Bumper Wood: Procurement Strategy, CPO Role, and Process Analysis

This report provides a detailed analysis of the procurement strategies employed by Bumper Wood, a small furniture manufacturing company in Brisbane, Australia. It begins with an overview of the company and its operations, highlighting the need for an effective procurement strategy. The report then delves into the two main categories of procurement: direct and indirect, explaining how they apply to Bumper Wood. It elaborates on the role of the Chief Procurement Officer (CPO), outlining key responsibilities such as overseeing procurement staff, managing budgets, seeking systemic sourcing enhancements, and developing performance benchmarks. The report also discusses the importance of aligning the procurement plan with the overall business strategy, considering factors beyond cost. Furthermore, it examines the steps involved in defining and choosing an effective procurement approach, including assessing the nature of the demand, identifying critical details, and evaluating delivery date viability. The report also touches upon the use of Long Term Agreements (LTAs) and their benefits in establishing contractual terms with vendors for pre-selected products or services. This analysis aims to provide insights into improving Bumper Wood's procurement processes for enhanced efficiency and cost-effectiveness.

Procurement

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Overview of company..................................................................................................................3
Step One.......................................................................................................................................3
STEP TWO..................................................................................................................................6
CONCLUSION..............................................................................................................................10
REFERNCES.................................................................................................................................12

INTRODUCTION
Procurement refers to the process of purchasing, usually for commercial purposes, products
or services. It is most frequently identified with corporations since, typically on a very broad
scale, firms tend to request services or buy products. This usually applies to the actual purchase
law, and it may even involve the overall acquisition process that can also be strategically relevant
for firms immediately prior to the final buying decision (Amann and et. al., 2014). Firms may be
sellers and buyers from both aspects of the selection process, although here they concentrate
exclusively on the claimant producer side. In order to better understand the importance of
relevant topic “Bumper Wood” a small company have been selected.
In this report, importance of Procurement process, strategies are discussed and the value of
chief procurement officer is also elaborated that help company in effective buying decision so
that desired growth can be attained.
MAIN BODY
Overview of company
Bumper Wood is a small sized furniture manufacturing company location in Brisbane,
Australia, which use to prepare different time of wooden tables, chairs, Designer bed, wood
flooring as well as also provide modular furniture on demand of customers. The company is
doing well in the competitive market by adding value to the customer money (producing and
delivery of goods as per demands), but is lacking behind an effective procurement strategy.
Step One
Procurement applies to the collection of procedures involved in purchasing the materials and
resources that the enterprise needs to run (Ambe and Badenhorst-Weiss, 2012). Consumer goods
and services acquisition is normally divided into two major categories: direct as well as indirect
procurement that is discussed in the context of Bumper woods:
Direct acquisition requires the buying of raw resources, merchandise, and facilities used by
businesses to manufacture their final products. For instance, commodities / services through
direct procurement might include items such as minerals, OEM parts, and finishing activities.

Conversely, indirect procurement focuses on the acquisition of services and goods which help
the need of the enterprise to operate, instead of the production of the final piece of the firm.
Those goods and facilities include items like chairs, office equipment and resources for
preparation.
The sourcing group aim is to have the right services and goods at the highest costs again from
best retailers. ince they make acquisitions on account over the divisions of an enterprise using
company revenues, the procurement committee is associated with other sections of the business
which perform a significant part within the financial performance of the respective company. As
a chief Procurement officer there have been various duties which needed to be performed in
appropriate manner so that valuable results can be made for company (Caldwell and Howard,
2014). These are discussed underneath:
The primary role of the CPO would be to oversee and coordinate the procurement staff in all
areas of purchasing and supply quality management. CPOs use a multitude of management
capabilities as core executives in an enterprise to balance multiple critical leadership roles. There
are some of such that include:
 Handling the actual strategy for procurement
 Trying to balance up a budget
 Being continuously cautious about seeking systemic sourcing and enhancements to the
supply chain
 Developing priorities, norms and benchmarks to keep track of main success measures
(KPI)
 Enhancing performance procedures.
 It is also critical for the CPO to guarantee that the recruitment plan is properly matched
with the overall business strategy of the organisation. As such, choices are also based not
solely on the volume and consistency of the currency, but on other considerations (Chen,
2012). For instance, if a corporation has chosen to be a symbol of management and
sustainable practises, then when sourcing vendors, procurement activities should consider
all options.
 The most popular company practise among most survey participants (78 percent) was
cost cutting.
 Since 2017, 61% of purchasing leaders have reported increased year-over-year savings.

