Business Finance - Management QSO 349 Homework ( week 7)

Southern New Hampshire University

QSO- 349

Mohammed Alshaghathirah

I have selected the first case study The GlaxoSmithKline case study. It focuses on the

challenges the company faced when sourcing complex professional services for their global

operations. The company's procurement team needed to develop a sourcing strategy that would

ensure the company had access to the necessary services while managing costs and risks. With

the risks and project management involves in it. let’s discuss the critical elements in the case

study.

Overview of Procurement Management Plans

A procurement management plan is a document that outlines the procurement

requirements for a project or organization. Its purpose is to provide a roadmap for managing the

procurement process from start to finish, including the selection of suppliers, negotiation of

contracts, and ongoing monitoring of supplier performance. A procurement management plan is

critical for ensuring that procurement activities are aligned with project goals, timelines, and

budget constraints.

In the case of GlaxoSmithKline, a procurement management plan would be useful for

managing the procurement of complex professional services, such as legal, consulting, and

accounting services. The plan would help to ensure that the procurement process is efficient,

transparent, and compliant with legal and ethical requirements.

The basic components of a procurement management plan include:

● Procurement strategy: This outlines the overall procurement approach, including the

selection criteria for suppliers, the types of contracts to be used, and the roles and

responsibilities of key stakeholders.

● Procurement schedule: This sets out the procurement timelines and milestones, including

when the procurement process will begin, when supplier proposals will be evaluated, and

when contracts will be awarded.

● Supplier selection criteria: This outlines the criteria that will be used to evaluate and

select suppliers, such as their experience, qualifications, and pricing.

● Contract terms and conditions: This includes the specific terms and conditions that will

be included in the contract, such as payment terms, intellectual property rights, and

termination clauses.

● Procurement budget: This outlines the budget for the procurement process, including the

estimated costs of goods or services and any associated fees, such as legal or consulting

fees.

A procurement management plan is essential to manage procurement activities

effectively, and it plays a significant role in ensuring that the procurement process is aligned with

the project's goals and objectives. In the case of GlaxoSmithKline, a procurement management

plan would help the company establish a clear framework for sourcing complex professional

services. The components of a procurement management plan include procurement scope,

procurement objectives, procurement organization, procurement risks, procurement constraints,

and procurement approach. Each of these components would satisfy the project's requirements

by ensuring that the procurement process is well-defined, the project objectives are met, the

procurement organization is structured, procurement risks are identified and mitigated, and the

procurement approach aligns with the project's goals. By creating a procurement management

plan, GlaxoSmithKline could ensure that it obtains the necessary services while managing costs

and risks effectively.

Contract Types

Contract types can be broadly categorized into fixed-price contracts, cost-reimbursement

contracts, and time and material contracts. Fixed-price contracts provide a set price for the work

being performed, while cost-reimbursement contracts reimburse the contractor for the actual

costs incurred during the project. Time and material contracts are a hybrid of the two and allow

for more flexibility in the pricing.

Different contract types may be more suitable for different types of projects. For

example, fixed-price contracts may be suitable for construction projects, while

cost-reimbursement contracts may be suitable for research and development projects.

Contract types should be assessed for their ability to maximize value and minimize risk

for the buyer. Fixed-price contracts may provide the buyer with more certainty over costs, while

cost-reimbursement contracts may provide more flexibility and minimize the risk of cost

overruns.

Based on the requirements of the GlaxoSmithKline case study; a fixed-price contract

would likely be the most appropriate contract type. This would allow the company to establish a

clear price for the services being provided and ensure that the costs are controlled. The

fixed-price contract would also minimize the risk of cost overruns and provide more certainty

over the total cost of the project.

References

Stevens, C., & Fairchild, R. (2010). GlaxoSmithKline: Sourcing complex professional services. Harvard Business Publishing.

Smith, R. (2013). Procurement management: An effective tool for project success. Journal of Business and Management, 15(1), 56-62.

Sahin, S., & Robinson, H. S. (2012). An exploratory study of procurement practices influencing supply chain integration in the construction industry. Journal of Construction Engineering and Management, 138(1), 96-104.

Blomquist, T., & Moller, K. (2010). Risk management in complex projects. International Journal of Project Management, 28(8), 827-838.