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What are the 5 R's in procurement?

The Right Quantity, The Right Price, The Right Place, At the Right Time.

supplychain-mechanic.com - What is the importance of the 5 Rights of procurement

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In a recent consulting role, I was reminded by the rather bullish Managing Director that the “only” role of procurement is to save cost.

I wish I had a dollar for everytime that was put to me. We Supply Chain pro’s know that procurement is so much more than cost. But how do you get that message across and convey the potential and benefits of the supply chain engine room?

Well, one tried and tested method is to use the mantra of the 5 rights of procurement. Of course, you remember these from your CIPS days right? It’s a simple combination of the key deliverables of a successful procurement process

The Right Quality,

The Right Quantity,

The Right Price,

The Right Place,

At the Right Time.

While it’s a tad simplistic (c’mon Supply chain is waayyyyy more complicated than that) it conveys the fundamentals of what good procurement can be measured by. Whilst I agree Procurement is nuanced, to explain it succinctly the 5R’s hits the nail on the head. The crux of this is, of course, is that the supply chain function, and procurement, in particular, needs to add value. Procurement often gets a bad press, costs escalate, the wrong suppliers get selected, service may be shoddy so it’s the 5 rights is a neat and simple way of reminding you what procurement should be doing. But how do you meet the criteria of the 5 Rights, is it by an individual, by a group or by a process? The 5 rights tend to be the acid test of a functioning procurement team and how you meet the 5R’s tends to be a mix of process and personnel. The 5R’s can be seen in both direct and indirect procurement. There most procurement teams would agree that there most buyers face a balancing act to play between the 5 criteria. For example, Right Quality might determine the price to be paid (which may not be palatable with budget holders). You may have a supplier that can only provide a certain economic order quantity in order to satisfy another criteria. The trick is to get the 5 criteria working in harmony to satisfy the business. So, next time your boss tells you that procurement is about costs, introduce them to the 5 rights.

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Here are the main types of suppliers. Services. These include suppliers of electricity, water, telephones, IT, email, website hosting, stationery, facilities, transport, etc. Sub-contractors. If you're in a trade business, these will include other tradespeople. ... Manufacturers/producers. ... Distributors. ... Importers.

informi.co.uk - Finding the right suppliers - Informi

Here are the main types of suppliers.

Services. These include suppliers of electricity, water, telephones, IT, email, website hosting, stationery, facilities, transport, etc. Sub-contractors. If you’re in a trade business, these will include other tradespeople. If you’re a consultant, training provider, etc, these will include other consultants, trainers, etc. You might contract these people direct or through an agency. Manufacturers/producers. For some types of business it’s possible to buy products or components direct from the earliest point of the supply chain – the manufacturer. This is normally the least expensive option, as the items won’t have been marked-up by other parts of the chain. However, sometimes manufactures have a minimum order size, which can be too high for many smaller businesses. If you’ve invented a product you’ll need to find a manufacturer. Distributors. Brokers and wholesalers buy large quantities from a range of manufacturers. Although they mark-up the prices, distributors can supply smaller orders that manufacturers may refuse. Distributors can also supply items from different manufacturers. Importers. They act like a domestic distributor, only the items they buy are from overseas. In some countries, because of the way supply chains work, it can be difficult, even for importers, to buy direct from manufacturers – they may have buy from wholesalers in those countries.

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