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World Class Procurement Definitions A forum for defining key terms / definitions as it applies to World Class Procurement and Supply Chain Management

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Old 03-25-2008, 01:27 PM
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Join Date: Mar 2008
Russia
Posts: 2
uralkali is on a distinguished road
Default foreign procurement office. need help.

Hello dear sirs!
First a little preface. Our company - is a mining and processing enterprise. We have 4 mines and 4 chemical farms. We are exploiting the second world field of potass. (1st one is in Canada). And right now we are reconstructing the majority of our productions complexes and building one more mine - the 5th one. So you can understand - we have quite large structure. Our capitalization is more then 13 bln doll., we have more then 10000 employees.

I'm working in the department of materially technical procurement. Right now we have great range of foreign suppliers. It is quite difficult to work with them straight on, so we use on german company as a general supplier. But as you can understand they also work with our competitor, have their own margin (i think not very great within one deal, not more then 10 %) but according to the volumes of equipment that we buy - it should be several tens of million euros per year.

So, we have an idea to create our own foreign department of purchasing (office, representation, etc) somewhere on the territory of Europe. Right now I need to identify if there is some kind of such experience of some company.
If it is possible, please help me, I want to get answers to the following questions (in my opinion it will be quite an interesting discussion). Our russian procurement specialists were unable to help me, and I think it will be beneficial experience for all of us.

1. Aims and purpose of creation of foreign import office
2. Organizational structure of this office, it's organizational form (ltd or just part of our company)
3. staff composition of office (to hire foreigners or relocate best of specialists)
4. functions of office
5. the place where to establish it
6. the methods of import procurement of office
7. law aspects (world experience in this theme)
8. correlation of office with org. structure of head company
9. organization of job and stages of establishment office in Europe
10. risks of organization
11. financial aspects of the work of office
12. economic results and effects of creation of office


Looking forward for your replies. I think it will be an interesting dicussion. I'll give you all the results of the job that we'll make.

Sincerely and hopefully.
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  #2  
Old 02-11-2009, 09:02 AM
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Join Date: Feb 2009
Uganda
Posts: 1
shakur is on a distinguished road
Default Re: foreign procurement office. need help.

hello
you had nice questions
but as you see things are totally different and they are changing every day, across the globe, recently many companies in europe asia and america collapsed and the only way of survival is cutting costs strategies however 98% of companies and organisations world wide embarked on procurement and supply chain management as the leading cost cutting strategy. so may dear an effective procurement department whether foreign or is strongly needed for your companys survival
In the traditional sense, there is a significant difference in that purchasing merely reflects the act of acquisition, while procurement encompasses more elements of the supply chain (re logistics, transportation etc.).

here some of the answers for yo questions
1)AIMS OF effective PROCUREMENT
-cutting over input costs
- identifying world class suppliers
- maintaining of quality stardards thru quality purchase.
-ensuring continuous organisations operations thru steady supply of inputs
-buying all inputs needed in operations and productions.
-risk identification, assessment of its impact to the organistion
-disposal of under utilised resources like capital assests old equipments etc
2) ORGANISTIONAL STRUCT
- it will depend on yo but i advise that you use an incorparated branch of themain company in order to avoid to big taxes . the issue will be tax and other charges if you use another company or name as foreign procurement
3) function OF OFFICE
-theseare similar to the aims ofoffice
4)PLACE
-choose a strategic location near suppliers for easy monitoring and to avoid travelling costs.
5)LAWS
-the office must be stardardised with company laws and ethics, international procurement code and european laws of markets
6)RISK
as a procurement proffessional risk assessment and minimisation is one of the obectives,and fx of proc department
Based on the above, the importance of differentiating between purchasing and procurement while interesting is at the end of the day an exercise in futility. Therefore you need to look beyond the scope of functional distinctions to see and understand the broader role your profession plays in the day-to-day success of your organization.
Then, and only then will you be able to make the contribution in which all purchasing/procurement professionals are capable of providing.
FROM THE ABOVE U CAN IDENTIFY THE EFFECT OF PROCUREMENT ON THE ORGANISTAION
CONTACT ME FOR MORE HELP tamshakur@yahoo,com
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