4.2 - Procure materials and services
PCF ID: 10216 | Elements: 28 | Metrics Available: Y | Benchmarkable: 7
Definition
Creating a plan for procuring materials and services. Develop strategies for sourcing materials and services. Choose the most appropriate suppliers, and develop contracts with them. Order the materials and services as per the requirements. Manage relationships with suppliers.
Overview
This process group covers procure materials and services within the broader context of Deliver Physical Products.
Process Hierarchy
Processes
| ID | Process | PCF ID | Sub-elements | Metrics |
|---|---|---|---|---|
| 4.2.1 | Provide sourcing governance and perform category management | 10277 | 7 | Y |
| 4.2.2 | Develop sourcing and category management strategies | 20973 | 0 | N |
| 4.2.3 | Select suppliers and develop/maintain contracts | 10278 | 4 | Y |
| 4.2.4 | Order materials and services | 10279 | 7 | Y |
| 4.2.5 | Manage suppliers | 10280 | 4 | Y |
4.2.1 - Provide sourcing governance and perform category management
PCF ID: 10277
Definition: Creating strategies for procuring materials and services from various sources, and for managing and evaluating categories. Establish a procurement process that describes the approach for obtaining products and purchasing activities. Evaluate the sources. Create sourcing relationships in order to continuously improve. Re-evaluate purchasing activities.
| ID | Activity | PCF ID | Tasks | Metrics |
|---|---|---|---|---|
| 4.2.1.1 | Develop procurement plan | 10281 | 0 | N |
| 4.2.1.2 | Clarify purchasing requirements | 10282 | 0 | N |
| 4.2.1.3 | Establish materials management contingency plans | 10283 | 0 | N |
| 4.2.1.4 | Match needs to supply capabilities | 10284 | 0 | N |
| 4.2.1.5 | Analyze organization’s spend profile | 10285 | 0 | N |
| 4.2.1.6 | Seek opportunities to improve efficiency and value | 10286 | 0 | N |
| 4.2.1.7 | Collaborate with suppliers to identify sourcing opportunities | 10287 | 0 | N |
4.2.1.1 - Develop procurement plan
Definition: Creating a plan for procuring materials and services. Plan what to buy, when, and from what sources. Include project requirements, the procurement team, the justification for the procurement, a timeline of events, and an explanation of the supplier selection process. Outline specific actions to start and complete purchases in order to adhere to best practices.
4.2.1.2 - Clarify purchasing requirements
Definition: Defining the purchasing requirements for materials and services. Specify the exact inventory required for the production process. Create a specific quotation for all the sources in order to avoid any duplication or overlap.
4.2.1.3 - Establish materials management contingency plans
Definition: Developing a strategy to deal with issues projected to arise during implementation of the inventory plan. Identify how to react to issues that arise and require changes to the inventory plan, such as a vendor failing to deliver materials on time. Collaborate with production and suppliers to prepare solutions to projected problems.
4.2.1.4 - Match needs to supply capabilities
Definition: Synchronizing the requirements of materials and services and the capacity of suppliers for providing these materials and services. Revamp the procurement needs of the company in consideration of the capabilities of the suppliers.
4.2.1.5 - Analyze organization’s spend profile
Definition: Evaluating the spend profile of the organization. Collect, cleanse, classify, and analyze the procurement data with the purpose of reducing procurement costs, improving efficiency, and monitoring compliance.
4.2.1.6 - Seek opportunities to improve efficiency and value
Definition: Seeking the most efficient sourcing and procurement opportunities.
4.2.1.7 - Collaborate with suppliers to identify sourcing opportunities
Definition: Collaborating with the suppliers of materials and services in order to determine new opportunities for sourcing.
4.2.2 - Develop sourcing and category management strategies
PCF ID: 20973
Definition: Deploying a strategic sourcing methodology to segment the majority of organizational spend based on external supply markets (versus individual suppliers or internal stakeholders) to reduce the cost of buying goods and services, reduce risk in the supply chain, and maximize value delivered from the supply base. This approach typically includes cross-functional management of categories, examining the entire category spend, how the organization uses the products or services within the category, the marketplace, and major suppliers.
