many expectations
of customers and they can be fulfilled if the supply chain of the organization is managed
effectively. The customers expect that the products will be delivered at the right time and
location and at a reasonable price and they also expect after sale service from the organizations.
Monitoring and controlling the purchased services and goods
An A4 paper organization should organize a governing council for the management of supply
who will develop the strategy of effective management of supply chain. The organization should
also take social responsibility to attain the objective of business. The organizations should
establish different mechanism to minimize and control the risk of supply chain.
Procedures related to supply and procurement
Advise to the employee and colleagues of the organization relating to use of documents in supply
and procurement
The purchase requisition is needed when a purchasing staff places an order to the supplier on
behalf of the company. According to Handfield et al. (2015 pp.3), purchase requisition is used to
inform the purchasing department to start the process of procurement. Another document is
purchase orders which bind the supplies and the buyers legally. The purchase orders include
important information relating to the size of the orders, terms of payment and other data. The
next document in the supply and procurement is delivery notes. A delivery note is a document
the descriptions of the goods and also it includes the number of products or goods.
The requirement of approval of orders, requisitions, and invoices
Requisition approval is required to procure the material of A4 paper on behalf of the
organization. The first step of the approval of requisition is to identify the needs of the purchase
and scope of the stakeholders. The process of order approval is required to identify whether the
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order for procurement has been accepted or rejected. The process of invoices approval is
required to identify whether there exist any problem in the invoice.
Ethical codes and rules of corporate governance in supply and procurement
A4 paper organization should follow the code of ethics while procuring the goods. The
procurement department should deal with the suppliers in an unbiased and fair manner. If the
organizations fail to follow the code of ethics at the procurement then it can affect the brand
image or goodwill of the organizations.
Use of financial budget in supply and procurement of goods
The financial budget plays an important role in the procurement of A4 paper and its supplies.
The financial assist the organizations in saving of cost and avoiding unnecessary expenses
relating to the procurement. The financial budget helps to establish the responsibilities between
the procurement departments.
Expenditure management with suppliers
Introductions
In this module, the different kind of markets which is served to the customers, suppliers by the
organizations is being analyzed. The effect on organizations by the changes in the market has
also been examined.
Effect of external environment on supply and procurement
Different kinds of market
There are two types of A4 paper market which are served to the consumers and suppliers of an
organization such as consumers market and industrial market. In industrial market, there are very
buyers and also the products are customized. In consumer market, there are many buyers who
purchase the goods at the listed price.
Different kinds of marketing systems
There are different kinds of marketing system of A4 paper such as perfect competition, duopoly,
imperfect competitions, monopoly, and oligopoly. There are huge numbers of sellers and buyers
in perfect competition. In case of monopoly, there is no competitor and there is only seller of
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goods or raw materials. Oligopoly competition is also same as monopoly competition and only
difference is that in oligopoly there are too many buyers of goods
Understanding the impact of different analytical tools
There are different types of tools b the business in supply chains to analyze the effect of external
environment. Tools such as pest analysis and porters’ five forces models help the organizations
to identify the external effect on organizations.
PESTEL analysis helps the business to identify the business opportunities available in the market
and also evaluate the external threat from the market. There are five factors in PESTEL analysis
as discussed below:
Political factors- the organization should identify the government influences on paper industry.
The organization should identify the political influences, tax policy, government policy, labor
law, and restrictions on trade
Economic factors-the organization who are manufacturing or purchasing A4 paper should
consider the economic factors at the time of manufacturing or procurement such as inflation
rates, exchange rates, unemployment rates, economic growth.
Social factors- the organization who is procuring or manufacturing the A4 paper should consider
the social factors while doing business such as age distribution, health consciousness, income
distribution etc.
Technological factors- organization should always keep their technology update or modified to
compete with in the paper industry
Environmental factors- the A4 size paper manufacturing company should consider and identify
the environmental factors to achieve its objective. These factors include environmental and
ecological aspects such change in climate and weathers.
Legal factors- the organization have to comply with relevant laws such as laws of consumer
protection, safety laws etc. for smooth running its paper business.
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Figure1. PESTEL analysis (sources: self-learner)
The porter five forces model- this model discuss about the factors which can affect the paper
industry such as:
Buyer threats- organization should identify the threats from buyer in the paper industry as buyer
can also influence on the paper industry
Supplier threat- Company should identify their suppliers’ potential to influence the paper
industry.
New entrant threats- company should identify the threats of new entrants into the paper
industry as new entrants can affect the market.
