301191 Procurement in Aviva Construction Assessment Answer
This paper deals with process of procurement in an organisation. With the help of procurement process the Aviva construction will be able to know how the involved procurement activity will offer exact value with respect to the money spent. The process will enable the Aviva construction to actualize the bigger goals and fulfil the related objectives. It will enable the Aviva construction to form a procurement strategy and put it in place to ensure its effectiveness. With exact execution of the plan the effectiveness of the procurement plan will be futile (Baily et.al., 2018). The report on procurement process will streamline all steps for clarity and better performance.
Procurement is the method of strategic assortment and negotiation of merchandises or facilities which is very essential for an organization irrespective of its governing body (government or non-government organization). In the era of globalization, most of the organizations have their own allocated procurement route and rules.
The name of company is Aviva Construction pvt. Ltd. which has just come into force. Hence a full-proof procurement strategy is required to take this start-up to a whole new level. The Aviva construction needs to follow a certain set of procurement rules in order to grow efficiently. The budget of the Aviva construction is not huge hence it will be considered while designing the strategy. The Aviva construction is located in Sydeny, Australia and provide services for constructions.
The Aviva construction goes by the theories put forth by procurement scholars as well as practitioners that does not fit all size, every task and every Aviva construction needs a personalized strategy to devise a procurement plan that best suits the requirement.
The types of procurement can be listed as follows:
- Inventory that’s vendor managed
- One time
Corporate Vision and Mission Statement
The corporate mission of the Aviva construction is to fulfil the business goals in such a working environment where only fairness, courtesy and honesty prosper and traverse across its departments, business clients, associates, staff, suppliers, vendors, community and society on the whole (Fu et.al., 2015). Customer service and customer satisfaction are important to the Aviva construction and with innovation, the Aviva construction strives to achieve it by offering best service and products in the industry.
The vision of the Aviva construction is to become the best customer-centric organization, simultaneously constructing a place where customer come with trust and leave with confidence after busying its products/services. The Aviva construction is here because they are here.
Procurement’s Vision and mission statement
The Aviva construction’s procurement vision and mission statement is that the sourcing and procurement landscape consistently comes up with fresh challenges, enhanced risks and better opportunities making the procurement process complex. In order to have longer availability of important goods at reasonable price, our Aviva construction needs to have a well-turned out procurement strategy that is made after systematic assessment (Mclauchlin & Mossburg, 2015). In the past few years, the Aviva construction has focused more on devising apt procurement strategy having spae for healthy supplier-buyer relationship feature, smooth interdependencies, thoughtful planning along with goods wise classifications.
The procurement rules and regulations of Queensland government are stepwise discussed below.
Queensland government follows a three step procurement process. They are procurement planning, supplier engagement and managing supply arrangement, respectively.
Demand analysis and supply market analysis are the prime part of procurement planning. Depending upon the demand and supply ratio the whole procurement plan is made. Available options are analyzed after figuring out the appropriate market demand. The amount of supply to the market depends on various parameters like availability of goods, obtainability of labors. Therefore supply to the market also depends on the above mentioned fact analysis. A proper procurement planning can accelerate the whole procurement process.
Any organization builds up its reputation by its work profile. After planning it is immensely important to execute the plan properly. Occasionally during execution of plan it became essential to recreate work plan due to some unavoidable circumstances. After suitable procurement planning, Queensland government analyses supplier engagement. This segment is consisting of four sub-segments. First sub-segment is developing requirements. Developing requirement assure business growth which eventually assists to empower the financial stability of the organization. Second sub-segment is ‘going to market’ or market survey. Appropriate market survey can create an immensely important database which can statistically show the increased or decreased rate of demand of any merchandise. Such crucial database always benefits the negotiation procedure further. Evaluation and selection is the third sub-segment under which the market survey is scrutinized. The last and final sub-segment of supplier engagement segment is award. Any supplier who effectively accomplished the above mentioned phases of marketing they are awarded by the Queensland government. Such awards help to build an awareness and eagerness among the suppliers.