4.2.3 - Select suppliers and develop/maintain contracts
PCF ID: 10278
Definition: Evaluating supplier options to select the most effective and efficient suppliers. Validate selected suppliers. Establish and manage supplier contracts.
| ID | Activity | PCF ID | Tasks | Metrics |
|---|---|---|---|---|
| 4.2.3.1 | Select suppliers | 10288 | 0 | N |
| 4.2.3.2 | Certify and validate suppliers | 10289 | 0 | N |
| 4.2.3.3 | Negotiate and establish contracts | 10290 | 0 | N |
| 4.2.3.4 | Manage contracts | 10291 | 0 | N |
4.2.3.1 - Select suppliers
Definition: Evaluating the pros and cons of various suppliers. Choose the most appropriate and cost-effective suppliers on the basis of their material quality, delivery schedules, and costs.
4.2.3.2 - Certify and validate suppliers
Definition: Validating the supply sources, and provide certification as an official supplier.
4.2.3.3 - Negotiate and establish contracts
Definition: Legally binding suppliers with the company. Negotiate contracts individually with all the suppliers that include the promised material delivery, the delivery dates and duration, etc.
4.2.3.4 - Manage contracts
Definition: Keeping contracts up-to-date with routine evaluation. Maintain order and discipline with the contracts in order to avoid any loss of information and mishaps.
4.2.4 - Order materials and services
PCF ID: 10279
Definition: Creating and approving requisitions and distributing purchase orders accordingly. Hasten the procurement process to satisfy internal needs.
| ID | Activity | PCF ID | Tasks | Metrics |
|---|---|---|---|---|
| 4.2.4.1 | Process/Review requisitions | 10292 | 0 | N |
| 4.2.4.2 | Approve requisitions | 10293 | 0 | N |
| 4.2.4.3 | Solicit/Track vendor quotes | 10294 | 0 | N |
| 4.2.4.4 | Create/Distribute purchase orders | 10295 | 0 | Y |
| 4.2.4.5 | Expedite orders and satisfy inquiries | 10296 | 0 | N |
| 4.2.4.6 | Reconcile purchase orders | 10297 | 0 | Y |
| 4.2.4.7 | Research/Resolve order exceptions | 10298 | 0 | N |
4.2.4.1 - Process/Review requisitions
Definition: Handling operations related to processing/reviewing the requisitions. Establish and maintain procedures for the initiation, authorization, and processing of purchase requirements to procure products/services.
4.2.4.2 - Approve requisitions
Definition: Approving requisitions for materials and services. Examine distributor-specific requests, and validate them individually.
4.2.4.3 - Solicit/Track vendor quotes
Definition: Requesting quotes from suppliers. Use a request for quotation (RFQ) to invite suppliers into a bidding process for specific products/services.
4.2.4.4 - Create/Distribute purchase orders
Definition: Creating and placing the orders for purchasing materials and services from suppliers. Analyze vendor quotes. Choose the most cost-effective vendors. Create vendor-specific orders. Distribute them in order to initiate the purchasing process.
4.2.4.5 - Expedite orders and satisfy inquiries
Definition: Accelerating the purchase orders in order to fulfill the internal needs (for raw materials) depicted through inquiries.
4.2.4.6 - Reconcile purchase orders
Definition: Verify that purchase orders are filled as expected: verify that items and quantities are delivered as expected, based on purchase order details and goods receipts.
4.2.4.7 - Research/Resolve order exceptions
Definition: Identifying and resolving any exceptions. Address the internal needs/inquiries for materials that cannot be procured immediately. Research inquiries that require the need of exceptional materials.
4.2.5 - Manage suppliers
PCF ID: 10280
Definition: Collecting and analyzing new information in order to track and rate suppliers through a supplier information management system.
| ID | Activity | PCF ID | Tasks | Metrics |
|---|---|---|---|---|
| 4.2.5.1 | Monitor/Manage supplier information | 10299 | 0 | N |
| 4.2.5.2 | Prepare/Analyze procurement and vendor performance | 10300 | 0 | N |
| 4.2.5.3 | Support inventory and production processes | 10301 | 0 | N |
| 4.2.5.4 | Monitor quality of product delivered | 10302 | 0 | N |
4.2.5.1 - Monitor/Manage supplier information
Definition: Examining procurement and vendor performance. Report delivery timing and the quality of the materials procured through different vendors.
4.2.5.2 - Prepare/Analyze procurement and vendor performance
Definition: Assisting the production and inventory processes through the information and reports created. Use the information and metrics of the procurement and vendor performance to enhance or improve the production process.
