After completing this module, you:

Are familiar with the particularities of formulating specifications to efficiently match your organisation’s needs for products and services;

Know how to setup a supplier appraisal system and are able to appraise your suppliers according to that system;

Are capable of choosing adequate ways to obtain and subsequently evaluate offers based on carefully formulated criteria;

Can explain the different stages of the tender process and the most important activities therein;

Understand what should (not) be included in contracts with suppliers and why;

Have learned how to prepare and execute effective negotiations

What will we learn?


1.1 General aspects of specifications

1.1.1 Roles in specifying requirements

1.1.2 Types of purchase items

1.1.3 Elements of the purchase specification

1.1.4 Approaches to specifying requirements

1.1.5 Value Analysis and Value Engineering

1.2 Specifying products and services

1.2.1 Specifying quality and performance

1.2.2 Specifying packaging, delivery and acceptance

1.2.3 Specifying supplier services

1.2.4 Specifying requirements for services

1.2.5 Analysing prices and costs

1.2.6 Other information to be included in the specification

1.3 The use of standards, technical regulations & measures

1.3.1 Using external standards

1.3.2 Technical regulations

1.3.3 Sources of information

1.3.4 Internal standardisation

Learning check


2.1 Forecasting demand

2.1.1 Types and characteristics of demand

2.1.2 Ways to forecast demand

2.1.3 Quantitative analysis to forecast demand

2.1.4 Using computers to forecast demand

2.1.5 Avoiding inaccuracy in forecasts

2.2 Sustainable sourcing

2.2.1 Developments harming the environment

2.2.2 Strategies for making supply chains sustainable

2.2.3 Corporate social responsibility and ethical purchasing

2.2.4 Environmental laws and policies

2.3 Collaborative purchasing

2.3.1 What is collaborative purchasing

2.3.2 Benefits of collaborative purchasing for SMEs

Learning check


3.1 Determine criteria for supplier appraisal

3.1.1 Quality

3.1.2 Availability

3.1.3 Service and responsiveness

3.1.4 Cost

3.1.5 General supplier capabilities and business attitudes

3.2 Selecting appraisal criteria for categories of purchase items

3.2.1 Routine items

3.2.2 Leverage items

3.2.3 Bottleneck items

3.2.4 Strategic items

3.3 Assessing supplier motivation

3.3.1 Supplier Perception Model

3.3.2 Determining supplier motivation

3.3.3 Implications of a position in the perception model

3.3.4 Determining a supplier’s overall motivation rating

3.3.5 A note of caution

Learning check


4.1 Identifying suppliers

4.2 Screening Suppliers

4.3 Researching suppliers

4.4 Weighting and rating supplier capabilities

4.4.1 Determining weight factors for appraising supplier capability

4.4.2 Rating potential suppliers’ capabilities

4.4.3 Combining the capability and motivation ratings

4.5 Assessing financial health

4.5.1 Financial statements

4.5.2 Financial ratios

4.5.3 Conclusion

4.6 Working with the appraisal results

Learning check


5.1 Methods of obtaining offers

5.1.1 The informal approach

5.1.2 The enquiry-quotation approach

5.1.3 Formal tendering

5.2 Methods to evaluate offers

5.2.1 Lowest price

5.2.2 Lowest Total Cost of Ownership (TCO)

5.2.3 Weighted scoring

5.2.4 Value for money

5.2.5 Other methods to evaluate offers

5.3 Choosing an evaluation method

5.4 Undertaking the financial evaluation

Learning check


6.1 Supply contracts

6.1.1 The importance of a supply contract

6.1.2 Points of attention when preparing a contract

6.1.3 A good contract

6.1.4 Linking contract types to supply strategies

6.2 The use of Incoterms®

6.2.1 Background of the terms

6.2.2 Explanation

6.3 Stages in the tender process

6.3.1 Prepare and issue the invitation to tender package

6.3.2 Receive offers and award the contract

6.3.3 Inform and debrief unsuccessful suppliers

6.3.4 Keeping a record of the process

Learning check


7.1 The importance of negotiating

7.2 Elements of preparation

7.2.1 Understanding the purchasing context

7.2.2 Understanding the supplier organisation and vice versa

7.2.3 Negotiating styles

7.2.4 Determining the balance of power

7.2.5 SWOT analysis

7.3 Setting negotiation objectives

7.3.1 Variables and options

7.3.2 Setting targets

7.3.3 Determining the negotiable zone

7.4 Organising the negotiation meeting

7.4.1 Composing your negotiation team

7.4.2 Choosing location and duration

7.4.3 When not meeting face-to-face

Learning check


8.1 Do’s and don’ts in each stage of the negotiation

8.2 Negotiation approaches

8.2.1 Win-win versus win-lose

8.2.2 Deciding on your starting position

8.2.3 The order of the issues to be negotiated

8.3 Persuasion tactics and negotiating techniques

8.3.1 Persuasion tactics

8.3.2 Negotiation techniques

8.3.3 Asking questions and listening

8.4 Body language and cultural aspects

8.5 Follow-up on negotiations

Learning check

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