Managing Supply Arrangement
After appropriate planning and survey the final stage of procurement is compiled by the administration of the organization. The most crucial step in this segment is contract implementation. Under legal surveillance the management of the organization specifies the entire facilities or merchandise list after negotiation which denotes the completion of contract implementation procedure. After validation of the contract a constant monitoring is essential to ensure the product or service qualities. Queensland government employs highly experienced executives to observe the entire procedure. After completion of the assignment a thorough review and cross examination procedure take places to ratify any loophole of the given assignment. After finishing the entire procurement system Queensland government officially concludes the assignment.
NSW Procurment process
NSW way of procurement
Analyze Business needs – This is the first and crucial step where the Aviva construction needs to analyze the needs. Engaging stakeholders at this early stage is definitely going to be beneficial as a lot of experience will come into play. From very basic needs like resources, the Aviva construction must analyze the complex requirements like contractor, asset and so on. The entire project depends upon the needs that are being finalized in this step hence the requirement list should be made with attentive mindset. Once everything is done the procurement plan can shift to the next step.
Analyze and Engage Market – This is the next step of this procurement plan. Since the needs of the business are known the Aviva construction can now move on to analyzing the market in order to research for the options that are available in the market. Considering the budget of the entire project Aviva construction can go on finding the relevant thing that is under the budget. The Aviva construction can hereby decide whether it is going to make or buy the product or service will be outsourced. All in all the engagement with the market is established under this step and a quest for resources is continued. Stakeholder’s opinion is also taken into consideration while analyzing the market. The goal is to figure out the solutions to the project that will make it successful.
To begin with, supply hazard can be characterized extensively utilizing three components:
1. Market chance: Availability of potential providers for the products, kind of market (restraining infrastructure or oligopoly condition) and passage boundary to the market
2. Execution chance: Supplier's quality-and execution related issues, which can incorporate things like the provider's entrance to new innovation or the provider's pace at embracing new innovation
3. Multifaceted nature hazard: Associated issues with institutionalization of the item or administration. Particular of the nudge ucts or administrations is basic.
Second, benefit effect can be characterized as:
1. Effect on productivity: This factor looks to address the run of the mill benefit yielded on the acquisition of every item.
2. Significance of procurement: This factor tries to address the significance or need of the acquisition of every product.
3. Estimation of procurement: This tends to the unmistakable and immaterial costs joined to or the worth got from the acquisition of every item.
Finalize Procurement Strategy – Now since the needs of the project are defined and the market has been analyzed for the resources, it is the time to develop right strategy. The Aviva construction now needs to take a discussion with the relevant peoples and finalize the procurement strategy. Now here the Aviva construction can decide whether to work with local suppliers or take the project to global level. These are all the parts of strategy development. Marketplace, resources, budget, etc everything should be considered while designing the strategy and before finalizing it should be reviewed again.
Approach the Market – Now is the time for the Aviva construction to approach the market. In this step the business’s as well as stakeholder’s need will be taken care of. The Aviva construction for the first time moves to the market with an objective to buying things. The Aviva construction will also look for the competitors in the market and what the competitors are doing. Assets will be looked for and source to get the essentials will be set here. It will be decided in this step which seller is going to get bulk order or not. The order which is allocate to the seller in the market also varies according to the seller/resource chosen by the competitor.
Select – Now comes the time for selection. The tender is to be allotted at this step after considering all the important factors like; budget, expectation, time duration and so on. The rankings of the qualifiers will be analyzed accordingly. Key stakeholder’s need will also be taken care of while allotting the tender. Now after analyzing everything the tender parties will be called for the selection process and the final selection will be made from those who qualify for the getting the tender. Since after this process the tender is to be allocated to the contractor, it is very essential to chose the right person for the final selection process.