4.2.5.3 - Support inventory and production processes
Definition: Support inventory and production processes by analyzing impact of procurement decisions and collaborating to constantly improve. (For example, perhaps minimum order requirements could be negotiated to be lower, to reduce excessive inventory and make production more flexible.)
4.2.5.4 - Monitor quality of product delivered
Definition: Track the performance of the suppliers on product quality. Use this information to further improve sourcing and supplier performance.
Change Summary (v7.2.1 vs v6.1.1)
Changes indicated by:
+XXXXX- New element added-XXXXX- Element removedcXXXXX- Element changedNEW- Newly introduced
Complete Element List with Definitions
All 28 elements
| ID | Name | Definition |
|---|---|---|
| 4.2 | Procure materials and services | Creating a plan for procuring materials and services. Develop strategies for sourcing materials and ... |
| 4.2.1 | Provide sourcing governance and perform ... | Creating strategies for procuring materials and services from various sources, and for managing and ... |
| 4.2.1.1 | Develop procurement plan | Creating a plan for procuring materials and services. Plan what to buy, when, and from what sources.... |
| 4.2.1.2 | Clarify purchasing requirements | Defining the purchasing requirements for materials and services. Specify the exact inventory require... |
| 4.2.1.3 | Establish materials management contingen... | Developing a strategy to deal with issues projected to arise during implementation of the inventory ... |
| 4.2.1.4 | Match needs to supply capabilities | Synchronizing the requirements of materials and services and the capacity of suppliers for providing... |
| 4.2.1.5 | Analyze organization’s spend profile | Evaluating the spend profile of the organization. Collect, cleanse, classify, and analyze the procur... |
| 4.2.1.6 | Seek opportunities to improve efficiency... | Seeking the most efficient sourcing and procurement opportunities. |
| 4.2.1.7 | Collaborate with suppliers to identify s... | Collaborating with the suppliers of materials and services in order to determine new opportunities f... |
| 4.2.2 | Develop sourcing and category management... | Deploying a strategic sourcing methodology to segment the majority of organizational spend based on ... |
| 4.2.3 | Select suppliers and develop/maintain co... | Evaluating supplier options to select the most effective and efficient suppliers. Validate selected ... |
| 4.2.3.1 | Select suppliers | Evaluating the pros and cons of various suppliers. Choose the most appropriate and cost-effective su... |
| 4.2.3.2 | Certify and validate suppliers | Validating the supply sources, and provide certification as an official supplier. |
| 4.2.3.3 | Negotiate and establish contracts | Legally binding suppliers with the company. Negotiate contracts individually with all the suppliers ... |
| 4.2.3.4 | Manage contracts | Keeping contracts up-to-date with routine evaluation. Maintain order and discipline with the contrac... |
| 4.2.4 | Order materials and services | Creating and approving requisitions and distributing purchase orders accordingly. Hasten the procure... |
| 4.2.4.1 | Process/Review requisitions | Handling operations related to processing/reviewing the requisitions. Establish and maintain procedu... |
| 4.2.4.2 | Approve requisitions | Approving requisitions for materials and services. Examine distributor-specific requests, and valida... |
| 4.2.4.3 | Solicit/Track vendor quotes | Requesting quotes from suppliers. Use a request for quotation (RFQ) to invite suppliers into a biddi... |
| 4.2.4.4 | Create/Distribute purchase orders | Creating and placing the orders for purchasing materials and services from suppliers. Analyze vendor... |
| 4.2.4.5 | Expedite orders and satisfy inquiries | Accelerating the purchase orders in order to fulfill the internal needs (for raw materials) depicted... |
| 4.2.4.6 | Reconcile purchase orders | Verify that purchase orders are filled as expected: verify that items and quantities are delivered a... |
| 4.2.4.7 | Research/Resolve order exceptions | Identifying and resolving any exceptions. Address the internal needs/inquiries for materials that ca... |
| 4.2.5 | Manage suppliers | Collecting and analyzing new information in order to track and rate suppliers through a supplier inf... |
| 4.2.5.1 | Monitor/Manage supplier information | Examining procurement and vendor performance. Report delivery timing and the quality of the material... |
| 4.2.5.2 | Prepare/Analyze procurement and vendor p... | Assisting the production and inventory processes through the information and reports created. Use th... |
| 4.2.5.3 | Support inventory and production process... | Support inventory and production processes by analyzing impact of procurement decisions and collabor... |
| 4.2.5.4 | Monitor quality of product delivered | Track the performance of the suppliers on product quality. Use this information to further improve s... |
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