Group Central Procurement Policy
This policy is the
attachment of [How to [write/build]]?
This is for your reference of management policies’ format and the
centralized procurement policy content, please do required adjustment according
to your company and group internal needs. Thank you!
2023/10/26 Other management points of view
They are listed in the
replay promoting images, please click and view: 20231026社群媒體重播圖檔-集團集中採購管理制度| Replay Promoting Images On
Social Media –Group Central Procurement Policy. Thank you!
2023/09/19 [Created Content] sources explanation
In this page, there are [Benefit
Report], ［Central Procurement Management Mechanism］and［Management Policies Framework］: I learned these when I worked for Taikoo Motors, Arcoa Inc and PWC
Taiwan, it’s long time ago.
I’m
grateful for those I’ve learned in this work scope in above mentioned firms I
worked for; policies design is a team
work, I hope this explanation is much more clearer about the sources I used and
share. Thank you!
2023/09/11 Below lists frequently asked questions for your reference;
you are welcome to comment or contribute your idea via [ExpertsSay] to share
your management mechanism in procurement:
(1)[Projects or Urgent Procurement]: Though, in this article, it is
discussing about centralizing or decentralizing procurement work roles and
responsibilities to have the best interest in the overall situation in a work
organization, however, in the demand of procurement, it also needs to consider
the timing and frequency of demand as the requirements. For
example: [Projects Procurement], such as plant establishment project
outsourcing or contract bidding, a purchase for a sudden big demand from a
client and demand for new business
establishment, furthermore, things which are foreseeable but the timing
of occurrence is not predictable as the [Urgent Procurement], things like
urgent recovery demand after work places being attacked by disasters caused by
flood or storm or destruction by thieves; the
work roles and responsibilities may differ from situation meet all kinds of
needs.
(2)The ownership of purchasing work roles and responsibilities can be
adjusted: In some companies, their business operating is stable, and, in
the commercial and advertising service providers work field, they change the
work ownership from Marketing to Central Procurement for
suppliers selecting and signing the work contracts, they are doing it in a way
of annual purchasing, inviting users departments to join the selecting and
voting procedures( including Marketing, Sales, HR/talents search and
Administration or Plant Affairs/uniforms).
(3) Internal control-to examine transparently and fairly: After kinds of
procurement work roles and responsibilities are confirms, it is advised to
established [Suppliers Selecting and Management Procedures], [Suppliers Service
and Supplying Results Assessment Policy] transparently. For example: regarding
suppliers’ requirements, related work experiences and its recognition, previous
co-working records and selecting procedures….etc., it is more appropriate to
have a written description for not only the purpose of work compliance of
procurement department but also as a work standard for other department
to recommend their preferred vendors.
To implement the [Suppliers Service and
Supplying Results Assessment Policy], sometimes, it is an internal motivated
management model, which may result in the procurement department (performing
too well) to become an independent professional procurement company, or, the
group's centralized manufacturing center (performing too well or unable to
improve) to improve the quality to respond the external competition or to be
disbanded or management be replaced due to unable to respond external
competitiveness.
(4) Internal control-to avoid the KPI becomes the root cause of fraud: The
KPI of procurement department is not necessarily containing the amount of cost
saved they need to achieve, because, sometimes, the company needs to pay more
in order to enhance products or service quality, accordingly, they need to
choose other suppliers and pay the relatively cost. You get what you pay for.
The starting point of cost saving, it is, the purchasing original price,
it is easily manipulated and not easy to be verified its appropriateness; in
some companies, the amount of cost saving is prohibited to be contained in work KPI to avoid internal
fraud happening.
(5) Internal control and flexibility-Weighting
the benefit and advoiding it: In business interactions with others, it cannot
be denied that sometimes, we need to receive or give gifts to external parties,
to accept an invited feast, and, we need to do similar things in return, or, to
support each other at business etc.; in some companies, it seems unfair that
they allow these kind of things happen, however, only procurement is not
allowed to receive or send gifts to suppliers.
