Summary of Unit 4
This unit focuses on how the contract fits into the procurement process. Preliminary issues such as what method to use in different situations to obtain, select and evaluate offers are discussed. A number of specific terms and conditions are presented and how effective negotiations can significantly improve the value of the contract. This unit also covers a number of other topics essential to the preparation of a contract, such as INCOTERMS, contractual default and the settlement of disputes.
The latter part looks at procurement having a dual critical role in managing transportation and logistics activities. Not only do logistics and transportation services represent a significant cost, they also affect customer service levels through availability of products. It is important for Procurement to make the right decisions on transportation mode selection and freight term negotiation in order to contribute to the Profitability of an organisation.
In the next unit, we shall continue our discussion on the significant strategic role of procurement as the world evolves, especially around procurements and strategic sourcing decisions.