Procurement Essay
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Introduction
IBM Daksh India is one of the most important business process outsourcing companies in India. It has been playing a significant role in the process transformation and management sections of one of the leading IT firms of the world, IBM since 2004.
IBM Daksh India came into existence as a result of the acquisition of Daksh e-Services by the IBM Corporation in 2004. IBM Daksh India serves as the global destination for managing business processes for all clients of IBM. In India, there are 14 service delivery centres of IBM Daksh India, spread across the major cities of New Delhi, Bangalore, Mumbai, Pune, Kolkata, and Chandigarh. There are two other global service delivery centres of IBM Daksh India in Manila and Philippines.(IBM 2004)
According to Dobbler and Burt (1996, 45) the centralization of the purchasing function is must for large organization like the one here to attain optimum efficiency and maximise profit. Before the take over by IBM Daksh was highly devolved and did not have a centralized procurement system and the procurement and contract management was handled in terms of each business unit. The staff would procure their requirements in isolation of their colleagues in other business areas and hence was not operating efficiently and nor was this practice resulting in maximising cost saving. With a few exceptions mostly was owned individually by the business units spread across India and in Manila and Philippines.(IBM 2004)
Identifying a need for Change in Procurement Processes
The identification was not a difficult issue. However the implementation and a change of the practices was a challenge. The procurement practices at Daksh were very basic and followed the simplest steps.
The process of procurement usually began when the procurer starting to search the market for bidders. After identifying the suppliers, a request for bids, proposals, quotes, and information was made. However, direct contact with bidders was also made at times instead of advertising the requests.
After selecting the suitable bidders, a quality check was put in order to confirm the suitability of the goods or service in question. The next step would be the negotiation of the terms, conditions, quality, and delivery schedules. Logistics and payment were the next two important processes that would determine the safe delivery and the payoff of goods or services. Below is the break of the phases of the procurement and the contract management.(Klein 2004)
Contract Management and Procurement Process
At IBM there is a procurement and contract management team which handles the entire the process and is centralized function and a similar structure had to be replicated in India and a few major changes were involved. The main being the setting up of the department its self.
The procurement and contract management process is as follows the customer phase which involves developing a plan and defining the needs. The sourcing, analysis and the award phase handle the initiation and invitation of the tenders alongside with analysing and awarding the contract and finally the management of the contract which looks into the start-up, monitoring till the contract ends. (Nicola Dimitri 2006)
Planning Phase.
The procurement and management team put forward a business plan where in the needs of the customer the end user a defined. In this phase the requirements are determined along with the standards which need to be adhered through out the entire contracting period along the side the basic and company polices.
Analysis, Sourcing and Award Phase.
The team or the analyst analyses various options for the procurement of the goods and the services. The team then advertises the requirement and requests are invited. In the request phase the specification and requirements are clearly provided in order to enable to receive accurate quotes. Once requests are received the analyst further identifies and analyses the requests this process also involves the end —user of the service and hence leads to a mutual agreement if and when a decision is made. Once the customer and the analyst have decided and agreed upon the requests internally the contractor is then invited for further negotiations and other agreements. Once this has been agreed the contract is awarded.
The Contract Management Phase.
Once the contract has been awarded there further discussion which are held in-order to close out the standards and the quality of the deliverables. The monitoring and supervision of the contract is also agreed in terms of weekly or fort-nightly reports on the progress. Also a communication plan is agreed upon due to the centralization of the department. The centralized team monitors the entire contract from start-till-end.
The process is stable however sometimes leads to internal conflicts depending on personal interest. However I feel the due to the centralization the organisations buying and negotiation power is more in terms with the supplier or the contract and hence enables the organisation to be able to get value for money.
The Challenges.
The initial challenge was the setup of the team and also the change of process which needed to be embedded in the staff. I feel the change process was rather the most difficult one then any other challenge in the entire process of having a centralized procurement and contract management team. The major advantage of the team was in terms of risk management. Besides the above there were few other challenges.
Planning Phase Issue
Disconnect between the procurement team and the customer in terms of the specification and the requirement would often lead to inaccurate contracting. The procurement process was completely process