The Aviva construction believes in matching the externally available resources that are offered by various vendors as well as suppliers that to the in-house requirements of the Aviva construction. This approach always has come across as an efficient method for brainstorming, visualizing, discussing as well as illustrating the opportunities related to differentiated buying along with supplier scheming.
Negotiate and Award – Here the bidding will be done. The supplier is to be selected in this process hence the negotiation will be done with the qualifiers and the right authority will get the contract. Mostly this process is focused on finance and technical capabilities of the contractors. The tender will be allotted to the authority which is providing the value within budget. Technical audits, credit check and product sampling/trial is also done at this step only where these factors are taken into consideration before allotment of the project. Decommissioning, removal and disposal costs are also considered before making the final allotment.
Implement Arrangement – Now since the Aviva construction has allotted the project to a contractor, it is the time when both the parties focus on understanding each other’s requirements in a better way. The focus is now on maintaining this relationship to the end of the project. The success strategy is to be discussed before carrying out the project. After both the parties are agree with each other, the implementation is done. The arrangements are made from both the Aviva construction and the contractor by taking stakeholder’s expectations in mind. The goal is to implement the project effectively in order to successfully lead the project.
Manage Arrangement – Now comes the process of managing the arrangements. The goal here is to arrange the resources and everything in such a way that project’s qualifications are successfully met and objectives are easily achieved. Since the time of the project entirely depends on the type of purchase, strategy, length of project and marketplace, the goal is to manage these in such a way that the project is completed in a limited time frame giving the best outcome. The long term goal here is to increase the credibility of the organization by putting in the real value to the project. The target is to efficiently complete the project by reducing the risk factor.
The team behind supply management requires addressing various bought items as well as the supplier-buyer rapport tackled with befitting strategies as the challenges and issues with respect to each one of them may differ drastically (Nagel, 2015).
This is the reason why most procurement mangers plan and implement many procuring portfolio methods to demarcate items and extract efficient buying strategies.
This Aviva construction believe in employing a buying portfolio method for procuring ingredients. The same approach they apply to identify noncritical items and strategies for everyday procuring process of non-tangible commodities or services. They also use the same for the procurement of indirect and direct commodities (Schapper et.al., 2017). They also use it to come up with a strategy to form a synergy and use it across their business entities.
Renew – This is the last and final step of this procurement strategy where everything is discussed from start. Whether there were any shortcomings with the project or there was something which can be improved. The entire project’s cost is to be calculated and analyzed whether it was under budget or not. The focus is also laid on whether there is a possibility of renewing anything, if yes then necessary steps are taken to achieve the goal.
Other prerequisite to implement procurement process in Aviva construction
New regulations and processes can be formed with respect to procurement having much better control, in order the beat the competition and enhance the transparency.
The existing staff will be required to be trained or new recruits need to be hired.
In case the new framework will be not be completed or put into practice, we will have to work on the compliances problems if any with respect to the market dynamics and competition (Bower, 2013). This can be achieved by consistent monitoring. Depending on all these factors, the procurement process can be rated in terms of its effectiveness. Enhanced insights and very closely managing the process can yield better results.
If required procurement providing service agents can be used or suppliers can be contacted directly after studying the whole sourcing market.
The changing political and economical scenarios must also be considered by planning the process as the outdated or old processes cannot be blindly followed if any of the two has seen transformation in the recent years (Cox, 2018). There must be scope for the follow up activity as well as tracking the order. There should also be scope of including performance supervising practice in the procurement contracts.
Approach for indirect procurements must be more structured as well as risk-based. Effectiveness of contract management is also very important for the overall-efficiency of a procurement process. Hence, it must be carefully planned and executed. There must be scope for reporting on important performance parameters as well as reporting methodologies along with KPIs (Croom, 2017).
Procurement process is as important as budgeting and must be planned with utmost care with a set framework and timeframe and its execution and monitoring must be done with care too.
