Procurement Management: ADCO Constructions

This report discusses procurement management in ADCO Constructions, including the importance of strategic sourcing function for competitive advantages and the application of procurement cycle principles. The report outlines the contributions of strategic sourcing to ADCO Constructions and the steps involved in the procurement cycle. Subject: Procurement Management, Course Code: N/A, Course Name: N/A, College/University: N/A.

Running head: PROCUREMENT MANAGEMENT
Procurement Management: ADCO Constructions
Name of the Student
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Abstract
The main aim of this report is to understand the procurement management of the leading
organization of Australia, namely, ADCO Constructions. Procurement management mainly
deals with the transfer or procurement of various materials or equipments from one place to
other for the successful execution of the project. The entire process of procurement includes
every activity that is needed like quality control, incoming inspection, purchasing function or
transportation for getting the products from suppliers to the finalized destination. The
strategic sourcing could be employed in the process of procurement for coordinating the
various functions with the purpose of managing them effectively. This report has outlined the
contributions that ADCO Constructions has got after opting strategic sourcing functions and
thus getting competitive advantages. Moreover, the significant application of procurement
cycle principles for this particular organization is also given here.

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Table of Contents
Introduction................................................................................................................................3
Scope..........................................................................................................................................3
Understanding Procurement Management in ADCO Constructions.........................................4
Strategic Sourcing Function for Competitive Advantages.........................................................5
Application of Procurement Cycle Principles in ADCO Constructions....................................9
Conclusion................................................................................................................................13
References................................................................................................................................15

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Introduction
ADCO Constructions is the leading construction organization, which is responsible
for delivering several projects in Australia (Adcoconstruct.com.au. 2018). It was established
in the year 1972 and has completed more than 3500 projects. The values of all these projects
were over 10 billion dollars. Procurement management is the specific form of management
where all types of goods or services could be acquired from various firms or organizations.
The organization of ADCO Constructions majorly deals with this procurement management
within their business (Adcoconstruct.com.au. 2018). It is one of the systematic approaches
that are utilized to buy each and every good and service that is required for this organization
and it helps in keeping the company sustainable enough. The procurement is well managed
by this type of management and thus both money and time are saved eventually.
The following report outlines a brief discussion about procurement management in
ADCO Constructions. The proper scope, literature review of this report will be eventually
described here. Moreover, the importance of procurement management within the
organization is provided here. The critical examination of the contribution, which strategic
sourcing function has provided for increasing the competitive advantages of this organization
will also be described here. The final part of the report will be discussing on the application
of procurement management principles within this organization.
Scope
The scope of this report is to understand the current position of the organization of
ADCO Constructions in respect to procurement management. The details regarding this type
of management like managing the risks and controlling costs or expenses are properly

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explained here. The contract management within procurement management for ADCO
Constructions is also explained in this particular report.
Understanding Procurement Management in ADCO Constructions
Procurement management is the proper and perfect procedure of procurement that is
utilized for managing the relevant information (Phillips 2013). The most significant
information required in the procurement management majorly involve types of contracts that
are planned to be used and any specific metric that would be used for measuring the
contractors’ performances. Moreover, the planned or scheduled delivery dates for products or
works that had been contracting and the standard documents of the organization of ADCO
Constructions (Nojavan et al. 2015). The proper coordination of the purchase of leading times
with all the project schedule development is also done with procurement management. The
plan of procurement management has become a major part of the project management
planning.
Project procurement management solely involves the procedures that are needed for
acquiring goods or services from external side of the particular organization (Kisomi,
Solimanpur and Doniavi 2016). All the procedures eventually interact with one other and
with each and every process within the knowledge areas. Every procedure might be involving
significant effort from more than one individual or group of individuals that are based on the
project requirements. The respective procurement planning can be defined as the procedure to
identify what the project requires could be the best to meet by simply procuring the products
and services outside organization (Ferri et al. 2016).
When this project is obtaining products or services from the outside organization,
these procedures from the solicitation planning by contract close out will be performing once
for every product and service item (Crawford 2014). This team of project management must