In this kind of situation, some company build up a [ Benefit Report]
management mechanism to monitor this kind of thing, all the employees,
including CEO, people who are included in their work organization chart need to
follow this rule; that is, in some specific amount or occasion, between
employees or between employees and customers or suppliers, if employees need to
report in the form of [Benefit Report] (click to view the advised content) within defined days after or before they
get something beneficial to themselves from others, they need to report this to
their managers and internal work discipline management unit or some specific
committee. Relatively, the company also lists things which are [not] allowed to
happen in any kind of situation, otherwise, the employees who were doing it
will be legally dismissed.
Above information is for your reference. Please comment or leave message in my social media platforms. Thank you!
What I’m personally most curious about is the advertising company behind
your TV commercial content, what is your decision making procedure?! And, what
is the decision making procedure about the content?! Especially those products
endorsed by celebrities; as a TV commercial audience, a consumer and a learner,
I hope could know how you define the
most appropriate content and your product image will impress your viewers in
only minutes, not only the image of celebrities or any famous persons? Does
this advertising company need to achieve some kind of work KPIs? Or, you are
the advertising company?! Please share your opinion. Thank you!
Moreover, regarding central procurement management mechanism, is it beneficial
to Sourcing, Merchandizing or Trading companies?! Otherwise, which is the
better way to do procurement in this kind of business?!
Please share your idea via ExpertsSay. Thank you!
2023/09/06 revision:
Some people would ask: how
big is the demand when we need to build up the central procurement?!
This is a good question; however, in other words, it is like the first
paragraph of policy development, (1) it depends on its “purpose”, and, (2)we
need to consider whether the products or service suppliers in the industry are
able to meet the requirements of the demand or not.
(1) Purpose: The purpose of central procurement, usually, it is to integrate
the overall demand volume in order to increase internal bargain power when
selecting suppliers and negotiating purchasing price, work efficiency of
purchasing ordering, and, relatively, there is less companies only doing it for
purchasing work efficiency enhancement.
(2) Suppliers’ situation: It means industry peculiarities, materials,
products or services of some industries, their sales price or service charge is
impossible to be negotiable; for example: the medical service charge when
people going to see a doctor, however, it is possible to define the price based
on demand volume or quantity in health examination service, or, if the hospital
and health examination center are under the same business group, then, it is
possible. For example: All OOO hospital patients are able to have additional
OOO service or beneficial service fees if they do health examination in OOO
centers.
It is a long-term management work model to establish a
central procurement work funciton, it is not suitable to make a hasty decision
for building up this kind of work mechanism; unless, in the work environment,
it is obviously the purchasing work is scattered and existing multiple people
doing the same job needing to immediately centralise the work on a specific
unit or a person, otherwise, it is not advised to define all the procurements
works belong to only one work department without appropriate assessment. Thus, I would like to suggest the companies start to set up this central
procurement work function and related management policies when they have
already gathered enough facts and found both of above 2 items can
be achieved at the same time, more than that, they are satisfied with the
result of (1), and if assessing from 1 to 21 about the satisfaction, they will
define 17 at least( I subjectively define the significance of 17 in 21, and, it
will change by its operating work environment accordingly).
-
What else?!
-
Regarding 17,
in your company, how you would like to define the significant impact on the
number in your finance statements and business work operation efficiency?! How big is big enough to take
action for building up the required things?!
-
How many facts are
enough for the gathering works?! In my point of view: 100% of the qualified
suppliers are capable of doing it, and the rest of the issues are their willingness
and monetary definition things only. What’s your idea about this topic?!
-
Is the industry you involved allowing your customers doing group
negotiating the price?!
-
Asking you this question sincerely: Is green energy
charge negotiable?!
Green energy business and all kinds of works are welcome to share your professional
knowledge and promote yourself via [Experts Say]. Thank you!
2022/12/31
remark: there are 11 outlines mentioned in this article:
1.Purpose, 2. Scope, 3. Role and responsibilities, 4.Level of approval、5. Related work process and reference, 6.Work
KPI, 7.Exception management, 8. Operational risk and internal control, 9.
Related work documents, Footer. Proposer and Approver.
I learnt this
idea from the work experience I built when I worked for #PwC, related information came from our internal work knowledge and
templates in clients side. More than that, the result of my discussion related
issue with peers are included. Regarding 6.KPI
and Proposer and Approver came
from my feedback to the concern raised in policy implementation meetings in
companies.
