My experiences with Purchase / Procurement / Logistics:

Re. CIPS

This certificate seems to be necessary if no other education has been possible

In my case the engineering education (B. Sc.) contains organizational education too: the holistic point-of-view on an organization and the importance of the different departments.

Since this education contains what's necessary re. CIPS it should be rather simple to achieve this certificate

But more important is: having more than just a CIPS gives more possibilities - a great advantage

CIPS contains: Effective Negotiation in Purchasing and Supply - Purchasing Contexts - Developing Contracts in Purchasing and Supply - Measuring Purchasing Performance - Managing Purchasing and Supply Relationships - Management in the Purchasing Function - Risk Management and Supply Chain Vulnerability - Improving Supply Chain Performance - Marketing for Purchasers - Storage and Distribution - Leading and Influencing in Purchasing - Strategic Supply Chain Management in Practice

All these elements are known by me, and I am working with almost all of them every day

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Purchase of technical components in Denmark, as well as the rest of the World for use all over the World

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Participated in the building-up of an international purchasing organization within an international group (gathering and co-ordination of knowledge, information and activities)

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De-centralized purchase gathered in a new established central department

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NLM / ECE 188 / FIDIC / Letter Of Credits

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Elaboration of national / international contracts - establishing of strategic partnership

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Supplier-evaluation

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Contract negotiations  -  experience with negotiation at all levels

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Control and gathering of purchase related to duration of project

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Overall-consideration - holistic point-of-view - logistical tools uses as well as supply chain management realizes - for element "capacity control" within logistics click on the word for further - for more about the area of "Definition of manufacturing basis (description of logistic system)" please click on the link

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Within the area of "Logistics" you can find different philosophies for achieving a more effective logistic. Unseen the philosophy is called Just-In-Time, KanBan, Kaizen or other, "common sense" should be the basic element: analysis of the existing compared with the possibilities for a more effective way of manufacturing seen in the light of a better position of competition. "Common sense" is the basis of mentioned philosophies - and of course the capability of realizing changes

On the other hand: if one is implementing a philosophy, companies in other countries has used through several years, how far is one ahead in the competition? I think one is (far) behind - and I would like to receive others opinion to this question

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Collection, inspection, packing of components and preparing them for transport/export (incl. documents according to Letter of Credits and Contracts respectively)

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Control of approx. 1000 sub-suppliers

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Own database with more than 50.000 companies (incl. their range of offers, economical key data and much more), and more than 6.000 products, their description, prices and more

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Achieved reduction in production cost about GBP 900,000 over 5 years (based on a total volume of about GBP 4,800,000)

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Stock systems

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Within the area of "Logistics" you can find different philosophies for achieving a more effective logistic. Unseen the philosophy is called Just-In-Time, KanBan, Kaizen or other, "common sense" should be the basic element: analysis of the existing compared with the possibilities for a more effective way of manufacturing seen in the light of a better position of competition. "Common sense" is the basis of mentioned philosophies - and of course the capability of realizing changes

On the other hand: if one is implementing a philosophy, companies in other countries has used through several years, how far is one ahead in the competition? I think one is (far) behind - and I would like to receive others opinion to this question

The above shall NOT be understand that I am against the mentioned or other philosophies: the main-message is that the company (or person or society) must change to avoid going back. Who expresses "the work is done" forgets that everything around him will continue some development - no: "the work is done" is based on known principles, but the next changes are on their way, and it is important to see and implement these

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A general description of "Logistics",      "Logistics and design/construction", "Logistics and purchase", "Logistics and stock", "Logistics and production", "Logistics and the economy department", "Logistics and the management", and how to implement a logistic department into an organization can be forwarded if it is some advantage for some co-operation.

This description can only be very generally since the term "Logistics" within the manufacturing area contains a lot of other terms. The details within this term are depending on the kind of company, the structure, how the development happened, the kind and structure of the products, and on the systems available in the company.

Realizing a description considering anything of the mentioned can be done, but will make the description almost unreadable

 

Logistics is defined as a business planning framework for the management of material, service, information and capital flows. It includes the increasingly complex information, communication and control systems required in today's business environment.

With the above definition logistic is based on

 

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Control of material transport

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realizing the material transport

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Stocks

 

between the two groups "supplier" and "end user", and consists furthermore

 

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machining

 

A logistics department is working with purchasing (right quantity/prize/time/quality), contributes to the value added by manufacturing, and has a crucial impact on business performance by carefully evaluating internal stock, external stock, contracts with suppliers, arranging and use of machinery etc.

A logistic department mainly uses 2 tools: EDP-based systems and several tool within the area of organization-development.

The concept of a Logistic Department contains much more than I am able to describe here. I recommend the direct contact for the description of the possibilities and the earnings.

