Wednesday 5 March 2014
Almaty Office, Kazakhstan
0°C Sunny
In our outline of setting up supply chain at a new mine, previous blogs have covered
- Management controls as they relate to Supply Chain
- Finance and SCM Coordination
This blog looks at procurement, including project and operational purchases, inventory replenishment, work order needs, non-stock (direct charge) purchases and services.
Procurement needs are determined by:
- Approved Capital expenditure processing
- Inventory replenishment
- Planned maintenance needs (usually through work orders)
- Other budgeted operational needs for materials or services costed directly to end users.
Such needs are communicated by a fully documented procurement/purchase requisition, approved and authorised manually and/or electronically. For the acquisition to be completed effectively full and meaningful written descriptions are essential. Additionally, buyers must ensure that they fully understand what they are expected to buy; lack of understanding causes misunderstandings, delays and incorrect supply.
A corporate policy concerning tendering levels will have been decided. Tendering will vary according to corporate location and size. The policy may allow no tendering (single source):
- Up to an agreed value
- For contracted / FPA materials and services following formal tendering
- For OEM parts and materials
- For emergency and breakdown needs
All other tendering will require either by 3 qualified written quotations or be subject to a formal tendering procedure, depending on value and according to policy.
Bid evaluations are conducted commercially by procurement team and by end user technically if necessary. End user identifies ALL of the bids that are technically acceptable (and may identify preference) and Supply Procurement team selects the bidder based upon this; end user does not select supplier.
Procurement is by Purchase Order (PO) whether or not subject to contract / FPA. It is recommended that negotiations are conducted prior to selection of vendor and only subsequently where there is little risk of unethical practices.
Once orders are placed, procurement team is responsible for both ongoing supplier relations (including expediting delivery) and arranging delivery, see next blog.
All procurement procedures will be supported by detailed manuals in relevant languages.
CBC is able to undertake and support this crucial element of setting up for an efficient mining supply procurement operation.