 By concentrating on centralised spending, 37 percent increased market value, while 32
percent concentrated mainly on reducing overall lifecycle and ownership costs.
 73% of procurement executives were valued by their organisation.
 There have also been, however, some alarming CPO developments, including:
 65 percent of surveyed purchasing members reported experiencing no working
partnerships with vendors beyond those in Tier 1. A weak supply chain management
record.
 Just 33 percent stated their confidence in the potential of emerging technology, with low
use of technological advancements such as data analytics and blockchain.
Thus, the team usually comprises only a handful procurement experts in start-up projects and
smaller firms. It is widespread to provide a CPO with a particular job description in these
organisations, such as purchasing director, purchasing contract manager, or former deputy
procurement manager. The Bumper Wood scale and reach also influence who the CPO refers
towards. While reporting to the CEO is more normal for the CPO, it is indeed likely for the CPO
to refer to the Chief Executive Officer, Chief Financial Officer (CFO) or another Senior Vice
President (Githui, 2012). It would also be the responsibility of a chief procurement officer with
respective company purchasing department:
 Ensuring the effective supply of goods and services
 Ensuring that customers are paid in such a timely way
 Relationship control of vendors.
Any CPOs are responsible for the position of product and service outlets and for establishing
relationships with manufacturers and vendors. Typically, they work with manufacturers to obtain
the highest offers and discounts, leveraging purchasing power and increased efficiency. They
also set up arrangements between manufacturers and the organisation. A chief procurement
officer can ensure, in addition to purchasing and setting deals and agreements, that data files all
product and service details are stored in an orderly manner. In addition, the workers collaborate
with the finance department to make sure that customers are compensated on time. Moreover,
they generally keep stock levels up to date and assume accountability for predicting the firm's
growth customer's demands. Many sectors, from small businesses to multinational corporations,
have recruitment officers. The sales representative may operate independently in a small
corporation, however there is a group that does the buying within an organisation. When work

for small company, a global team would have to be handled by the chief contract administrator
(Glas, Hofmann and Eßig, 2013).
The CPO typically provides the procurement staff with overall oversight, either in a small
organisation or a big one, and ensuring that purchasing practises and procedures are
implemented. They are still usually actively searching for higher quality goods and higher costs.
Both purchase decisions inevitably end up at the CPO's office in a number of industries. Many
agree that the job of the CPO has become more important in businesses, and the job is considered
to have been more competitive in recent years. For the objectives of standardisation and
flexibility, globalisation, enforcement demands and other influences have sparked a movement
towards centralised control of the procurement feature. Many CPOs refer to a manager or
directly to another business's chief executive officer (CEO). Defines brand procurement activities
typically require excellent communications and negotiating abilities. It might be important for
outstanding oral and written communication skills. Proficiency also may be considered the best
choice in other cultures, as sellers can be based in other places of the globe. Usually, anyone
the wishes in becoming an advertisement officer must have a graduate degree, probably in
supply chain management, procurement, production, company strategy, economics, banking,
accounting, mathematics, accounting, or communications. Typically, a graduate degree is
exceptionally valuable. Usually, a chief procurement officer (CPO) seems to be the manager of
an organisation responsible for the preparation, control and control of the purchasing activities of
the company. Those who may be responsible for contractors or may be responsible for managing
the buying of supplies, materials and equipment. It is also his or her duty to buy products and
services and to investment expenditures and deals (Johnston and Girth, 2012).
STEP TWO
After the procurement department has authorised a completely financed and authorized request
and adequate sampling was already performed, the position of the contract administrator is
critical in selecting the right procurement plan.
The goal of defining and choosing an effective procurement approach is to decide the most
suitable way to acquire the solution / outcome to meet the target user's requirements for
products , workers and services by achieving the most favourable pricing as well as contractual

terms in a fair method that will better produce what is needed in a timely fashion while
maintaining that perhaps the UN Guidance is accomplished (Kerzner, 2013).
A plan for recruitment within Bumper Woods involves:
 Option of the form of relationship and/or agreement to be reached
 Selection of a method of procurement
 The form of competitiveness to be followed in order to buy the commodities / services /
works needed.
Variables including the FRR, the organisation's procurement processes, the lines of
responsibility, the financial levels, the organizational inspection / approval protocols as well as
the related regulatory timelines, the form of procurement (goods , services or works), the scope
or specificity of the demand, the business condominium would have to be taken into account for
the design including the procurement plan. Instead of linear steps that need to be performed in
strict sequence, the method of defining and choosing the right procurement method can better be
defined as a set of decisions. The procurement officer will usually only perform the most
important stages depending on corporate standards and the expertise of the procurement officer.
However, several of the conceptual phases in the selection of a procurement plan process is
given in the flowchart underneath to best explain this method and the outcomes.
Any of the activities below must be addressed during the review of the requisition to assess the
essence of the demand, the requirements and the estimated value of that same procurement
operation (Larson and Gray, 2013).
 Identify critical details in the request and also the description of criteria and may have an
effect on the acquisition plan (e.g. urgency, purely regional criteria to be fulfilled,
delivery date of the goal, etc.).
 Define standard requirements vs the branded ones.

