The Introduction

The procurement cycle defines structure of management of purchasing process from the very beginning of the project and till the moment of recycling of the equipment or the termination of the services bought within the limits of the corresponding project. Thus, the procurement cycle provides support of the corresponding project during all its cycle that is from the beginning and before definitive end. For this purpose all the cycle is shared on some separate stages which management to carry out easier and more effectively, than management of the entire project as a whole. On each of these separate stages there are certain purchasing processes, and each of these stages demands use of certain resources.

The Main Stages of Procurement Cycle

If the industrial enterprises, wholesalers and retail dealers completely observe the principles of purchases listed above it, most likely, it will provide success in their purchasing activity. The businessman should pass four stages in a procurement cycle as it is recommended by The U.S. Small Business Administration.

1. The Estimation of Requirements. Before to buy, the businessman should define, how its requirement for the given goods is combined with other requirements and firm possibilities. For definition of requirements for some products it is enough to enquire about available stocks and last sales. For other groups of the goods it means acceptance of risky decisions on what models to choose and in what quantity to buy each of them. The businessman should not remain with the unseasonable or unfashionable goods.

2. The Choice of the Supplier. After the estimation of requirement for the goods is made, the businessman should find the supplier who can sell these goods. There are goods which can be received only at one seller; in that case all is reduced to the decision, to be engaged in these goods or not. But different potential suppliers can deliver the most part of the goods. In similar cases the businessman should estimate not only cost, but also a degree of service, an acceptability of conditions of delivery, possibility of settlement of problems with the credit, the schedule of deliveries, storekeeping, and also to provide actions under unforeseen circumstances.

3. Negotiations About Purchases. Discussion at a solving third stage includes procurement prices, and also volumes of deliveries, terms of deliveries, deliveries by one or several parties, costs on transport and packing, quality assurances of the goods, the discount for advertising and the goods advancement, special offers of rather slightly damaged goods or sale and so forth

4.  The Control. And at last, to improve conditions of deliveries, the businessman should reconsider from time to time the relations with each of suppliers. In case of need, he should search for the new supplier.

If delivery terms are broken or late, the businessman is obliged to stir up the activity. The businessman, using by all available means, should achieve from suppliers of acceleration of deliveries. Arriving thus, it can to prevent, for example, a stop of the enterprise because of shortage of necessary raw materials.

Analysis of the Procurement Cycle on the Example of War Industry

The procurement cycle should during all  cycle of the project (as a rule, upon termination of its each next stage) to provide certain results which allow supervising bodies and representatives of a military management to check a course of realization of the project and to make decisions on end of a certain next stage and transition to a following stage. The overall aim of management of purchasing process consists in contribution of successful realization of purchasing projects for the purpose of maintenance of requirements of armed forces in the necessary equipment in target dates and according to the established level of financing, and also for the purpose of decrease in the risks connected with purchasing process. However it is necessary to notice that purchases in military sphere represent difficult complex process, even under condition of application of the structured mechanism provided by a procurement cycle. Therefore working out and use of a procurement cycle should supplement, but not replace at all with itself effective ­ management of purchasing process. As examples of procurement cycles in military sphere it is possible to use U.S. Defense Acquisition System and the procurement cycle of British Armed Forces CADMID displaying all stages of cycle of the project, which are Concept, Assessment, Demonstration, Manufacture, In-Service, Disposal. Various procurement cycles are applied and in an economy private sector, and also in other spheres of public sector.

The procurement cycle is the management mechanism defining ways of realization of complex processes of purchase by group on realization of the purchasing project. These ways are defined on the basis of experience of management of the previous purchasing projects, and also on the basis of the existing advanced methods confirmed in the form of formal procedures. The procurement cycle also demands observance of the certain rules regulating process of studying and consideration of all basic aspects and questions on which successful realization of the project depends. Besides, the procurement cycle should during the entire cycle of the project (as a rule, upon termination of its each next stage) to provide certain results which allow supervising bodies and representatives of a military management to check a course of realization of the project and to make decisions on end of a certain next stage and transition to a following stage. The overall aim of management of purchasing process consists in contribution of successful realization of purchasing projects for the purpose of maintenance of requirements of armed forces in the necessary equipment in target dates and according to the established level of financing, and also for the purpose of decrease in the risks connected with purchasing process. However it is necessary to notice that purchases in military sphere represent difficult complex process, even under condition of application of the structured mechanism provided by a procurement cycle. Therefore working out and use of a procurement cycle should supplement, but not replace at all with itself effective management of purchasing process.

Operation of the Equipment and Services

At this stage of  cycle of the project the lion's share of its general resources is spent. Therefore so it is important to consider in the project beginning all expenses at all stages of its  cycle, in particular, expenses on operation and service of the equipment during all term of use. This stage provides use of the got equipment and-or services in interests of the military organization of the state. In the general context of management of purchasing activity of armed forces at an operation phase such kinds of activity are carried out:

a)Acquisition and use of spare parts and account materials;

b)Maintenance service and equipment repair (these services can partially or appear completely the supplier, but they should be provided the corresponding contract);

c)Demonstration tests for check of reliability of the equipment according to requirements of the customer.

One more important component of activity at this stage of  cycle of the project is equipment modernization according to new requirements. Modernizational actions can be spent within the limits of the separate projects which management should be carried out in the same way, as well as management of purchasing projects.

Recycling of the Equipment and the Termination of Services

At the final stage of cycle of the purchasing project there is a recycling of the equipment and the termination of term of rendering of services. The termination of rendering of services is rather simple process which occurs according to conditions of the contract concluded within the limits of the corresponding project. Recycling of the physical equipment is too rather simple process, but it can be connected with certain expenses (especially in cases when interests of preservation of environment demand especially responsible relation to recycling questions). On the other hand, it can bring certain incomes for the military organization (for example, in case of sale of the used equipment or products of its recycling, or restoration of separate components of the equipment for the purpose of their further operation). Therefore it is important, that all aspects of this activity have been considered in advance and provided in purchasing strategy of the corresponding general project.

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