Supply chain & procurement

1. -Procurement
&Sustainability.
-Outsourcing.

2. Presentation Map
Procurement
&
Sustainability
• Definition of Purchasing
• Difference between purchasing /
procurement
• Procurement cycle
• Challenges of Procurement
• Types of agreements-Its benefits
• Types of suppliers
• Examples
• Tips for effective procurement
• Sustainability
• Examples
• Relation between Procurement
& sustainability
• Definition of Outsourcing
• Main Pros & Cons
• Different forms of outsourcing
• Steps of effective outsourcing
• Emerging trends of outsourcing
• Conclusion
• Examples
• Appendix
• Reference
Outsourcing as
emerging trend
Sustainability

3. Definition of
Purchasing
• Purchasing is the process a
business or organization uses
to acquire goods or services to
accomplish its goals. Although
there are several organizations
that attempt to set standards in
the purchasing process,
processes can vary greatly
between organizations.

4. Difference between Purchasing & procurement
Procurement Purchasing
Activities related to acquiring goods
and services
Functions associated with buying
goods and services
Steps that happen before, during, and
after purchase
Straightforward process of purchasing
commodities
Used in a production environment
(internal process)
Used in a wholesale environment
(external process)

5. Difference between Purchasing & procurement
Procurement Purchasing
Puts more importance on an item’s value
than its cost
Tends to focus more on the item’s price
than its value
Refers to a set of tasks that spot and fulfill
needs
Refers to the specific task of committing
expenditure
Includes need recognition, sourcing, and
contract closure
Includes ordering, expediting, and payment
fulfillment

6. Procurement Purchasing
Follows a proactive approach to spot and
fulfill needs
Follows a reactive approach to satisfy
internal needs
Relational–focuses on creating long-term
vendor relationships
Transactional–focuses on transactions
than vendor relationships
Difference between Purchasing & procurement

8. Brief about carbon black(Birla Carbon Egypt
S.A.E.)
Birla Carbon Egypt is a multinational company start working in Egypt from 1994 under the name of
Alexandria Carbon Black.
It’s one of Strategic business units (SBU ) of Aditya Birla group .it’s head quarter in India.
The company produces Carbon Black & export 80 % of its production worldwide & 20 % in the local
market.
Birla Carbon Egypt work according Pull strategy after collecting customers orders from its Major
customers (Goodyear , Michelin, Weedy for cables , Mercededs,Wolks Wagen,Nippon Paint Holdings
Co., Ltd,Sun Chem chemicals & Hp for inks.
Start making forecast for required materials through MRP (Management resources planning ) & start its
capex required budget .

9. Procurement Cycle in Carbon Black
Requirement
for RM
The PR reached to
Procurement
department who
starting to
circulate RFQ
Checking in
the stores
Collecting offer as
per internal
procedures inside
the co & send it to
technical
department
Raise PR
(Purchase
requestion)
Converted to PO
(Purchase order)
& sending to
suppliers
Suppliers
Deliver
materials as per
specified date in
PO
Stores created
GRN(Good
receipt note)
Department make
ISSUE PASS &
withdraw materials
from stores

10. Comment on Procurement Cycle
• This is not the only action taken there is cross functional collaborative work
between different department if there is specific maintenance task required
from WH (Warehouse department) ,mechanical department can do it
without the need for external contractor(internal sourcing).
• If there is any department has enough inventory from required material can
transfer the stock to other department and that affected in cost saving &
inventory management.
• Uploading offers , comparative , technical acceptance on SAP (Paperless ) –
Green IT.

11. Challenges of
Procurement
department
• Buyers Effectiveness : buyer is the core of the process so
must have a strong negotiation skills to get the required
materials with discounted rate.
• Updating with the solution , there are many materials can
replace the existed one that comes from good
understating of Newley updates
• ISO is mandatory for the suppliers to deliver materials
with accepted quality.
• Trust & communication required with your relationship
with suppliers & contractors.
• Intelligent solution (Negotiation raised nowadays).
• Cost effectiveness as there are many competitors existed
worldwide as per the globalization.

12. Procurement Agreements types
Purchase order for specific
material
Specified due date
Creating comparative
Comparing latest price rate with
last rate
Issue pass to close cycle
Service purchase order
Dealing with contractors
Comparative created
Specified due date for job
completion
Service entry sheet
Blanket orders
For many items-one item at least ranged
6 -12 months or more
Schedule delivery
Price specified on date of creation
purchase order
Purchase
orders

13. Procurement Agreements types
Service contract
Material contract
contracts
Take or buy 80-20 %
Fixed rate with lower
negotiation but
service and
maintenance for
factory

14. Main benefits from
agreements
• Cost saving may be lower than previous
years
• Minimum inventory size
• Reducing the risk on the buyer
• Stock availability ( reducing lead time)
• Build strong relation with suppliers as it
become a business partner.