 Double test that even a reasonably large minimum standard is given by the technical
standards such that every product matching the criteria is appropriate.
 Determine the viability of the delivery date sought and provide the requestor with input
on lead times.
 Evaluate if the assessment may consider considerations other than technical compliance.
 Determine if all technological and other considerations are sufficient for threshold
requirements of 'yes / no' or if importance should be assigned to all.
 In addition to the applicable financial levels for the processes and delegations, assume the
estimated value of the requisition.
 Evaluate if the provision can be bundled mostly during Bumper woods requirements
review with other related demands pending acquisition or known.
Long Term Accords (LTAs)
In respective company long-term agreements (LTAs) occur in several ways which go by many
terms, including: long-term contract, structure deals, device deals, contractual with conditions,
among probably others. Generally, LTAs are depending on the outcomes of a competitive
bidding exercise. A LTA is a signed contract between an agency of the United Nations and a
seller containing all the contractual terms relating to orders which may be made against them
during respect of pre-selected products or services: cost, discounts, payment, distribution and
packing, and most other specific special terms of service. LTAs are usually set up on a deferred
basis for a given period of time ( e.g. two years) and a cumulative sum relating to a maximum of
aggregate production duration, based on the size of the obligation and the policy of the company.
LTAs may be for a single vendor or multiple providers that may include one or more products
and service row categories (Lee, Li and Xie, 2013). In certain cases, the proposal may resulted in
an actual placing of a request or an agreement to position orders at even a specified amount,
whereas in others, only structure can be defined. A broad range of specifications, like basic
office equipment (paper, computers), transport, general field equipment (vehicles,
communication systems), air charter facilities, system inputs (medicines, fertilisers, agricultural
products and normal specialised equipment (coal detection equipment) were provided by LTAs.
Relevant demands may be properly included in this other application for the same procedural
measures (e.g. shown in SOW for a prolonged timeframe supplying the provider of its own vans
and communication facilities in compliance with the requirements of the firms in the region) or

combined together with other related requests. Whether it was suitable should be determined by
the quantity surveyor in discussion with the applicant. In order to minimise the regulatory burden
mostly on key element and to render the vendor entirely responsible for its own quality, this
alternative might be preferred, particularly if it has been assumed that likely network providers
have available and low-cost access to just the goods / services needed.
COMMUNICATION PLAN
A communications strategy helps you to distribute data to relevant partners efficiently. The
strategy would describe the messages that they intend to spread, who all these messages are
targeted at, on which interface(s). In moments of disaster, engagement strategies may be used,
and they're often used while proposing new projects or when introducing new items. "For
example, if a small organisation is drafting a strategic strategy for its client, they might write a
target along those same lines:" and over span of one year, we plan to raise job applicants for the
customer by 25 percent. Conversely, for contributors who may not wish to become supervisors,
maybe the HR team wants to compose a contact strategy to pitch creating a new growth matrix
(Nojavan and et. al., 2015). If that is indeed the case, the HR department will have to define clear
targets that they aim to accomplish as a consequence of their initiative, even though the
outcomes become less measurable, such as "raising employee engagement rates by 10 percent
during the next year" or even "increasing employee loyalty, as seen by the first NPS ratings."
Category management
Category management is an essential procurement strategy in Bumper Wood will classify their
spending into areas involving equivalent or similar items that allow reduction and productivity
focus potential. In order to best optimise their deals and better handle their vendors in accordance
with organisational priorities, Group Management helps sourcing specialists to devote their
resources and perform business research. This aims to coordinate the expertise of the sourcing
team and leads to scale economies and strengthened relationships with manufacturers by having
a detailed knowledge about how each division relates to manage risk.
 Initiate-Begin by specifying the classes which will be handled by procurement: it can be
used as a reference point or a reference using the directly and indirectly model.
 Prepare-Visions need to be identified after the divisions are specified so that the
purchaser or classification manager can handle the classification in line with the
accounting vision (Meng, 2012). For instance, if the company strategy is to help small