If viewers get any work benefit in this sharing, please forward this
content to more people in need. Thank you.
[ Policy starts here ]
What’s Your Idea Co., Ltd.
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Document
Template：WYI00001
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PoilcyOwner：HQCentralProcurement
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Policy／DOC No.：PO-PRC0001V01
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Q&A
meeting minute：POQAM20220001
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NewHiredTraining：●Group●Company●Department
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DateofAnnouncement：２０２２０２０９
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Group Central Procurement Policy
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Extension No.：９８９８
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P. 1 of 6 Pages
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1. Purpose：In order to reinforce group
procurement bargain power in centralizing purchase request and manage
procurement work efficiency and internal control effectiveness at the same
time, this policy is established specially for its been compliance.
2. Scope:
2.1. This policy applies for work role and
responsibilities among purchase requisition, purchase ordering and receiving
and acceptance work procedures in What’s Your Idea Co., Ltd.( This Company or
Parent Company) and its investee companies; this list of investee companies is
based on the 「Subsidiaries Supervisor List」announced by Finance Department.
2.2.
「Suppliers」 include those who provide
goods or service to companies in this group.
3. Role and
responsibilities：
3.1.Selecting Group
Suppliers：below suppliers need to be centrally
selected by Parent company and referred to as Group Supplier, such as「brand」 advertisers, correspondent banks,
external auditors, computer hardware and software providers, property insurance
firms, law firms, commodities and material suppliers, office and plant
builders, recruiting firms and international freight service providers.
Each subsidiary is allowed to select the resting kind of suppliers and
define its own related work role and responsibility. Please contact 「HQ Central Procurement 」 via above extension number or email once
there is a need of group purchasing negotiation discussion.
3.2. Parent company and subsidiaries work
role and responsibilities chart in signing contracts, purchase requisition,
purchase ordering and receiving and acceptance in Group Suppliers management:
[Parent company
and subsidiaries work role and responsibilities in Group Suppliers management]
P = Parent company;
D = Demand company; W = Other explanation
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Signing contracts |
Purchase requisition |
Purchase Ordering |
Receiving and acceptance |
Payment request |
Payment processing |
Other explanation(W) |
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Commodities and material suppliers |
P |
W |
W |
W |
W |
W |
Demand company purchases from the Group
manufacturing center; Group manufacturing center purchases from the contract
manufacturers externally, and performs the payment request internally. |
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Brand advertisers, Correspondent banks,
External auditors, Computer hardware and software providers, Property
insurance firms |
P |
D |
D |
D |
D |
D |
|
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Law firms, Office and plant builders,
Recruiting firms, International freight service providers |
D |
D |
D |
D |
D |
D |
|
3.3. Central Procurement Suppliers:
suppliers of centralized procurement
in This Company, including Group
Suppliers in 3.1, related work role and responsibilities of departments is
listed in below chart:
[Departments work role and
responsibilities in Central Procurements Suppliers management]
Departments: AC=Accounting; AD=Admin; PD=Product;
MK=Marketing; GP=Group Central Procurement;
IT=Information Technology; HR=Human Resources; LE=Legal; LG=Logistics; GM=Group
Manufacturing Center; US=User(s)
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Work Process Suppliers ; Work Owners |
Suppliers selecting |
Signing contracts |
Purchase requisition |
Purchase Ordering |
Receiving and acceptance |
Payment request |
Payment processing |
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Correspondent
banks, External auditors |
AC |
AC |
AC |
AC |
AC |
AC |
Finance |
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Commodities and
material suppliers |
PD |
PD |
PD |
GM |
PD |
PD |
|
|
Brand
advertisers, Products advertisers |
MK |
MK |
MK |
MK |
MK |
MK |
|
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Computer
hardware and software providers |
GP |
IT |
AD |
IT |
IT |
AD |
|
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Machinery equipment
providers, Transportation equipment providers, Office and plant builders,
Maintenance and renovation service providers |
AD |
AD |
GP |
AD |
AD |
||
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Domestic
logistics service providers, International freight service providers |
LG |
LG |
LG |
LG |
LG |
||
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Supplies,
Stationery, Courier firms |
AD |
AD |
AD |
AD |
AD |
||
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Recruiting
firms |
HR |
HR |
HR |
HR |
HR |
||
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Property
insurance firms |
LE |
AD |
LE |
LE |
LE |
||
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Group insurance
firms |
LE |
HR |
LE |
LE |
LE |
||
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Law firms |
LE |
LE |
LE |
LE |
LE |
||
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Travel agency |
HR |
User(s) |
HR |
User(s) |
HR |
3.4. User departments are allowed to
select suppliers excluded in above 3.2 and 3.3 work scope and perform related
work process.