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PESTEL Economic
al
Social
Technolo
gical
Political
Legal
Environme
ntal

Substitute threat- Company should identify all the threats which can be cause from substitute
product as it can substitute the A4 size paper if the company sells any better product than A4 size
at a lower price.
Figure2. Porter five forces Model (source: self-learner)
Impact of factors of macro-economic
According to Ismail et al. (2015 pp. 151), there are different macroeconomic factors which can
influence and availability of the A4products of the organization. Factors such as changes in the
interest rate, fluctuation in the exchange market, inflation, changes in the monetary policy, etc.
can affect the availability and prices of the product. These changes can increase the cost of
materials used for manufacturing the goods and can also increase the logistics cost and transport
cost.
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Porter's
Five
Forces
New
Entrant
threats
Substitute
Threat
Buyers
bargaining
power
Suppliers
bargaining
power
Threats
from rival

Effect of corporate social responsibility (CSR)
A4 paper business should contribute a certain percentage of its turnover in CSR. It is also the
social responsibility of the organizations to treats its various stakeholders properly. If the
business contributes towards social responsibility then it can achieve its long term goals and
objectives because society helps the business to flourish in the industry and also to run its
business effectively and efficiently.
Effective purchasing
Breakdown of cost of services, goods and construction
It is necessary to breakdown the cost related to goods, construction and, construction because
there different types of indirect and, direct cost included in the procurement cost. The costs of
goods are the costs which are related to material and tangible items. The services cost is the cost
which are related to the organizations or individual performance and the constructions cost
include maintenance and repairs cost and are also project-based cost.
Benefits of effective supply and procurement
The advantages of effective supply and procurement are that it reduces the cost of buying and
enhance internal effectiveness. Effective supply and procurement helps the organization to cover
the supplier risk and also assist to help in the operations of inbound and outbound logistics.
Application of portfolio analysis
According to Trautrims et al. (2017 pp.228), the portfolio analysis in supply chain of A4 paper
evaluates the historic and future expenditure on the supply and procurement of goods and
services. It also analyses the risk associated with the purchasing of goods and services. The last
step in the portfolio analysis to develop a strategy to effective procures the goods and services
from the supplier. It also helps the organization to design a procurement profile for the purchase
of goods and services from the best suppliers.
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Pricing arrangement
There are different types of pricing arrangement of A4 paper which can help the organization to
effectively manage the cost in a supply chain. The different types of pricing arrangement are
pricing tools, cost-plus arrangement, fixed pricing, indexation pricing, etc.
Breakdown of direct and indirect cost
Breakdown of indirect and direct cost is necessary because the direct cost is the cost related to
the resale of goods and the indirect cost are the cost related to the cost of ancillary items. Direct
costs are the cost related to the raw materials, work in progress and components cost. Indirect
costs are related to the large inventory cost
Comparison of new prices with the historical prices of goods
One of the suppliers of China named LI Paper Company has quoted a price of 10000 US dollars
for the supply of 100000 A4 paper to one of the customers of US. The price of 100000 A4 paper
in 2017 was 9000 US dollars. This difference arises due to inflation in the market price of iron.
The customers could avoid the inflation cost by doing pricing arrangement with the supplier.
Link between price, markup, cost, and margins
There is a link between price, margin, markup, and cost. The cost of goods is the cost incurred
for the manufacturing of goods and the prices are the prices which are charged to the buyers by
adding a certain percentage of profits. Margin is calculated by deducting the cost of goods from
the sales. Selling price is determined by adding the markup value with the cost of goods.
Negotiating with the suppliers and analyzing the cost of services or goods purchased
There are different kinds of negotiations technique to negotiate with the supplier of A4 paper
material. The buyer should never agree with the first price which is offered by the supplier and
should make a counter offer to the supplier. Then the buyer should ask from the supplier the final
price of the goods which he is ready to accept.
Defective quality and non-performance cost
If any defect has been identified after receiving the material of A4 paper then the buyer can
request the supplier to return the defective goods or repair the goods. The buyer should identify
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the alternative solution for the defective goods. The buyer should check how much time it will
take to repair the goods and he should also check the risk of further defect in the goods.
Inventory control
Assessment of different kinds of inventories, inventory techniques, and cost of inventory holding
If the A4 paper stock of an organization is out of stock then organization can use the concept of
safety stock. Safety stock is an extra stock which is held in inventory by the organization.
Another method for inventory management is ABC analyses which classify the inventories based
on the values of their consumption.
