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Do you ever feel that your procurement operations are at times just too overwhelming? Are there just too many products with too many problems being purchased from too many vendors in too short a time frame with too few personnel to handle the load? If so, we are willing to bet that inadequate communications is likely the problem. We see the solution to this nightmare as being one of simply addressing this issue, i.e. communications, more effectively. That is, we think the solution is to do more to ensure that all parties to the procurement contract know explicitly what their responsibilities are, are aware of when their commitments are due, and realize that they will be held accountable for their performance. In essence, tell people what you want and when you want it, and then follow up by monitoring their implementation.

The online-projects’ procurement system is a way of better managing the individual tasks involved in purchasing materials, equipment, and services, so as to ensure that those materials, equipment, and services are supplied according to the specifications in a timely and cost effective manner.

We believe that one of the keys to a successful procurement strategy is in having properly prepared specifications that stipulate in detail the vendor’s reporting requirements (i.e. documentation, inspection, and testing), and then monitoring the vendor’s compliance with those reporting requirements. Our system facilitates this process.

In the following sections we explain how by using our system, each step of the procurement process, from creation of the initial specification through acceptance of the product on site, can be effectively tracked and monitored, thus assuring a smoothly operating procurement operation.

Table of Contents

Specifications

Requisitions

Bid Inquiries

Products

Purchase Orders

Expediting

Delivery

Installation

Testing and Inspection

Acceptance

 

Specifications   top

Specifications created during the engineering design phase form the fundamental basis of the procurement phase. If the requirements for vendor documentation, inspection, and testing are properly and adequately stipulated, the task of administering the purchase order becomes much less demanding. Our procurement system uses these vendor reporting requirements as the basis for defining a set of tasks with which to monitor vendor progress and compliance with the specifications.

Requisitions   top

Requisitions – the engineer’s request to procurement to initiate a purchase order – can take any form, allowing a firm to use its own system. Requisitions are uploaded and stored with the appropriate bid inquiry. They may be routed for approval, if required, during the development stage using our document workflow system.

Bid Inquiries   top

Bid Inquiries are handled in the documentation system like mini, self-contained projects. Each inquiry is assigned a number, i.e. the RFQ number. From a documentation standpoint all information and documentation pertaining to the inquiry is linked to that RFQ number. Retrieving information about or documentation on an inquiry becomes a simple matter of searching on just that RFQ number.

Inquiries are created or “opened” using information from the engineering requisition. This information becomes a permanent part of the inquiry record which includes:

• Descriptive Information – The RFQ Number, title, and scope and description of the inquiry

• Categorization Parameters – A category and subcategory, if applicable, and a general status, i.e. open, closed, or on hold.

• References – The RFQ Manager and reference to a PO number.

• A Milestone Schedule – An important part of the inquiry is its schedule which may be set by direct date selection or by lead time referenced to an ROS date. With the lead time method, you enter the ROS date. Milestones, including Issue to Procurement, Issue to Vendors, Close Bids, Technical Evaluation, Technical Recommendation, Issue PO, and Required On Site are then automatically calculated and tracked via a color-coded monitoring system. Other milestones may be generated at the user’s option.

• Vendors and Bid Lists – Vendors are selected from previously established and maintained lists of approved vendors. Bidders lists are displayed and may be optionally shown to all on the bid list.

• Contractual Information – Included are the contract type, the budget, whether or not an AFE has been approved, and any special contractual considerations.

• Notes and Lessons Learned – Notes or lessons learned throughout the course of the inquiry or during the purchase negotiation phase are easily documented and become readily available for future reference.

• Documentation – Inquiry documentation is organized by RFQ number and includes vendor correspondence and minutes of meetings as well as the inquiry package itself. The documentation is searchable by many parameters including document type, number, category, key word, status, and much more.

Products   top

Products (i.e. materials, equipment, supplies, and services) are what make up the procurement scope. Products are organized by category to simplify their association with vendors. A product library, which can be transferred from project to project, is created from which an approved vendor list is generated. The approved vendor list is used in the selection of bidders that are included on bid inquiries.

Purchase Orders   top

Purchase orders are handled like bid inquiries, i.e. like mini, self-contained projects. Each PO is assigned a number and is cross-referenced to its RFQ number. From a documentation standpoint all information and documentation pertaining to a PO is automatically linked to the PO number. Retrieving information about or documentation on a PO becomes a simple matter of searching on just that PO number. In the purchase order section of the web site, authorized personnel can open a new purchase order (i.e., identify and describe the basic information about a purchase order); retrieve summary information about each purchase order; intuitively search for and retrieve any purchase order document; and update the information about each P.O. and its documentation

A purchase order is created or “opened” using information from its respective bid inquiry. This information becomes a permanent part of the PO record which includes:

• Descriptive Information – The PO Number, title, and scope and description of the purchase order.

• Categorization Parameters – A category and subcategory, if applicable, and a general status, i.e. cancelled, issued, on hold, or pending.

