Business Finance - Management QSO 349 Homework ( week 7)

Southern New Hampshire University

QSO-349- Proj Contracting/Procurement

Mohammad Alshaghathirah

Procurement Principles

Procurement principles are a set of guidelines that organizations follow when procuring

goods and services. These principles emphasize the importance of obtaining value for money,

conducting procurement activities ethically and transparently, promoting competition among

suppliers, and being accountable for procurement decisions and outcomes. Adhering to these

principles can help organizations achieve their procurement objectives, mitigate risks, and build

trust with stakeholders. There are five key principles that are important for this case study. Lets

discuss them one by one.

Value for Money

Value for money is a critical procurement principle that emphasizes the importance of

achieving the best possible outcomes for the organization while optimizing costs. In the case

study of GlaxoSmithKline (GSK), value for money was a key consideration in the company's

procurement strategy. GSK implemented several measures to ensure that its procurement

activities delivered value for money. The company sought to leverage its purchasing power by

consolidating its supplier base, negotiating favorable pricing terms, and improving contract

management processes. This approach enabled GSK to achieve economies of scale, reduce costs,

and streamline procurement processes. A professional procurement process ensures that goods

and services are procured at the best possible price without compromising quality. This is

achieved through various activities such as market research, analysis of supplier proposals, and

negotiation. Procurement activities are aimed at obtaining goods and services at the best possible

price without compromising quality. The principle of value for money ensures that the

organization maximizes its resources and invests in the right areas to achieve its objectives.

Ethics

Ethics is a critical procurement principle that emphasizes the importance of conducting

procurement activities in a fair, transparent, and responsible manner. In the case study of

GlaxoSmithKline (GSK), ethics was a key consideration in the company's procurement strategy.

GSK had a code of conduct that outlined ethical principles for procurement, including

transparency, fairness, and integrity. GSK also implemented an anti-corruption program to

prevent bribery and corruption in its procurement activities. A professional procurement process

requires that all procurement activities are conducted ethically and in compliance with relevant

laws and regulations. This includes activities such as avoiding conflicts of interest, ensuring fair

treatment of suppliers, and maintaining confidentiality of sensitive information. Ethical

procurement ensures that procurement activities are conducted with integrity and in compliance

with relevant laws and regulations. This promotes trust and confidence in the procurement

process and helps to avoid any negative impacts on stakeholders.

Competition

Competition is a critical procurement principle that emphasizes the importance of

promoting competition among suppliers to drive innovation, improve quality, and achieve the

best possible outcomes for the organization. In the case study of GlaxoSmithKline (GSK),

competition was a key consideration in the company's procurement strategy. GSK implemented a

competitive bidding process to select suppliers for its procurement activities. The company

invited multiple suppliers to bid on its contracts, ensuring that suppliers had an equal opportunity

to compete for business. GSK also evaluated suppliers based on their ability to provide

innovative solutions, quality, and value for money. A professional procurement process promotes

competition among suppliers, which can lead to better prices, higher quality products, and

improved supplier performance. This is achieved through activities such as issuing requests for

proposals, using fair evaluation criteria, and conducting supplier debriefs. Competition is an

essential aspect of procurement as it promotes innovation, better quality products, and fair

pricing. The principle of competition ensures that the procurement process is open to all potential

suppliers, and the selection process is based on objective criteria.

Transparency

Transparency is a critical procurement principle that emphasizes the importance of

conducting procurement activities in a clear, open, and accountable manner. In the case study of

GlaxoSmithKline (GSK), transparency was a key consideration in the company's procurement

strategy. GSK implemented several measures to ensure transparency in its procurement

activities. The company maintained a Supplier Code of Conduct that outlined ethical principles

for procurement and communicated this code to its suppliers. A professional procurement

process is transparent and open to scrutiny by stakeholders. This is achieved through activities

such as publishing procurement plans, providing clear instructions to suppliers, and making

procurement documents publicly available. Transparency in procurement means that all

stakeholders have access to information about procurement activities. This fosters trust,

accountability, and effective communication. Transparency also enables stakeholders to

scrutinize procurement activities and hold those involved accountable for their actions.

Accountability

Accountability is a critical procurement principle that emphasizes the importance of

taking responsibility for procurement decisions and outcomes. In the case study of

GlaxoSmithKline (GSK), accountability was a key consideration in the company's procurement

strategy. GSK implemented several measures to ensure accountability in its procurement

activities. The company established a Procurement Policy and Procedures Manual, which

outlined the roles and responsibilities of all individuals involved in the procurement process,

including the procurement team, management, and suppliers. The company established a

Procurement Executive Committee (PEC), which was responsible for overseeing all procurement

activities and ensuring that they aligned with the company's strategic objectives. The PEC was

accountable to the company's Board of Directors, which provided oversight and guidance on

procurement-related matters. A professional procurement process holds individuals and teams

accountable for their procurement decisions and outcomes. This is achieved through activities

such as establishing clear roles and responsibilities, setting performance targets, and

implementing a performance management system to measure and evaluate performance.

Accountability in procurement ensures that those responsible for procurement decisions are held

responsible for their actions. This encourages individuals to take ownership of their decisions

and actions, and it promotes good governance practices.

Evaluating Decision

In case of Value for money the case study suggests that the procurement team at

GlaxoSmithKline sought to obtain value for money by leveraging their global procurement

organization, utilizing preferred suppliers, and benchmarking prices against industry standards.

This demonstrates a commitment to obtaining goods and services at the best possible price

without compromising quality. After that we take Ethics so the case study mentions that

GlaxoSmithKline had a policy of conducting business with integrity and in compliance with all

relevant laws and regulations. This suggests that the procurement team at GlaxoSmithKline were

committed to ethical practices in their procurement activities. After that competition suggest that

the case study mentions that GlaxoSmithKline had a competitive bidding process in place for the

sourcing of complex professional services. This indicates that the procurement team at

GlaxoSmithKline were committed to promoting competition and fairness in their procurement

activities. After that transparency indicates about the case study suggests that GlaxoSmithKline

had a transparent procurement process in place, with clearly defined roles and responsibilities,

and a communication plan that was shared with all stakeholders. This indicates a commitment to

transparency in procurement activities. And lastly accountability, the case study suggests that

GlaxoSmithKline had a clear process for decision-making, with designated individuals

responsible for each stage of the procurement process. This indicates a commitment to

accountability in procurement activities.

References

Chartered Institute of Procurement and Supply. (2018). Procurement ethics: An overview. https://www.cips.org/supply-management/opinion/2018/february/procurement-ethics-an- overview/

United Nations Development Programme. (2016). Principles of good procurement. https://www.undp.org/content/undp/en/home/librarypage/sustainable-development-goals/ principles-of-good-procurement.html

Widyadana, G. A., & Chen, J. (2017). Evaluation of procurement decision-making criteria: A case study in a public sector organization. Journal of Cleaner Production, 141, 567-576. https://doi.org/10.1016/j.jclepro.2016.09.107