Application of bar coding and forecasting technique of inventories
Bar coding is the unique identification of the goods such as any tag or label in the goods. Bar
coding helps the management to track the goods and also it helps to detect the frauds with the
help of detectors. Inventory forecasting is the prediction of sales in the future based on the
changes in the market and set of competitive forces.
Kinds of incoterms
Incoterm E- this indicates that the buyers of the goods will bear all the cost and risk associated
with the goods and will also collect the goods from the warehouse of sellers.
Incoterm F- the sellers will transport the goods to the buyer destination and till the goods reach
the buyer destination point the seller will be responsible for the goods and after point the buyer
will be responsible.
Incoterm C- up to the destination point the seller will incur all the cost.
Incoterm D- all the cost and risk will be bear by the seller to bring the goods to the buyer
destination.
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Developing agreement in supply and procurement
Introduction
In this task the different terms of goods and services has been studied and also the performance
assessment by the buyers based on the technique SMART has been evaluated.
Contract terms used in goods and services
Spot purchase- it is used in case of purchasing goods
Blanket order- it is used in case of goods
Panel agreement- this term is used in both the goods and the services
Call offs- this term is used in case of goods only
Term contracts- this term is used in case of gods as well as services
Review of procedures and process to ensure compliance with legal requirements
Specification- the buyer should ensure himself that the description of A4 size paper are described
according to the requirement of organization
Contract terms- the buyer while entering into an agreement with supplier should have knowledge
of important terms such as, breaches of contract, confidentiality, remediation, etc.
Pricing schedules- the terms of the payment for the procurement of goods should be fixed at the
time of entering into the contract
Performance indicators (key) - the performance indicator (key) of procurement are the
compliance rate, lead time, defect rate of supplier, purchase order cost.
Core clauses use at the time of procurement
Indemnities- one party pays compensation to another party for any damage caused by him
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Insurances- suppliers make an insurance contract with buyer that if the goods are lost or damage
during transit then the supplier will bear the cost.
Liquidated damages- when it is complex to calculate the actual damages then it that situation a
fair value of damages is determined.
Performance assessment based on SMART
S- Specific- the quantity and the specification of A4 paper should be described in details to the
supplier
M- Measurable-the performance of the supplier should be measurable
A-Achievable-the procurement target should be achieved by the organization
R-Relevant- a price target and the delivery date target should be set by the organization
T-Timely- a target should be set up so that supplier delivers the good timely
Sourcing Essentials in Supply and procurement
Introduction
In this module the stakeholders’ requirement has been analyzed in details and also the effect on
sourcing process has been evaluated.
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Identifying requirements from stakeholders
Internal customers and stakeholders’ requirements play an important role in sourcing process.
Therefore, it becomes essential to clarify and review the requirements from internal stakeholders
and customers to assure that the purpose of spending money by them are attained the sourcing of
goods and services.
Effect of procedures on sourcing process
The procedures of the organization and their impact are discussed below:
The organization should first identify requirements of different units in an organization. Then the
organization should identify potential suppliers of A4 paper. Once a supplier is selected
organization should identify the factors such as pricing structure of A4 paper, scope of work,
terms and conditions, timeliness of delivery, etc. After the contract is finalized, the next step is to
raise a purchase requisition for the supplier. Once the supplier of A4 paper accepts the purchase
order, an invoice is sent to the purchasing organization.
Single, dual or multiple sourcing options
Single source procurement refers to purchases from one selected supplier, even though there are
other suppliers that provide similar products. Dual source means to choose two suppliers to
supply same product. Multiple sourcing is the application of different vendors instead of using a
single source.
Developing invitations to tender
An invitation to tender will cover the information describing the goods or services required by
the stakeholders and customers to enable the tenderer to prepare an accurate tender that is in a
prescribed format so that it is easy to compare with other tenders.
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Participation of stakeholders in sourcing plans
Engaging with the right internal stakeholders can ensure sourcing process gain understanding of
strategic issues, cost-saving goals, value-add, compliance, and organizational input moving
forward.
Evaluating quotations and tenders
First and foremost, the quotation and tenders will be assessed to see if it complies with the
conditions for Participation (mandatory requirements) and any other mandatory conditions. If it
doesn't, it will be considered to be non-conforming and eliminated from further evaluation. An
assessment is then undertaken against each of the non-cost evaluation criteria.