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seek support from all specialists within the disciplines of procurement and contracting when
required. When this specific project never obtains services or products from outside
organization, the procedures from the solicitation planning by contracts close out. The
procurement planning should even involve consideration of the potential subcontracts,
especially when the buyer is exercising major control or influence on the subcontracting
decisions (Baily 2017).
ADCO Constructions has eventually utilized some of the most important and
significant tools or techniques within their procurement planning step such as make or buy
analysis as well as the definition of the contract types (Rendon and Rendon 2015). The make
or buy analysis solely helps to take the decision when a solution was to be built on the
significant problem or even the solution must be bought, which is available. There are some
of the most important factors that subsequently help in making a perfect project decision.
This project schedule could be affected within the procedure. The particular organization of
ADCO Constructions gets the distinct time to do their respective work and finally meeting
each and every commitment (Nojavan, Zare and Mohammadi-Ivatloo 2015). The most
significant resources such as the heavier equipments, which they buy, lease and rent on the
basis of the situation are substantially checked by the procedure of procurement management.
The several types of contract are even chosen by the procurement management within ADCO
Constructions. Since, it is a constructions company, some of their contracts are fixed price,
irrespective of the fact that the distinct amount of effort as well as time provided to them
(Amann et al. 2014). The expert judgment is also required by ADCO Constructions for
assessing the inputs into this procedure. This type of expertise might be given by any
particular individual or group with the specialized knowledge as well as training and it is thus
available from various sources.

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Strategic Sourcing Function for Competitive Advantages
The competitive advantages are those conditions, which allow a particular company in
producing the goods or services of equivalent value at the lower prices (Kotloff et al. 2015).
These competitive advantages could be attributed to the variety of several factors that
involves the branding, cost structure, and even the quality of various product offerings,
distribution of networks, intellectual properties and the customer services (Masterman and
Masterman 2013). The ability of any organization for producing any good and service
efficiently and effectively than the competitors that lead to the great profit margins
subsequently creates comparative advantages (Turner 2014). The consumers always have the
tendency to select the cheaper products and hence a comparison is induced. The comparative
advantages do not imply better product, rather it implies if a company is providing products
at a much lower price than its competitors. The differential advantages occur when the
products and services of any company is different from the offerings of its competitors and
are termed as much superior (Kerzner and Kerzner 2017). ADCO Constructions, being a
construction company, requires making their construction extremely perfect and proper for
the customers.
Strategic sourcing can be solely defined as the specific procurement procedure, which
continuously improvises as well as re evaluates the several purchasing actions of the distinct
organization (Burke 2013). In the production environment, this strategic sourcing is even
considered as a component of the supply chain management. The professionals of modern
supply chain management have significantly placed major emphasis on the definition of the
several differences within procurement and strategic sourcing. The procurement operations
subsequently support the regular transactions like issuing of purchase orders to the suppliers,
whereas the strategic sourcing is responsible for representing for contract negotiation,

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supplier development, strategic planning, outsourcing models and infrastructure of supply
chain (Larson and Gray 2015).
ADCO Constructions has adopted a distinct strategic sourcing process. The major
steps of this particular process are given below:
i) Data Collection and Spending Analysis
ii) Market Research
iii) The RFx Process or go to market
iv) Negotiations
v) Contract
vi) Implementation as well as continuous improvements (Marchewka 2014).
The specific process substantially combine the assessment of market and the steps of
cost analyses of the old model to the research step of single market, and the identification of
suppliers or steps of development of sourcing strategy to the single step of go to market,
negotiation has eventually split to contracting and negotiation (Larson et al. 2014). This is
mainly for the importance of the market intelligence within the modernized strategic
sourcing, and the significant ability in delivering value to improve both the contract terms
and pricing whenever leveraged to the selected suppliers. Since strategic sourcing could be
put in place as well as practiced within time, most of the reputed organizations would modify
the procedure to meet the individual corporate requirements (Fleming and Koppelman 2016).
The outsourcing might even be incorporated to the distinct sourcing strategy for all services.
The major types of competitive advantages that strategic sourcing function has
provided to ADCO Constructions are ability in meeting the deadline of constructions, better