companies in order to improve the regional economy, consumers need to build a strategy
to choose regional suppliers.
 Prioritise-As aspect of the system for realising the vision, goals have to be identified. For
example , the local country's economic targets may be to procure 50 percent of real cost
goods from manufacturers within five years in the very same city , state or area. For
simplicity of calculating the outcomes, targets set must always be Clever.
 Establish-The priorities need to be expressed in the methods that can be implemented as
the next stage of the procedure. For this case, a tactic might be to call all vendors within a
50-mile area and encourage them to compete for all expensive brands to indirect costs.
 Implement-The division manager has to collaborate with the management to develop
buy-in until the plans are decided and authorised by senior management. To improve
their situation, the techniques need to be endorsed by all.
 Maintain-The category role is to set Critical Performance Metrics (KPI) or Service Level
Agreements (SLA) to better guarantee the strategies are followed as well as the priorities
are accomplished, which would then be tracked to assess performance. A KPI may be for
four priority product and service agreements to be concluded within 1 year with local
vendors. KPIs and SLAs must strive to be SMART according to expectations.
 Develop-The groups can be checked at frequent intervals, and the frequency of those
intervals depends on the essence of the sector. Procurement is a feature that is continually
changing, so a definition that was important at the beginning of a time can become
outdated, non-critical, or change from specific to indirect. To insure that definitions are
both appropriate and in line with the overarching corporate strategy, the evaluation phase
is essential (Yojavan and et. al., 2015).
CONCLUSION
In the end of report, it has been concluded that a large portion of the capital of Bumper Wood
will be needed to handle procurement and its procedures. Usually, acquisition budgets supply
administrators with a clear sum which they can invest on procuring the items and services will
require. The sourcing process is indeed a vital standard policy of respective company since it is
essential to assess if activities will be successful from the opportunity to buy such goods or
services. In certain cases, procurement practises are governed by business guidelines, mostly
controlled by monitors from either the accounts department payable by transactions. The

selection process entails the planning and evaluation of an application and also the final
collection and payment acceptance. To coordinate procurement activities, the Chief Procurement
Officer may lead the implementation of specific legislation, collaborate with accounts receivable
to insure implementation of the policy document and successful payment, as well as work on
procurement committees where there are difficulties arising bids make purchase decision.

REFERNCES
Books and Journals
Amann, M., K. and et. al., 2014. Driving sustainable supply chain management in the public
sector: The importance of public procurement in the European Union. Supply Chain
Management: An International Journal. 19(3). pp.351-366.
Ambe, I. M. and Badenhorst-Weiss, J. A., 2012. Procurement challenges in the South African
public sector. Journal of transport and supply chain management. 6(1).
Caldwell, N. and Howard, M., 2014. Contracting for complex performance in markets of few
buyers and sellers: The case of military procurement. International Journal of
Operations & Production Management. 34(2). pp.270-294.
Chen, K., 2012. Procurement strategies and coordination mechanism of the supply chain with
one manufacturer and multiple suppliers. International Journal of Production
Economics. 138(1). pp.125-135.
Githui, D. M., 2012. Responsible purchasing and supply chain management in Kenya: A critical
analysis of the ethical considerations in Procurement management.
Glas, A., Hofmann, E. and Eßig, M., 2013. Performance-based logistics: a portfolio for
contracting military supply. International Journal of Physical Distribution & Logistics
Management. 43(2). pp.97-115.
Johnston, J. M. and Girth, A. M., 2012. Government contracts and “managing the market”
exploring the costs of strategic management responses to weak vendor
competition. Administration & Society. 44(1). pp.3-29.
Kerzner, H., 2013. Project management: a systems approach to planning, scheduling, and
controlling. John Wiley & Sons.
Larson, E. W. and Gray, C., 2013. Project Management: The Managerial Process with MS
Project. McGraw-Hill.
Lee, C. Y., Li, X. and Xie, Y., 2013. Procurement risk management using capacitated option
contracts with fixed ordering costs. IIE Transactions. 45(8). pp.845-864.
Meng, X., 2012. The effect of relationship management on project performance in
construction. International journal of project management. 30(2). pp.188-198.
Nojavan, S. and et. al., 2015. Energy procurement management for electricity retailer using new
hybrid approach based on combined BICA–BPSO. International Journal of Electrical
Power & Energy Systems. 73. pp.411-419.