Critical Analysis of Procurement and Risk Management at CAP Market

This report provides a comprehensive analysis of project risk and procurement management within CAP Market, a German supermarket employing disabled individuals. It begins with an executive summary outlining the importance of strategic procurement and its application within CAP Market's operational context. The report then delves into a critical examination of the company's sourcing methods and supplier base, evaluating existing strategies and their effectiveness. A strategic framework is proposed to enhance procurement excellence and drive value growth. The framework includes steps such as internal analysis, supplier assessment, strategy development, implementation, negotiation, and transition planning. The discussion explores the benefits of strategic procurement, including cost reduction and risk management, and emphasizes the need for continuous improvement in supplier relationships. The report also highlights the application of VMI and cross-docking for inventory and supply chain management. It concludes by emphasizing the significance of supplier performance management and its impact on risk mitigation, cost savings, and supplier collaboration, alongside the importance of strategic sourcing to the company's operations.

Running head: PROJECT RISK AND PROCUREMENT MANAGEMENT
PROJECT RISK AND PROCUREMENT MANAGEMENT
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Executive Summary
Strategic procurement is defined as a proper kind of approach to SCM (Supply chain
management). It mainly provides a definite structure to the whole method of collecting and using
information. CAP market is considered to be medium size supermarket based in Germany which
mainly employs various disable people. Each unit of this organization is mainly run by the
association of local disablement. The brand of this organization is owned by a co-operative
group of a sheltered workshop. This particular organization tends to provide cherished
community services along with good working condition. The whole chain of CAP market has
grown a lot in the last few years. Procurement process in CAP market can be considered to be a
bit complex one. Strategic procurement is considered to be a very wide process. This particular
process requires inputs from all departments and functional zones of this organization. So, CAP
market should set up a proper strategic procurement team so that it can easily set up the overall
direction of procurement aligned with its business strategy. This new team of strategic
procurement will make use of data for development and implementation of strategic procurement
plan. In the coming pages of the report, a critical analysis has been done sourcing method and
supplier base. After that, a strategic framework has been proposed which can easily lead to
procurement excellence and value growth. There are mainly seven steps behind the successful
implementation of procurement process in CAP market like conducting an internal analysis on
the needs of CAP market, conducting an assessment regarding the supplier market, collecting all
the information of supplier of CAP market, development of sourcing and outsourcing strategy,
implementation of a proper sourcing strategy, negotiation with various suppliers and selection of
proper win bid. The last step is all about the implementation of a transition plan which can be
used for supply chain improvement.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Critical examination of sourcing method and supplier base........................................................4
Critical discussion on Sourcing Method and Supplier Base........................................................7
Strategic source of the framework which is used for procurement excellence and growth of
value.............................................................................................................................................8
Conclusion.....................................................................................................................................12
References......................................................................................................................................14

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Introduction
The following report reflects on strategic procurement which is a difficult thing to handle
for any organization like Cap Market. Strategic procurement in the Cap market generally
requires the involvement of the entire organization (Mena, Van Hoek, and Christopher, 2018). It
requires effort from each and every department of the organization. Generally, a strategic
procurement team is considered to be an important tool which is used for improving the value
and contribution of the CAP market organization. It generally works like a guide for CAP market
and should be updated on a regular basis so that it can easily align with its overall business
strategy. The greatest need for strategic procurement can be various aspects like reduction of
cost, new market development and proper management of risk (Azambuja, Ponticelli, and
O’Brien, 2014). By the help of procurement management, the CAP market can ensure the fact
that they are delivering value by concentrating on various strategies like consolidating spend,
reduction of the total life cycle and an increase in competition. In other words, strategic
procurement at CAP market can easily incorporate at reducing the base of supplies,
communication and lastly having a long-term relationship with various suppliers.
In the coming pages of the report, an idea has been provided regarding the various
benefits of strategic procurement in Cap Market. The organization can have a large number of
benefits like driving profitable growth and source of value. It can also add to their business value
design. For this particular reason, Cap market have been re-examining their supply base so that
they can easily minimize linked cost and maximize their value of goods and services for their
customers or consumers. At the end of the report, a strategic source framework has been
provided which can easily lead to procurement excellence and value growth.