 

 

 

PROCUREMENT

Procurement refers to the overall process of acquiring a product or service. Depending on the circumstances, it may include some or all of the following: identifying a need, specifying the requirements to fulfill the need, identifying potential suppliers, soliciting bids and proposals, evaluating bids and proposals, awarding contracts or purchase orders, tracking progress and ensuring compliance, taking delivery, inspecting and inventorying the deliverable, and paying the supplier.

KPIs in ‘Procurement’ (the list is not comprehensive):

Cycle Time of Purchase Order

How many days have you taken to prepare a Purchase order and submitted to Supplier?

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% of invoices disputed

Percentage of invoices disputed.

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Average time to procure

Average time to procure an item. Time lag between request for procurement and signing of contract or purchase.

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On-Time Delivery, Commit Date, Supplier

On-time delivery – % of deliveries that are on time

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On Time In Full (OTIF)

OTIF measures the success at delivering exactly what the customer ordered on the day it was supposed to be delivered.

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% of suppliers that are responsible for 80% of spend

Percentage of suppliers that are responsible for 80% of spend on these suppliers.

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% of payable invoices without purchase order

Percentage of payable invoices that have not been matched to a purchase order.

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% of procurement requests satisfied by preferred suppliers

Percentage of procurement requests satisfied by the preferred supplier list.

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Average value of orders

Average value of orders within measurement period.

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Average number of modifications to orders

Average number of modifications to orders for orders within measurement period.

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Certified Supplier Ratio

% of certified suppliers

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% of suppliers that affirmed business code of conduct

% of suppliers that affirmed business code of conduct

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% of total spend managed/controlled by procurement

Percentage of total spend managed/controlled by procurement.

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% of emergency purchases

Percentage(%) of emergency purchases done over a month / period to the total purchases during the same period.

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Procurement spend per procurement employee

Average procurement spend per procurement employee (in FTE).

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Proportion of purchases made from contracts/frameworks

Proportion/percentage of purchases made from contracts/frameworks.

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% of (preferred) suppliers not used in last 12 months

Percentage of (preferred) suppliers not used in last 12 months (or any other given period).

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% of RFPs that needed to be improved based on supplier responses

Percentage of Request for Proposals (RFP) that needed to be improved based on supplier responses.

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Average number of responses received to RFPs

Average number of responses received to Request for Proposals (RFP).

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% of procurements in compliance with standing procurement policies and procedures

Percent of procurements in compliance with standing procurement policies and procedures.

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% of key stakeholders satisfied with suppliers

Percentage of key stakeholders satisfied with their suppliers.

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% of orders based on framework/standard contract

Percentage of orders based on a framework/standard contract relative to all orders.

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Average number of requests for information to suppliers for orders

Average number of requests for information (RFI) for e.g. price, time to deliver, etc. to distinct suppliers for orders.

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Lead time to qualify a supplier

Number of days to qualify a new supplier for placement on the approved supplier list

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% of overdue purchase order requests

Percentage of overdue purchase order requests.

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Average number of days open of purchase order requests

Average number of days open of purchase order requests.

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Average handling cost per purchase order requests

Average handling cost per purchase order requests.

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% of purchase order requests handled within agreed upon time-frame

Percentage of purchase order requests handled within agreed upon time-frame.

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% of neglected purchase order requests

Percentage of neglected purchase order requests.

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% of incorrectly assigned purchase order requests

Percentage of incorrectly assigned purchase order requests.

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Average number of purchase order requests per handler

Average number of purchase order requests per handler.

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% of escalated purchase order requests

Percentage of escalated purchase order requests.

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Backlog of purchase order requests

Number of open purchase order requests older than 28 days (or any other given time frame) relative to all open requests.

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% of re-opened purchase order requests

Percentage of re-opened purchase order requests.

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% spend on one off contracts (purchase orders)

Percent of purchase spend through one-time contracts (purchase orders).

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Cycle Time, Requisition to Purchase Order

Total elapsed time to generate a structured or buyer assisted PO from the moment requisition has been received to the moment purchase order has been released.

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Purchase Order Accuracy

Percentage of purchase orders with line item, pricing, supplier data , quantity or delivery date and address errors over total number of purchase orders per period of time. Can be different for different buying channels.

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Purchase Order Approval Ratio

Number of purchase approval requests / purchase approvals X 100

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Purchase Order Cost

Average total cost of processing a purchase order. Can be different for different buying channels.

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Purchase Order Cost, Web Enabled

Average total cost of processing a web enabled purchase cost.

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Purchase Order Flexibility

The measure of how often and to what extent a purchase order may be modified by the customer. On a scale of 1 to 5, Five being the most flexibile.

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Percentage of Maverick Spend

Percentage of spend that is not guided by any contract sanctioned by sourcing

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Cycle Time, Approve Purchase Order

Average elasped cycle time for approving a purchase order.