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quality of work, claims as well as disputations history, safety or industrial relations record,
skills of management, reduction in complexity of work and litigation or arbitration history
(Walker 2015). These competitive advantages are responsible for developing better relations
by partnership arrangement and thus involving subcontractors to achieve the project
objectives. The more structured standardized and ethical approach for their procurement or
management of subcontractors is developed for ADCO Constructions. This particular
organization has improved its efficiency and the source to settle procurement processes are
automated (Harrison and Lock 2017). They have even standardized their contract lifecycle
and thus improved supplier management.
Operations research can be termed as a specific discipline to apply the advanced
techniques in helping to make decisions even better (Marchewka 2014). ADCO
Constructions has acquired optimization by utilizing mathematical algorithms for solving
their business problems rapidly by the evaluation of every possible outcome or several
outcomes and thus selecting that outcome, which would provide them the best solution.
When they have applied optimization to the sourcing operations and operations of supply
chain, the optimization has helped them to identify the sourcing professional and thus
evaluating several inputs of procurement (Fleming and Koppelman 2016). This evaluation
has then taken them into consideration to the globalized market, individual conditions of
suppliers, and distinct conditions of present supply chain and finally has offered several
alternatives for addressing the sourcing goals of their buyers.
The next competitive advantage that ADCO Constructions has got from sourcing
strategic function is Sourcing Business Models (Heagney 2016). This is the systematic
approach for the purpose of structuring their supplier relationships. The respective sourcing
business model can be defined as the kind of business model, which is solely applied to all
the business relationships where more than one party is required to do their work with other

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party that is successful. The sourcing business models could be targeted in ADCO
Constructions for the procurement professionals who are seeking the modernized approach in
achieving the best fit within suppliers and buyers (Nicholas and Steyn 2017). ADCO
Constructions has thus obtained several significant competitive advantages after opting from
strategic sourcing functions.
Application of Procurement Cycle Principles in ADCO Constructions
The management in a specific organization mainly deals with obtaining of services
and products (Larson and Gray 2015). The procurement cycle eventually follows specific
steps to identify the need or requirement of this organization of ADCO Constructions by the
last step of the product or contracts. The responsible management of the corporate funds and
public funds was important while handling the important procedure, whether in the stronger
or weaker economic markets (Marchewka 2014). The distinct ten steps to manage the
organization of ADCO Constructions for achieving their objectives and goals as well as the
reduction or proper identification of risks within their business are given below:
i) Requiring Recognition: The business of ADCO Constructions should learn the fact
whether it requires a newer product from the internal or the external sources (Burke 2013).
The specific product might be the one, which requires being re ordered, or it might be the
newer item for this organization.
ii) Specific Needs: Some of the major industries have basic standards for helping to
determine specifications. The part numbers help in identifying all of these for ADCO
Constructions (Fleming and Koppelman 2016). This organization might have ordered their
product. The construction that this organization is making should fulfil all the requirements of
the clients.

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iii) Source Options: The business of ADCO Constructions requires determining
where product is obtained. This organization should have the approved list of vendors. This
organization would require searching for the supplier by the utilization of the purchase orders
or even researching the variety of various sources like that sales representatives, Internet and
magazines (Nojavan, Zare and Mohammadi-Ivatloo 2015). This company would be
qualifying the suppliers in determining the most suitable product for their businesses.
iv) Terms or Prices: The business would be investigating on all the relevant
information for determining the best terms or prices for product (Rendon and Rendon 2015).
This would thus depend on the factor when ADCO Constructions requires commodities that
are absolutely available products or the special materials.
v) Purchasing Orders: The purchasing orders are utilized for buying the materials
within a buyer as well as seller (Masterman and Masterman 2013). It specially provides the
definition of price, terms, conditions and specifications of their services or products and the
other added obligations.
vi) Delivery: The purchase orders should be delivered on a timely manner, either by
mail, fax, email or any other means of electronics. Most of the times, the distinct
methodology of delivery is absolutely specified within the various purchasing documents
(Aich and Tripathy 2014). Then the recipient acknowledges the purchase order receipt.
vii) Expediting: Expedition of these addresses of the purchase order is the timeliness
of materials and services delivered. It thus becomes extremely important when there are any
further delays (Turner 2014). The problems majorly involve work completion, delivery times
and payment dates.