Eastablishing procurement team
Decision about centralization
Procurement team can be eastablished in three ways. It can be centeralized as well as decentrilized.
|centrilised team||De-centerlised team||Hybrid|
|Quicker, less control||Best of both|
Standard Policies and bureaucratic
Segregation of Duties
It can be done with the help of following tools in my Aviva construction.
It is useful for distinguishing potential shortcomings like absence of responsibility, duplication of responsibility, people missing from endorsement process, struggle of obligation, lack of control, more than one individual in control etc.
This grid help to know about the nature of people in procurement team and allot them work according to their abilities. Skill vs will grid is grid which divide people according to their level of skills and their commitment toward work.
Excite people- these people have good skills but they are not willing to do so they are good to motivate other team member.
Delegate- These people are good to delegate jobs to others as they have knoweldge as well as interest
Direct- These people need directions as they are low on skill and will both
Guide- These people need guideance because these people want to do work but they are not able to do.
Settling Conflict and mistaken assumptions 5 styles:
These people are confident and un agreeable. They pursues claim worries at cost of others. These people use their ability to control.
These peopl are unassertive and helpful. They neglect possess concerns. They are Obedient and requests.
These people are unassertive and uncooperative. They neither pursure their own or others concerns.They don’t like to deal with struggle
They are self-assured and agreeable. They prefer to find an answer that fulfils the two concerns
Compromising – These people think about mutual soultions for conflicts.
There are two kind of leadership style which being procurement manager in Aviva construction, I must choose any style of both to impement procurement practices.
|Task remunerate among pioneer and colleagues||change the requirements, qualities and desires of devotees to aggregate interests|
|Rewards and discipline to impact inspiration and execution||Consider more note worthy’s benefit of the gathering above self motivate supporters through trust|
|Effective in undertaking based groups – producing, monotonous work, hands on pioneers||Higher degrees of exertion, fulfilment and execution|
|Not viable for complex exercises|
Team development in our Aviva construction
There are four major processes and stages in group development. These stages can be classified as stage 1: forming, stage 2: storming, stage 3: norming and stage 4: performing
Stage 1 forming: this stage comprises of the following elements-
Developing trust in between the organization and its customers
Making contacts with the customers and strong bonding for long term relationship
Establishing Expectations at the basic level with the strong foothold
Identifying the various similarities
Agreeing upon a common goal and objectives of the organization
Setting up of the ground basic rules and regulations for the organization
Stage 2 storming: this is the most important stage where many teams experience failure. It comprises of the following elements-
Expressing of different ideas, views, opinions, suggestions and feelings about a product or a service
Reacting to the leadership of the managers or top management in the organization
The staff members are the team members might be independent or might be counter dependent fore support
Pushing up of boundaries
Challenging the leadership and authority of their managers or supervisors
Running for position
Identifying the raw materials and resources available
Stage 3 norming- this stage comprises of the most number of elements and can be considered as one of the lengthiest processes.
The decision through negotiating and building consensus upon a product or service
The team members agreed upon their role as a team member and processing related to solving a problem or an issue
Resolving differences amongst team members
Appreciating the strength of the team members
Respecting authority of the team member or leader
Having a constructive feedback
Commitment towards common goals and objectives
Progressing towards the goals and objectives
Stage for performing- this is the last stage in the process of group development which comprises of the following elements.
Working collaboratively as a team of individuals working towards a common goal
Being empathetic and caring towards every member in the team
The group and team must have a Unique Identity for themselves which must be appreciated
Members should be independent in completing their roles
The team should be able to find solutions to issues and problems collectively
Using various processes and structures
Allowing the team members to adjust themselves according to the new requirements of the task
Learning from suggestions and feedbacks and then taking a decision regarding work.
Organization structure of procurement department
Based on above analysis following procurment structure is finalised
Following ethical consideration will be kept in mind while implementing process
- To maintain integrity and impartiality
- To maintain commitment to the system of the government
- To promote the public good
- To maintain accountability and transparency in all works.