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Discussion
Critical examination of sourcing method and supplier base
Strategic procurement can be defined as a process which can be used for creating
alignment and consistency of action. It mainly aims in delivering long-term objectives and
overall strategy which can be used for fulfilling its mission (Wanjiru, 2016). It generally focuses
on s transformation or change in organizations mission, goals and various objectives which are
known to be a measurable activity like plan budget and management of procurement function.
Cap Market comes up with own policies and structure which greatly affects the whole
procurement process. The policies and procedure are built in such a way that it can easily
contradict with procurement objective and goals. For an organization like CAP market, decision
making may take a long time during the procurement process (Deasy et al., 2014). CAP market
has an excellent relationship with their various suppliers but the fact should be taken into
consideration that continuous improvement may lead to breeding and reduction of cost. Strategic
sourcing can be easily stated as a well-known method which can be used for cost-reduction. It is
considered to be useful in Transport and freight, finance, marketing and sales, manufacturing and
lastly HR retail.
CAP market can be considered to be a charitable organization which was set up in the
year of 1985. This particular market organization provides employment for disabled people of
Germany (Kim, Suresh, and Kocabasoglu-Hillmer, 2015). This organization works with other
five similar organizations so that it can easily cover the whole of Germany. In the beginning, this
particular organization was a joint venture which was run by its various members. But later on
this organization was properly constructed and at present, it has mainly five objectives.
 Buying and Selling of various goods jointly for its member.

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 Developing and selling various products which are considered to be suitable to be
manufactured by various disable people.
 Proper set up and management of various co-operative operations in various member
institutes.
 Providing an advice regarding business and technology
 It can be used for proper management of developed projects.
The development of CAP market mainly comprises of three parts that practice for
distribution, operating or working of various trucks and technology (Shin, Collier and Wilson,
2017). There are a large number of benefits which can be gathered from supply chain like time-
saving, effective management of inventory and lastly improve the forecasting of various products
at CAP market. This supermarket started with providing jobs for management of inventory at the
warehouse of the CAP market. A method was adopted by the CAP market known as VMI
(vendor management inventory) which is used for proper inventory flow (Park et al., 2016). This
particular method was mainly used for ensuring the fact that various products are always
available on the shelve. This particular process requires cooperation and proper collaboration
with various suppliers which provide better supply chain management.
Before the development of VMI, CAP organization was making use of tapping
technology. CAP organization was making use of computers for proper inventory control for its
various centers and warehouses (Araz and Ozkarahan, 2017). The inventory management at CAP
market can easily gather information from various points like POS, sales in real-time and
inventory at warehouse into a particular database which is centralized in nature. This particular
information is shared with various suppliers so that they can have an idea when more products
need to ship. The SCM process at CAP organization is not totally based on technology. This

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supermarket makes use of a method known as cross-docking at its warehouse (Arney et al.,
2014). This particular method helped in moving the inventory in such a way that it can move the
inventory directly from the place which is arriving from the various departing trucks. Products
are mainly taken from various arriving trucks and after that, it is packed in some trucks. The
ultimate result of this can be lower cost for various inventory management, less time for products
in transport and lastly reduction of transport cost (Edquist et al., 2015). The ultimate benefit
which can be achieved is cost control which can be used for reducing the overall expenditure of
this CAP organization. By having a proper control of the money which is spending, the
organization can easily have a track about the value or amount of money which goes out of the
door. It will ultimately help the CAP organization to keep more cash in hand or to invest in
another amount of money like capital expense or any kind of debt.
A supply base can be easily defined as a part of the supply network which is actively or
mainly used for buying an organization (Lawal, 2016). Supply base optimization generally
begins with rationalization which is a strategic initiative. Supplier rationalization can be easily
considered to be a continuous process which generally needs maintenance on a regular basis. The
maintenance is all about replacing the good suppliers with better or best one (Loader, 2015). The
main goal or task is to build a manageable, optimized supply base and lastly establishing a long-
lasting relationship with various suppliers (Mark McKevitt, Flynn, and Davis, 2014). CAP
market should conduct a supplier performance management (SPM) program on a regular basis at
it can bring a lot of benefits. SPM program can provide advantages:
 SPM can be used for neglecting various kind of supply chain risk and disruption.
 This program can be used for the protection and improvement of the reputation of
the brand.

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 SPM program can be used for avoiding various types of cost and achieving
saving.
 This program can be easily used for segmenting and ranking vendors
 This program can be used for establishing collaboration with various suppliers of
CAP market.
 This program aims at providing full transparency between the CAP organization
and its suppliers.
 It aims at improving collaboration between the CAP organization and its
suppliers.
 This program increases the customer satisfaction at CAP market.
 This program can be considered to be useful for improving quality,
manufacturability and lastly reliability for various customers of CAP market.
 This program can be considered to be useful for improving the awareness
regarding supplier diversity.
 This program will increase the visibility of full supply base to procurement and
event management departments.
Critical discussion on Sourcing Method and Supplier Base
Strategic sourcing is known to be a well-known supply management tool which aims at
delivering cost reduction and other kinds of benefits. Strategic sourcing is the first step of the
ladder. When it is combined with strategic supplier management and effective day to day
activities then the final outcome can be more advantageous. Few organizations like CAP market
have easily managed to become leaders in both domains that is strategic sourcing and strategic
supplier management. Both the organization and its suppliers work together to develop strategies