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viii) Receipt as well as Inspection of Purchase: When the specific sending
organization could deliver the product, the recipient eventually accepts and rejects the various
items (Kotloff et al. 2015). The acceptance of all the items forces the organization in paying
for them.
ix) Invoice Approval or Payment: The three documents should match whenever the
invoice is requesting payment. The three documents are the invoice, the specific receiving
document as well as the purchase order (Turner 2014). The documents’ agreement eventually
provides the confirmation from both the supplier and receiver. The discrepancies should be
resolved even before this recipient is paying the bill of construction in ADCO Constructions.
The payment is then made within the form of cheque, cash, and transfers of bank, credit
letters or the other kinds of the electronic transfers.
x) Maintenance of Records: In case of the audits, the organization should be
maintaining perfect records (Burke 2013). All of these majorly involve the purchase records
for the verification of the information of tax and the purchase orders for the confirmation of
warranty information. ADCO Constructions should maintain these records properly.
The objective of the public procurement in ADCO Constructions is awarding timely
as well as cost effective contracts to the qualified suppliers, contractors, and even the service
providers for goods provision, work or services for supporting the operations of public
services, in respect to the principles or procedures that is established within the rules of
public procurement (Kisomi, Solimanpur and Doniavi 2016). They are extremely responsible
to ensure the objective of public procurement could be achieved.
ADCO Constructions has eventually applied ten significant principles of procurement
management. They are as follows:

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i) Utilizing procurement to deliver sustainable outcomes: This document should be
significantly considered as the procurement as the strategic process as well as the way to
deliver the business objectives by the supply chain in ADCO Constructions (Crawford 2014).
ii) Focusing on the impacts material to the procurer: The requirements of
sustainability of the company require to be absolutely defined as well as materiality
understood within consultation with the stakeholders in ADCO Constructions (Nojavan, Zare
and Mohammadi-Ivatloo 2015).
iii) Sustainable supply and not sustainable supplier: The basic focus of standard
should be over the sustainable supply and not on the sustainable supplier. This subsequently
refers to the fact using various procurement techniques for delivering the required outcomes
(Masterman and Masterman 2013).
iv) Not one size fits all: The prioritisation must be of the specific essence to the
respective standard for the organization of ADCO Constructions. The risks and impacts of
sustainability must be eventually mapped against the categories of supplying and the higher
priority impacts or categories must be addressed in the beginning (Larson and Gray
2015). This must be done with the wider range of several internal stakeholders, and also after
taking into consideration, the corporate policies and requirements of external stakeholders.
v) Managing demand: The demand management is the most important factor in the
standard in ADCO Constructions. The most basic way for procuring is not buying at all or
keeping demand to the minimum by the business operations more effectively and efficiently
(Fleming and Koppelman 2016). There requires the organisational link within the user of
goods and procurer, services and works.

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vi) Embedding sustainability to present procurement practice: It is extremely vital
for this particular standard in addressing for the purpose to achieve outcomes that are more
sustainable by the present practices of procurement within the organization (Walker 2015).
vii) Tier one is not the only one: This standard is not only about the very first tier of
the suppliers. It should be the reference management of total supply chain where there could
be various opportunities and risks (Heagney 2016).
viii) Encouraging innovation: The procedure should be encouraging innovation that
is related to the sustainable goods, services and works by efficient market research as well as
utilization of several outcome specifications in ADCO Constructions (Nicholas and Steyn
2017).
ix) Developing a competitive and sustainable supply chain: There must be an
emphasis on the maintenance or improvement of the competitive markets for ADCO
Constructions.
x) Full and fair opportunities: The local procurements, minority business are the
specific priorities of stakeholders and this must be supported by the specific supply chain
wherever suitable within ADCO Constructions (Fleming and Koppelman 2016).
Conclusion
Therefore, from the above discussion, it can be concluded that procurement
management is the significant procedure that helps to find or agree to the terms or conditions
and finally acquiring goods or services from the external sources through the tendering or
competitive bidding procedure. The entire process of procurement management is responsible
for helping in purchasing goods and services from the external supplier. The entire process of
the procurement management comprises of six important steps, which are identification of

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goods or services that are to be procured, completion of the purchase orders and finally
issuing them to the suppliers, agreeing on the scheduled delivery timeframes as well as
methods, receiving goods or services from these suppliers, reviewing and accepting the items
procured and finally approving the supplier payments. This specific process of procurement
management is important for any construction industry. The above report has outlined the
procurement management process of the leading organization of Australia, known as ADCO
Constructions. The two major points, which are critical examination of contribution that
strategic sourcing function has made to the competitive advantages of this particular
organization and the successful application of the principles of Procurement Cycle, are
properly described in this report for ADCO Constructions. The importance of procurement
for all the global companies is well demonstrated in this report and a proper literature review
is provided here.

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References
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Amann, M., K. Roehrich, J., Eßig, M. and Harland, C., 2014. Driving sustainable supply
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Kerzner, H. and Kerzner, H.R., 2017. Project management: a systems approach to planning,
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