15. Types of suppliers-Contractors:
Transactional
– one time
• Strategic – supplier
• Like Crude oil
• Coal tar
• Packaging
materials
• OEM
(only equipment
manufacturer)
-Ex: HOWDEN
Emerson
ARVOS
Suppliers
Approved from
your customers
; you are obligated
to work with
Harghiton: Liner
materials
Buyer has lowest bargaining
/Negotiation power with OEM

16. Examples & Impacts
Supplier Name Impact Type of Agreement –
Type pf Supplier
Mantrac
(OEM for caterpillar)
Saving 24000USD/year
Reducing Leadtime for
overhauling
80-20 take -OEM
El TOKHY Saving 4060 USD/year
Availability of bearing
Reducing stores
Contractual agreement
Arbor Saving 12400
USD/Year
Availability of fitting
Reducing lead time
from 6 weeks to 10
days
Contractual agreement

17. Examples & Impact
Supplier Name Impact Type of Agreement –
Type pf Supplier
El Hilal & Negma saving 2133.33 USD /
Year
Blanket order -Strategic
Packing
Rubex Saving 19400 USD +
Buld strong relationship
Blanket order -Strategic
Packing
Kholafaa A.Naiem
Successors
19000 USD/Year &
reducing scarp materials
Blanket-Transactional
French Company for
Wooden Pallets
24000 USD /Year Blanket order -Strategic
Packing

18. Examples & Impacts
Supplier Name Impact Type of Agreement –
Type pf Supplier
Nalco Fixed the rate
Boiler maintenance for
free
Regular visit -1 time per
month
OEM

19. Tips for effective procurement cycle
Building trust
with your
suppliers, come
from daily work
Effective Buyers
with string
Negotiation power
Cope with
technological
changes , high
responsive rate
Always put B plan
Decisiveness with
action
-KPI
-Procedures

20. Sustainability
What is sustainable procurement ? Sustainable procurement also known as green
procurement .
Adopts and integrates corporate social
responsibility (CSR) principles into procurement
process and decisions while also ensuring they
meet company requirements.
Does Any company Apply this Concept in Egypt?,
if yes , could you give us an example.
Yes, Birla Carbon Egypt (Alexandria carbon black),
let’s take a look.

21. What’s the relation
between
Procurement&
Sustainability? Sustainability led to achieve a positive image , as you will
achieve:
Discretionary
Ethical
Economic
When organizations broadens this framework by meeting their needs for
goods, services, works, and utilities in a way that achieves value for
money and promotes positive outcomes not only for the organization itself
but for the economy, environment, and society.

22. Worldwide association for evaluating your
supplier ECOVADIS
• This association evaluate your strategic business partners through
specific required records & certificate to give them a validity to work
not only with Egyptian plant bust also with worldwide branches of the
group.
• It also measure CSR activities for each suppliers and evaluate their
work toward society .

24. Field Audit Action
Packing
EgyPlast
Audit done by audit committee in
2019 to check the factory of the
supplier.
Finding :
Scrap from the manufacturing process not recycled &
not friendly to the environment .The company put this
on a rural area surrounding the factory.
Action: Blacklisted this customer & send him a formal
letter that he has been excluded from the suppliers’ list.
Arfa Truck-
Forklift
maintenance
Many accident for outsourced
workers assigned by the contractor.
Stoppage for the contract of forklift maintenance after
warning letters had been sent
San Misr-
Outsourcing
Manpower
Done by making regular meeting
with outsourced works & found
them not taking payslip for6
months
Stoppage with penalty 50000 EGP .
Company carefully create the vendor
codification formant that to select
best suppliers & ensure their CSR
activities toward their societies
worldwide.
On other hand company
make monthly audit on
selected approved supplier
list as shown on below
table to ensure the same.

25. Field Audit/Codification Action
Packing
El Alamia For
Cartoon
Audit done 2019. Finding:
Using unsafe machines , oil for lubrication for machines
that make bad emissions for the environment.
Had been blacklisted .
Equipment Codifying Wieland company as it
achieve a good power saving for
running equipment
Enable us not taking any NCRS in ISO 50001
Refractories
Alex refractories
Audit done 2019 Finding:
-Unsafe factory conditions
-Bad emission for environment
-Filters in very bad condition
Blacklisted & replace by another one
Company carefully create the vendor
codification formant that to select
best suppliers & ensure their CSR
activities toward their societies
worldwide.
On other hand company
make monthly audit on
selected approved supplier
list as shown on below
table to ensure the same.