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and set of values. An organization like CAP market creates supply advantage with the help of
suppliers which checks the fact that how their roles and relationship can be changed as per
requirement. The ultimate goal of strategic sourcing is to provide a certain number of advantages
in which members can become innovative and leader in the market. Purchasing organization and
its various suppliers can easily promote communication by creating different opportunities and
processes. The CAP market is focused on strategic sourcing which is much focused to easily find
products at a required price from different suppliers. After that CAP market is much focused to
provide the strategic partnership with a large number of vendors. This will provide long-term and
high volume purchase in return for the lowest possible prices. Apart from this, the CAP market
organization makes use of cross docking which is a well-known logistic practice. This particular
method is considered to be a centerpiece for CAP market strategy which aims to replenish the
inventory in an efficient way. This aims in direct transfer of a product which is inbound and
outbound truck trailers without any kind of extra storage space. It aims for unloading items from
an inbound and outbound truck with no storage space in between them. The suppliers are more
focused to deliver products at CAP market distribution where different products can be cross-
docked and delivered to various stores. The ultimate goal of cross-docking is to reduce the
inventory and transportation cost, transportation time and any kind of inefficiency.
Strategic source of the framework which is used for procurement excellence and growth of
value
Strategic sourcing can be easily defined as a dynamic delivery of both internal and
external business or any IT related issues. It is mainly done so that business objectives are met
for various sources and services (Krasteva and Yildirim, 2017). Strategic sourcing mainly
comprises of four phases that is sourcing strategy, evaluation and selection, negotiation with the

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contractor and lastly sourcing management. There are five phases of the Strategic sourcing
process for this CAP market like analyzing, recommendation, selection, implementation and
lastly management. It is done so that organization like CAP market can improve its purchasing
power so that it can have its best possible value in the market.
Analysing: The analyzing phase of the strategic sourcing process for CAP market will
help them in gaining knowledge about the external market. This particular phase will help in the
establishment of external sourcing team, brief details about the data analysis of any kind of past
performance (Roberta Pereira et al., 2014). Apart from this, this particular phase will help the
business people of CAP market to have an idea regarding the present business needs or
requirements. The only drawback of this phase is that it is time-consuming, so the sourcing agent
of CAP market should begin their particular process early phase. For this phase, it is
recommended that CAP market should have a sourcing professional to guide this and other kinds
of associated phases. Sourcing professional at CAP market will start this phase by conducting a
market analysis which helps them in having an idea regarding the external market, the
performance of suppliers and lastly business needs. Various kinds of sourcing professional will
help to have an idea regarding the information and recommendation which is developed by the
sourcing team. It also aims in having an advantage in strategy, time and lastly various kinds of
expected benefits. The gateway can be easily defined as a proper kind of scheduling method
which is mainly used for ensuring the fact that all the parties under CAP market are in agreement
with the project (Strategic sourcing) before it moves forward.
Recommendation: The main focus on this step is all about the approval of sourcing
strategy which is developed in the analyzing step. This step relates to the collection of resources
from various business leaders of CAP market (Young, Nagpal and Adams, 2016). The Gateway

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review of CAP market is mainly inclusive of Corporate Supply management and their staff
members. It is inclusive of leaders of CAP market which are affected by sourcing initiatives.
During the review of the gateway at the CAP market, its sourcing team will get an idea regarding
the current market information. Along with this, it also provides details regarding the
segmentation of suppliers and recommendation by making use of strategic plan template.
Business leaders at this gateway will ensure the point that meetings can increase their concept
about supplier strategies. It is inclusive of a certain number of commitment which provides an
idea regarding the things which can take place.
Selection: The main goal of this stage relates to proper negotiation and proper suppliers
to easily fulfill the needs of CAP market. In this stage, sourcing team of CAP market will
communicate with the sourcing strategy for its business (Loader and Norton, 2015). The proper
effort is required for reducing the opportunities for supplier and to make use of contacts with
CAP market so that they can gain information and reduce competition in the market. Apart from
this, the team at CAP market will identify various kinds of communication strategies for
suppliers for ensuring the fact that they provide the best offer. This particular support at CAP
market will improve competitive tension by considering the sourcing method. Sourcing team at
CAP market generally negotiates with various suppliers for fulfilling the deliverable requirement
(Fernandes and Vieira, 2015). After proper negotiation with sourcing professionals, the suppliers
can easily fulfill the requirement of deliverable at Gateway steering team.
Implementation: The main intention of this implementation stage is to provide award
business to the CAP market at selected suppliers. Detail step about the completing phase is
mainly delivered across the whole CAP market. Suppliers of CAP market assist in the
development of an implementation plan (Farag and McDermott, 2015). The appointed team at