3.5. Accounting Department:
3.5.1. Accounting needs to reject payment request for payable work process once the central procured items payment is requested for non -central procurement suppliers, otherwise, any exceptional situation needs to comply for 7.Exception Management.
3.5.2. All departments and subsidiaries’ 「Non-Centralized Procured」 items annual accumulated purchased
amount reaches NT$5,000,000, Accounting needs to summarize its information as 「Year XXXX Non-Centralized Procured items annual
purchased amount reaches NT$5,000,000
and its suppliers」 or 「Case not found in this 12 months - Year XXXX Non-Centralized Procured items annual
purchased amount reaches NT$5,000,000
and its suppliers」 and send to 「HQ Central Procurement」 by 3/31 every year.
3.6.HQ Central Procurement: every year, HQ Central Procurement
needs to hold meetings to discuss Group/Central Procurement Suppliers related
issues by 6/30, and update the list of Group
Suppliers( including central procurement suppliers of This Company) and
announce the latest information by 7/5 every year.
4. Level of approval：please
refer to 「Level of Authorization Chart-Procurement
and Payment Work Cycle」.
5.Related work process and reference：
5.1. Work process of this policy：N/A
5.2. PO-PRC0002V01 Suppliers Selection Rule
5.3. PO-LGC0001V01 Contract Signing Process
5.4. PO-PRC0003V01 PR and PO Work Management
5.5. PO-ACP0001V01 Payment Request Work Process
5.6. PO-FNP0001V01 Payment Terms Management
5.7. PO-PRC0004V01 Supplying and Service Quality Assessment Work
Procedures
6.Work KPI：
6.1.HQ Central Procurement: to announce updated 「List of Group Suppliers」 and 「List of Central Procurement Suppliers」 by 7/5 every year.(Need to remark the
updated items.)
6.2.Accounting：according to 3.5.2, summarize and send out
response related to 「Year XXXX Non-Centralized Procured items annual purchased amount
reaches NT$5,000,000 and its suppliers」 or 「Case not found in this 12 months - Year XXXX Non-Centralized Procured items annual
purchased amount reaches NT$5,000,000
and its suppliers」 by 3/31 every year.
7.Exception management:due to any specific situation causing Group
Suppliers or Central Procurement Suppliers are skipped for central procured
items, the payment request department needs to prepare 「Explanation for Central Procurement Skipped」 and get approval by department managers and
HQ Central Procurement. Skipped central procurement payment request is
acceptable only when this approved document is attached.
8.Operational risk and internal
control:
8.1. Benefit avoidance and work independence in suppliers
selection.
8.2. Work compliance of suppliers assessment procedures.
8.3. Work efficiency and effectiveness assessment of
central procurement.
8.4. Assessment the appropriateness of the reasons of
skipped central procurement and its amount significance.
8.5. Above 6. Work KPI assessment.
9.Related work documents:
9.1.ID-FINSB20220001Subsidiaries Supervisor List
9.2.ID-PRGCPO20220001Group Suppliers List
9.3.ID-PRCCPO20220001Central Procurement Suppliers List
9.4.LOA20220001 Level of Authorization Chart
9.5.POQAM20220001 Policy Q&A Meeting Minutes
9.6.ID-PRUGPO0001V01 Explanation for Central Procurement
Skipped
9.7.ID-PRUCPO0001V01「Year XXXX Non-Centralized Procured items annual purchased amount
reaches NT$5,000,000 and its suppliers」
9.8.ID-FNPO0001V01 Payment Request Sheet
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Proposer：VP-HQ Central Procurement |
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Date |
[ Poilcy completed ]
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