26. What are the
benefits from
Sustainability?
Risk Reduction
Revenue Growth
Cost Reduction
Good & positive image for the company
Enhanced Customer Perception
Improved Risk Management
Reduced Overhead cost
Competitive advantage
Enhanced Reputation of the firm which may affect
positively firm profits especially in the long-term
Easy Access to Financial Resources.
Opportunities to be granted government investments and
tax reductions.
Easy access to investment opportunities worldwide.
Higher Stock Prices
To achieve
Suitability, you
must apply
effective CSR

27. SA-8000
ISO -140001
Regular audit for
labors to ensure no
children in
manpower.
Do you think that in our local & global environment
support the idea of sustainability ?
Yes

28. Positive environmental collaboration
• Encouraging many suppliers to work for society
Supplier Name Field
Salah El DIN Plastic pallets Kidney wash clinic
French company Wooden pallets Donation for orphans
El Tawfik Company Q bags Participating to educate areas
surrounding him

29. Is there is any relation
between Procurement &
sustainability ?
From the scratch when you
purchase material from your
suppliers (even sourcing of your
suppliers) that cope with
sustainable concept you will
create cost saving & efficiency ,
that will impact on your
operation, delivered quality to
your customers.
Image of your company Infront
of your stakeholders
Strongly
Positive
relation

30. Gap International, one of American’s largest fashion retailers, developed one of the most
restricted codes of conduct for its suppliers. Its suppliers must comply with all child-labor
laws on hiring, working hours, overtime,
and working conditions. Workers must be at least 14 years of age. Rather than simply
canceling business with suppliers using child labor, Gap requires suppliers to stop using
child workers and to provide them with schooling instead, while continuing to pay them
regularly and guaranteeing them a job once they reach legal age. In one year, Gap
canceled contracts with 23 factories that did not meet its standards. Gap’s experience,
however, may be unusual. Recent surveys of over one hundred companies in the Global
2000 uncovered that 64% have some code of conduct that regulates supplier conduct, but
only 40% require suppliers to actually take any action with respect to the code, such as
disseminating it to employees, offering training, certifying compliance, or even reading
or acknowledging receipt of the code.
GAP as a sustainable Purchaser

31. Outsourcing
Give your company
competitive
advantage in a
dynamic
environment

32. Definition
• Outsourcing is the business practice
of hiring a party outside a company
to perform services and create goods
that traditionally were performed in-
house by the company's own
employees and staff. Outsourcing is
a practice usually undertaken by
companies as a cost-cutting measure.

33. Outsourcing
Pros Cons
lower costs (due to economies of scale or lower labor rates lower turnaround time
increased efficiency lack of business or domain knowledge
variable capacity language and cultural barriers
increased focus on strategy/core competencies lack of control
access to skills or resources time zone differences
increased flexibility to meet changing business and commercial
conditions
accelerated time to market
access to innovation, intellectual property, and thought leadership
possible cash influx resulting from transfer of assets to the new
provider

34. Different forms of outsourcing
Business process
outsourcing
Out-tasking Selective outsourcing
Knowledge process
outsourcing

35. • Business process
outsourcing:
In business process
outsourcing, entire company
processes are outsourced. An
example of this: you can
have your employees' payroll
created by an external service
provider.

36. • Knowledge process outsourcing: (KPO)
In this type of outsourcing, complex tasks are outsourced to a third-party company. An
example of this can be the preparation of search engine optimized texts for your website.
The respective company usually has trained experts with a high degree of specialization.
Although KPO is a subset of BPO, KPO involves far more specialized, analytical, and
knowledge-based work.
• Types of KPO Services
• Some common example of KPO outsourcing domains include:
• Financial consultants * Data analysis and interpretation
• Research and development (R&D) * Medical & Healthcare
• Business operations (management consulting) * Technical analysis
* Legal

37. • Out-tasking:
• In this case, only individually-defined tasks are handed over to
another company. Often it is because they are time-consuming
and administrative processes, such as the archiving of e-mails
or data backup. However, the responsibility for this remains with
the company, as the whole business area continues to be
managed independently.
• Out-Tasking includes Contracting and Licensing.
• For example, you may ask company to make web design (you
may or may not work with them again after the task had been
accomplished)

38. Selective
outsourcing
Mixes business process outsourcing and out-
tasking. Selective outsourcing offers flexibility
to adapt and improve as per changing market
and technological demand.
Outsourcing only part of an activity or process
and performing the rest in-house is selective
outsourcing. Through selective outsourcing,
organizations contract and outsource only
critical activities /services while maintaining
the overall control with them.