We can describe sustainable procurement to be a process where your organization assess their needs for goods and raw materials, various services and other capital objects, and meet this need in such a manner, that it allows them to achieve value out of the amount that they have spent on the process of procurement in terms of profit and benefits. These benefits are not only for the organization, but, they are divided in the society, economy and our natural surroundings.
The concept of Sustainable procurement comprises of three major dimensions namely:
The NSW procurement process will be implemented with sustainability. For this, following things will be taken care
There are four major objectives to obtain sustainable procurement namely:
- Providing effective protection to the environment
- Prudently using natural resources without wastage
- Social progress of the nation which recognizes the needs of everyone including the future generation
- Maintaining high and stable levels of economic growth along with growth in employment
Social aspects of Sustainable procurement
The following aspects are not acceptable by the community and Society. These aspects have been discussed below:
- Damaging the environment through products
- Keeping exploitative practices at work
- Unhealthy and unsafe work environment and workplaces
- Lacking of professional and ethical corporate behavior
- Failure to financially payback to suppliers and contractors
- Following sharp practices which lead to stripping shareholder value.
There are few more considerations while implementing procurement policies in Aviva constructions which will be taken care. These are mentioned below.
Category management –
Category management is one of the major phase in a procurement process. Identifying different categories and managing them accordingly is extremely important in order to lead a project to success. Category management is basically an 8 stage process –
- Defining Category – First and foremost step is to define the category and identify the type. Unless and until the identity of the category is clear, nothing can be done upon it.
Categories are basically of 6 types –
- Supply Source
- Internal use
- Supply Markets
- Material based
- Specification and department base
- Asses the role of the category – Next step is to assess the role of the category. It should be found out what the category is meant for.
- Assess its performance – Performance of the category should be defined as well hence the analysis on the performance factor should be done.
- Devise category plan/objectives – A plan should be made for a specific category objective.
- Detail an overall strategy – A detailed strategy should be prepared.
- Set specific category tactics – Each category should have specified tactics in order to attain the best outcome.
- Implement the plan – The next task is the implementation of the plan.
- Review its progress – The progress of the implemented plan should be reviewed in order to find out the performance of the plan.
Spend Analysis –
Under any project the analysis of expenditure is extremely important. In order to keep the project under the budget the spend analysis should be done. The factors that are taken into consideration in spend analysis are –
- Purchased item
- Date of Purchase
- Number of suppliers involved
- Expenditure on each
- Amount paid for the item
Once the data on these factors is collected the analysis can be made.
Through spend analysis the cost can be minimized as well as the sellers involved can be reduced accordingly. These are important when the aim is to keep the project under budget. The financial reporting becomes easier and more accurate through spend analysis. The purchasing process is also improved and better supply strategies can be prepared. All in all spend analysis is important for any project.
Selection of supplier –
The selection of suppliers during any project should not be taken casually as it can impact the entire project. The supplier should be genuine, cost-effective and with moral values. Poor selection of supplier can cost any organization the entire project.
The aim should be to select a supplier which can be retained for long-term and is profitable at the same time. The reputation of supplier in the market should be analyzed before finalizing the contract. The goal is to expand the business hence the supplier should be chosen wisely as a single project can keep the reputation of business at stake.
The chosen supplier should be able to maintain continuous communication and should provide excellent service at the same time. Risk factor should be taken into consideration while selecting a supplier and supplier with least risk possibility should be chosen.
The report concluded about the steps involved in the process identifying the procurement material/goods/service; recognizing its need; juggling with the options available as source of procurement; studying of the price, conditions and terms; preparation of purchasing order; delivery timeline; expedition; and receiving the order, checking the purchase and the receipt. Depending on the type of goods or services purchased there can be types of procurement. It is imperative to understand which procurement type to follow depending on the need and the nature of the goods.