• References – The vendor’s name and contact; the PO manager, engineering representative, and inspector; and the cross-reference to the RFQ number.

• A Milestone Schedule – An important part of the purchase order is its schedule. Milestones for Award, Start Work, and Completion of Work must be set when creating a new purchase order; however, optional additional milestones may also be set. Setting milestones forms the basis of tracking the vendor’s required deliverables, i.e. the documentation, inspection, and testing requirements that are stipulated in the product specifications.

• Contractual Information – Included are the contract type, the budget, and any special contractual considerations.

• Notes and Lessons Learned – Notes or lessons learned throughout the course of the contract are easily documented and become readily available for future reference.

• Documentation – Purchase order documentation is organized by purchase order number and includes correspondence and minutes of meetings as well as all required vendor data. The documentation is searchable by many parameters including document type, number, category, vendor documentation requirement, and much more.

Expediting   top

Several methods or tools used for expediting a purchase are available within the online-projects’ procurement system.

• Monitoring Deliverables – Monitoring deliverables is an effective means of ensuring that contractual requirements are met. An advantage of accurately monitoring deliverables is that their submittal can then be used as a basis of payment. The types of deliverables normally produced as part of a purchase order contract include:

       o Required Vendor Documents – Required vendor documents are the documents that a vendor is required to submit as a condition of the purchase order. The submittal requirements for these documents are normally specified in the Document Requirements Sheets (DRS) of the engineering specifications. There may be up to three submittals required for each document that is produced by the vendor: For Approval, As Certified, and As Built. Progress on each submittal is tracked through a color-coded system that ties delivery to a scheduled milestone date.
  o Inspection and Testing Requirements – Inspection and testing documents are deliverables that report the results of inspections and tests required as a condition of the purchase order. The submittal requirements for these documents are normally specified in the Inspection and Testing Requirements Sheets (ITRS) of the engineering specifications. The vendor schedules the inspections and tests by providing, within a pre-specified number of days notice, a scheduled start date and completion date for each inspection and test. The vendor must input this data into the procurement system. The timing of the actual inspections and tests can then monitored using a color-coded tracking system. Documents that are used to report the results of inspections and tests are scheduled to be submitted within a specified number of days of completion of the inspections and tests. These documents, the number required for each inspection and test, when they are due, and whether they have been accepted or approved by the owner or engineer, are also automatically tracked in color-coded format.

• Expediting Contact Reports – These reports can be as simple as a telephone contact record, but there must be an effective way in which to document and archive the records for future reference. The procurement system makes it easy to add reports to the database and displays them in chronological format, editable and suitable for printing.

• The Email System – Because the email system organizes all email communications automatically by purchase order number and category, using email to resolve purchasing issues is not only feasible but is also quite practical. Since the thread of each subject or topic is always kept intact, issues are resolved more readily and with less confusion, and traceability is effectively and accurately maintained.

• The Action List – Creating an action item can be a valuable tool for expediting an effort to mitigate a problem, control an emergency situation, or simply to get a critical question answered. Action items associated with a PO may be created on the fly and assigned to any registered user of the procurement system. These action items are automatically organized by PO number with direct, intuitive links from various locations in the system making it easy to stay up to date with one’s daily responsibilities.

Delivery   top

Delivery of materials, equipment, and supplies may be tracked by simply monitoring the vendor’s documentation requirements for packing, loadout, shipping, transportation, and receipt at the delivery point. Each document that is associated with delivery is tracked in color-coded format. Problem areas are automatically highlighted providing early warning of delays.

Installation   top

Installation of equipment may also be tracked by monitoring those vendor documentation requirements that ensure completion of tasks such as proper placement of equipment and hook-up and commissioning. Installation is complete when the documentation confirming installation is complete and has been submitted and accepted by the owner or engineer.

Testing and Inspection   top

Testing and inspection may be tracked by monitoring the requirements for vendor documentation covering issues such as appearance and workmanship, completion of materials, elimination of safety hazards, dimensional tolerances, inspection of welds, worker qualification, visual quality inspections, etc. Again, testing and inspection is complete when the results of all required tests and inspections have been reported, submitted, and approved by the owner or engineer.

Acceptance   top

Acceptance may be tracked by monitoring the vendor documentation requirements pertaining to performance testing, final paint and finishes, parts lists, warranty documents, maintenance manuals, and the like. Only after final acceptance documentation has been received and approved by the owner or engineer will final payments be made.

In Conclusion   top

We believe that a successful procurement operation is all about effective communications, but to enable that to happen requires generating and monitoring the proper documentation. If a PO includes a specification that adequately stipulates what documentation is needed to verify compliance with the specification, and if a system is established that allows expedient monitoring of that documentation, there is every reason to believe that the order will be executed satisfactorily with few if any problems. Our system makes it easy to define, track, monitor, and manage the documentation and each of the numerous tasks and activities that are a part of any purchase order.

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