39. How to take decision of outsourcing?
Finding area need
improvement
Making cost benefit
analysis for all other
aspects (responsiveness,
commitment, quality)
Creating commercial
comparative for the cost
of hiring & outsourcing
Note:
You get cost paid for
permanent workers at least for
5 years , to know the effect of
inflation , price trend, other
benefit had been paid (bonus ,
incentive, medical insurance,
& salaries)

40. Emerging trends of outsourcing
Security Will Be
Prioritized
Demand for Call
Centers Will
Decrease
Robotic Processes
to Get More
Intelligent
Intelligent
Automation Will
Reduce
Outsourcing Costs

41. Emerging trends of outsourcing
The Market Will
Settle Down
Cloud Demands Are
Expected to Rise
Value - 1, Cost – 0
Cognitive
Strategies are
Expected to Gain
Traction

42. Emerging trends of outsourcing
Machine Learning
Usage to Increase
Virtual Work to
Stay

43. COVID-19 & impact on outsourcing trend:
• However, since the Coronavirus (COVID-19) outbreak, things are very
different, and many rethink their strategies, as they look to overcome
adversity caused by the pandemic.
• “All company expenses are being reviewed, such as product quality,
exceeding specifications, risk mitigation, holistic cost and innovation,” says
Roy Anderson, chief procurement and digital transformation officer at Trade
shift. “We can break ‘all expenses’ into two major categories: indirect and
direct manufacturing expenses.
• “Labor expense across all indirect activity is reviewed to determine its value
to employees, customers and shareholders. Internal labor expense is involved
in many categories including payroll, facilities, call centers, logistics and IT
services such as internal data storage, which was at one time a significant
internal expense and has since moved to outsourced services such as AWS,
Microsoft Azure or Google Cloud services. The trend is that all non-core
activity (non-core is unique to each company as to what makes them
exceptional in the marketplace) is challenged against external suppliers. The
review is not only total cost, buy scale and innovation, but the ability to open
up new markets,” adds Anderson.

44. Our conclusion will be that firms must adapt their strategies
to dynamic changes on environment and put alternative
plans depending on different types of outsourcing in
anticipation for any probable future crises like COVID19”,
-This a comment from our Group-
Conclusion

45. Actual Examples applied for Outsourcing:
“Birla Carbon Egypt”
Department Type of activity Benefits
Logistics & clearance
activities
In bound & out bound
Primary Activity Saving 400,000 EGP
Annually
San Misr-Manpower for
production &
Mechanical department
“Take home %”
Primary Activity Saving 1 M 500 EGP
Supply Chain –
Marketing &
Purchasing
Renting Truck to
transport carbon black
Support Activity Saving around 22000
USD

46. Actual Examples applied for Outsourcing:
“Birla Carbon Egypt”
Department Type of activity Benefits
HR-Recruitment
Boiden
Support Activity Select best calibers
More efficient workers
with high potentials
Forklift Maintenance Primary activity Saving 46000
USD/Annually
Renting cranes &
Scaffolding
Primary activity Saving 27000
USD/Annually

47. Actual Examples applied for Outsourcing:
“Birla Carbon Egypt”
Department Type of activity Benefits
Security for the company Support Activity Totally outsourced
company
Saving 120000 EGP
Agriculture casual
workers
Support activity Saving 200,000 EGP

48. Thank you
…
• Really appreciating your
kind efforts & time to
simplify the subject
Dr.Assrar.
Group (1)

49. Abbreviation Index
Abbreviation Meaning
OEM Only equipment manufacturer
GRN Good receipts notification
SBU Strategic Business unit
SAP ERP SYSTEM
ECOVADIS International institution for
evaluating the suppliers
QTY Quantity

50. Abbreviation Index
Abbreviation Meaning
SCM Supply chain management
CSR Corporate social responsibility
NCR non-conformity report
KPI Key performance indicators
Take home % Terminology used to know the
salaries will be paid to outsourced
labors
PO Purchase order

51. Abbreviation Index
Abbreviation Meaning
PR Purchase Requisition
ISSUE PASS Approval for withdrawing material
SA-8000 ISO Certificate that required to
ensure not to work children, pay slip
to be sent to workers, overtime
calculations
ISO 140001 Environmental perspective enable
organization for the adoption of any
environmental changes, meet its
stakeholder's expectation & its
employees , to sustain its running
business

52. Reference
s
• https://kissflow.com/procureme
nt/procurement-vs-purchasing/
• https://www.purchasecontrol.co
m/blog/procurement-and-
strategic-sourcing/
• All mentioned examples
mentioned in 1st part are under
Procurement umbrella

53. Reference
s
• https://ecovadis.com/academy/s
ustainable-procurement/
• https://www.cio.com/article/243
9495/outsourcing-outsourcing-
definition-and-solutions.html
• https://www.ionos.com/startupg
uide/grow-your-
business/outsourcing/

54. Reference
s
• Strategic Management with
Dr.Manal El Kordy
• https://www.outsource2india.
com/trends/outsourcing_tren
ds.asp