Purchase to Pay (P2P) systems
Purchase-to-pay systems complete the full process from purchase to payment of A4 paper that
covers activities of requisitioning, purchasing, receiving, paying for and documentation for
goods or services.
E-tendering software
The purpose of e-tendering is to build the tendering process for the procurement of specialized
goods or services of low volume but have high value. The use of e-tendering involves:
1: Visit the e-tender portal
2: Review the system requirements
3: Go through the help manuals
4: Get enrolled in the portal
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5: Login to the portal using the User Id and Password
6: View and download tenders
7: Submit tenders
8: Upload documents using digital signature certificate
9: Seek technical assistance in need
E-auctions
E-auction is a transaction between sellers and bidders that takes place on an e-market. It can
occur business to business, business to consumer, or consumer to consumer, and allows suppliers
to bid online against each other for contracts against a published specification.
Unit: Supplier Appraisal
An assessment of a supplier’s suitability and capability to supply specific goods or services,
before awarding a contract. An effective supplier appraisal process includes:
 Measurements and targets that are easily understood by both suppliers and buyers
 KPIs that are weighted according to your company’s strategic priorities
Sources of information for supplier selection
The sources of information regarding the potential suppliers of A4 paper are:
Newspaper advertisements, salesmen, Catalogue, price lists, trade journals, trade directories,
telephone directories.
Evaluation of capabilities of potential suppliers
It is important to understand the financial nature of each of the suppliers of A4 paper. Regular
contact with supplier personnel and regular monitoring of trade and financial publications can
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help purchasing and supply professionals track supplier financial health. Some warning signs
that should peak buyer curiosity include:
 Loss of important accounts
 Slower bill payment
 Additional incentives for prompt bill payment
 Willingness to make price concessions that are out of the ordinary
Effective negotiation
Introduction
In these module different stages of negotiation and the negotiation has been evaluated. The
behavioral aspects of negotiation have been studied in detail and also how to handle the dispute
that arise between supplier and stakeholders has been examined.
Handling disputes while negotiation with suppliers and stakeholders
According to Yu and Wong (2015 pp.223), for effective negotiations the buyer should identify
its A4 paper suppliers and stakeholders and then he should set the limits and objectives. While
negotiating, buyer should control his emotions and should be able to communicate effectively
and he should know the timing of when to close the negotiation process. The buyer should have
the power to bargain.
There are 4 approaches applied in commercial negotiation such as:
Win/win approach- it is used in case of collaborative environment. It is also used when the trust
level is high and is also used while addressing the stakeholder’s interest.
Win/lose approach- it is used in cases of products of goods which does not carry any fixed price.
Lose-lose situation- it is a situation when the other party ignore the other party needs and so it I
is avoided.
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Stages of negotiation
There are five stages of negotiation for A4 paper such as:
 Planning the negotiation process
 Defining the basic principles of negotiation
 Explanation and Justification
 Dealing and solving the problem
 Winding up and execution or implementation
Sources- Negotiation power
The sources of negotiation power are:
BATNA- if the negotiation agreement fails then BATNA is used as an alternative for the
negotiating party.
Psychological power- the parties use their psychological power while negotiating. One of
the parties to the negotiation feels that he is most powerful in negotiating than other and
vice-versa.
Role power- this is the power which derive from the position, title or rank of negotiating
party.
Negotiation- behavioral aspects
While negotiating for the purchase of A4 paper the buyer of the organization should:
 Use his competence
 Using his professional image
 Listening effectively
 Communicating the intention of buyer to supplier
 Buyer should be patient and honest.
 He should provide all the information or requirement of A4 paper to supplier.
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References
Handfield, R.B., Cousins, P.D., Lawson, B. and Petersen, K.J., (2015). How can
supply management really improve performance? A knowledge‐based model of
alignment capabilities. Journal of Supply Chain Management, 51(3), pp.3-17.
Ismail, S.M.M., Nijam, H.M. and Musthafa, A.M.M., (2015). The impact of
macro-economic variables on stock market performance; evidence from Sri
Lanka. Journal of Emerging Trends in Economics and Management
Sciences, 6(2), pp.151-157.
Trautrims, A., MacCarthy, B.L. and Okade, C., (2017). Building an innovation-
based supplier portfolio: The use of patent analysis in strategic supplier selection
in the automotive sector. International Journal of Production Economics, 194,
pp.228-236.
Yu, C. and Wong, T.N., (2015). An agent-based negotiation model for supplier
selection of multiple products with synergy effect. Expert Systems with
Applications, 42(1), pp.223-237.
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