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Aung Kyaw Moe / Task 10 Procurement

Memo To: From: Date: RE: Francois Damba Aung Kyaw Moe
29 May 2013

TASK 10 PROCUREMENT

Establishment of Procurement Expediting System with Ralem Company If we decide to extend our contract with Ralem for next year, we need a Procurement Expediting System that is designed to follow up supplies once an order has been placed based on our annual contract. Expediting is the process of attempting to secure a more rapid delivery than promised by our supplier on a purchase order and we need to establish a system which includes the following steps: 1. After sending a Purchase Order to the supplier, we have to follow up to make sure that the supplier received our PO and know thoroughly about all details and specifications/quantity of supplies to deliver and date, terms and condition of delivery. The best thing to do so is to attach an acknowledgement copy with PO and request the supplier to signed on it and send back to us. 2. Create a database that records all POs to follow up and update weekly about the final status of them in case by case basis. 3. Request Ralem Company to provide Order Status Report on weekly basis in terms of progress, problems, constraints and difficulties about Pos. 4. Set up a communication schedule by phone/fax/email to follow up any changes in production and delivery of supplies. 5. Make frequent visits in person to the production site in the suppliers premises to investigate the actual status of production. 6. Give advices to the supplier in order to improve in terms of operation management and examining suppliers logic and timing of production, management of parallel and series activities in manufacturing programme, some new alternatives and options in production process and prioritization and expediting of critically urgent orders. 7. Ensure that the supplier has to fulfill the timely delivery schedules and set up a system of sending reminder letter before the date of deadlines. 8. Create a complete and thorough system of checking and receiving the supplies delivered by the supplier according to the schedule, and make sure that unacceptable supplies (which are not in conformity with quality, quantity, and delivery terms and conditions as packaging and marking requirements) must be sent back to the supplier. 9. Apply Penalty Clauses and taking protective measures for all that go wrong in terms of delay delivery, damages and loss, cost of return, split delivery and unconformity in package and marking, packing and palletizing. 10. Make a Performance Record and Review of each PO production and delivery and note any discrepancies and deviations from the original terms and conditions

mentioned in the contract. Set up a good system of suppliers performance rating and measurement by using qualitative and quantitative methods. Analysis of Information about Ralem and Briefing for Meeting According to David Tatlock, the performance of Ralem in last year is not very promising and involved with many problems. The first problem he mentioned is that of Delay in signing contract and the Company has no clearly defined system of processing contract with the customers and there seem to be no assigned person to handle the cases. On top of Davids comments, Franscois Damba added that there is quality and quantity issue with Ralem. The supplier delivered 1 Kg packages instead of 25 Kg ones we originally put orders and it is difficult to manage in our distribution. Their Failure to inform us prior to the actual delivery of the supplies is another messy thing they made since we cannot have chance to correct their wrongdoing and mistakes in packaging. Besides this packaging problem, it was highlighted that Ralem delivered Low Quality Sugar which did not meet the specifications mentioned in the Contract and it is so obvious that this is a serious issue since they did not pre-inform us about changing of quality. In the last place, Finance Section complained that there is a problem of Invoicing for payment with Ralem since they put invoice that is more than was in the contract. It is a sort of fraudulent action that Ralem calculated the cost of supplies in terms of 1 Kg instead of 25 Kg bags and that will cost more than originally agreed on our contract. Based on above analysis of information obtained from other sections, we can have important points of briefing for meeting with Ralem as follows: Expediting the process of signing contract and request to identify a focal person from Ralem to handle the case Advice Ralem to have a system of providing pre-delivery information about quantity, quality, and volume/size of supplies that will be delivered Rectify the packing size to 25 Kg as per Contractual terms and warn not to send in wrong packaged size of 1 Kg mentioning the condition that they wont be accepted anymore in future Give warning message to Ralem that it is not a Good Business Practice to supply the low quality sugar without prior information and adjustment with us and emphasis the important of quality of the product based on the principles of Fit for Purpose and Money for Value Give recommendation that all invoices must be in accordance with the agreed amount in the contract and that is linked with the correct size of package and make sure that No Extra Payment will not be made for the reason incorrect packaging

Best Regards, Aung Kyaw Moe Logistics Officer Sub-Office (SCILaid Betaland)

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