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Cycle Time, Place Order

Average elapsed cycle time for placing a purchase order.

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Short Notice Purchase Orders

The intent of this measure is to track the number and percent of supplier schedules changed inside suppliers’ fixed zones. Included are changes to the item number, quantity or timing regardless of who requested the change (COMPANY or the supplier) and regardless of whether or not the parties agree to the change.

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Active suppliers per purchasing employee

Active suppliers per purchasing employee

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% of supplier agreements and licenses up to date

Percentage of supplier agreements and licenses up to date.

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% of direct materials sourced nationally

Percentage of direct materials sourced nationally.

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% of direct materials sourced internationally

Percentage of direct materials sourced internationally.

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% of contracts using own Terms & Conditions

Percentage of contracts using own Terms & Conditions.

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Proportion of spend under contract

Percentage of spend under contract.

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Average purchase order processing cost

Average purchase order processing cost.

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Average cycle time for purchase order for direct goods

Average cycle time (e.g. in days) from requisition approval to purchase order placement for direct goods.

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Average cycle time for purchase order for indirect goods

Average cycle time (e.g. in days) from requisition approval to purchase order placement for indirect goods.

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% of procurement spend on recycled materials

Percentage of procurement spend on recycled materials.

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% of total spend via e-auctions

Percentage of total spend via e-auctions.

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% of spend via e-procurement (e-procurement ratio)

Percentage of total spend via e-procurement.

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% of active suppliers that are e-procurement enabled

Percentage of active suppliers that are e-procurement enabled.

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% of total spend with diversity suppliers

Percentage of total spend with diversity suppliers.

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% of total procurement spend onshore

Percentage of total procurement spend onshore.

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% of total procurement spend offshore

Percentage of total procurement spend offshore

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Managed procurement spend outsourced as a % of total spend

Managed procurement spend outsourced as a percentage of total spend.

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Procurement employees as % of total employees

Procurement employees as a percentage of total company employees.

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Procurement operating expense per procurement employee

Procurement operating expense per procurement employee.

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Procurement operating expense as % of total spend

Procurement operating expense as a percentage of total spend.

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Procurement operating expense as % of sales

Procurement operating expense as a percentage of sales.

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Total procurement spend as % of sales

Total procurement spend as a percentage of sales.

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% of receipts of formal bids & proposals via the Internet

Percentage of receipts of formal bids & proposals via the Internet.

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% of value of orders based on standard/framework contract

Percentage of the value of orders based on standard/framework contract, relative to the value of all orders.

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% of purchase order requests handled first time correctly

Percentage of purchase order requests handled first time correctly.

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Ratio of price paid to price quoted

Ratio of price paid to price quoted.

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Number of formal disputes with suppliers

Number of formal disputes with suppliers

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Purchase price variance

Difference between actual purchase unit price and standard unit price, multiplied by actual quantity of input used. It reflects a change between the expected price and actual price of input.

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Number of non conformities during vendor inspection

Number of non conformities during inspection against a particular vendor. To measure the performance of different vendors.

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% Actual vs. Estimated Savings

Percentage of actual or realized savings on spend against a negotiated contract vs the estimated spend determined during the sourcing initiative.

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Total value of orders

Total value of orders within measurement period.

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Average overdue time of purchase order requests

Average overdue time of purchase order requests.

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Average handling time of purchase order requests

Average handling time of purchase order requests.

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Procurement Productivity

The ratio of Year over Year Procurement savings contribution divided by the number of buyers/procurement employees (in FTE)

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Procurement Savings Contribution

Year over year procurment savings contribution

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Cost, Update Purchase Order

Cost, Update Purchase Order

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Number of Purchase Orders

Number of Purchase Orders

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Number of Purchase Order Requests

Number of Purchase Order Requests

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% spend on procurement card

Procurement card spend as a percent of purchase spend

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Product price flexibility

Reflects a specific SKU adjust its COGS to meet either customer demanding reduction or enterprise self cost reduction target.

(actual Fixed COGS at a budgeting time / actual COGS) * 100

Obviously everyone would desirely suggest A class SKUs rank first on this performance measurement.

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Granted discount rate

Granted discount sums in purchasing.

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Write-off %

Percentage of write-off value vs. overall spendings

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MRP exemptions cycle time

It measures the time from a demand changes through a MRP platform suggesting to take an action and the proper accomplishment of during day to day job. Those might include but not limited to: Cancellations, Push outs, or Expedites of current placed purchase orders.

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Requisition to item issuance time

To measure the delay between the time when a procurement request is initiated and the time when the request is fulfilled (expressed in terms of days).

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Total negotiated cost reduction savings

Total negotiated cost reduction savings during the procurement process within the measurement period.

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Average size of discounts of items

Average size of discounts in procurement of items.