THE EVANGELICAL COLLEGE

OF THEOLOGY JUI

NAME: JOHN F KOSSUE

ID NUMBER: 2915

COURSE: PROCUREMENT

ASSIGNMENT
Procurement methods refer to the approaches used by an organization to
obtain goods and services. These methods can vary depending on factors
such as the value of the purchase, the urgency of the procurement, the
complexity of the goods or services required, and the organization's
policies.
Common Procurement Methods:
1. Open Tendering:
o Description: This is the most common method, where an
organization invites bids from all interested suppliers. It's
transparent and competitive.
o Advantages:
▪ Wide pool of potential suppliers.
▪ Transparency and fairness.
▪ Competitive pricing.
o Disadvantages:
▪ Time-consuming due to the need to evaluate multiple
bids.
▪ Can be challenging for smaller businesses to participate.
2. Restricted Tendering:
o Description: Only pre-qualified suppliers are invited to tender.
This method is used when the procurement requires specific
expertise or resources.
o Advantages:
▪ Streamlined process as fewer suppliers are invited.
▪ Often faster than open tendering.
o Disadvantages:
▪ Limited supplier options, which can lead to higher costs
or reduced competition.
▪ Requires proper pre-qualification to ensure quality.
3. Request for Quotation (RFQ):
o Description: Involves requesting price quotations from a small
number of suppliers, typically for lower-value purchases.
o Advantages:
▪ Quick and easy to use for low-value items.
▪ Less formal than tendering.
o Disadvantages:
▪ Limited competition, so potentially higher prices.
▪ Less rigorous evaluation compared to tendering.
4. Direct Procurement (Single Source Procurement):
o Description: This method involves purchasing goods or
services from a single supplier, without competitive bidding. It
is often used for specialized products or when there is only one
supplier available.
o Advantages:
▪ Saves time and simplifies the process.
▪ Useful for urgent needs or highly specialized goods.
o Disadvantages:
▪ Potentially higher costs as there is no competition.
▪ Lack of transparency in pricing and decision-making.
5. Framework Agreement:
o Description: A long-term agreement with one or more
suppliers, setting terms and conditions for future purchases
without specifying exact quantities or prices.
o Advantages:
▪ Ensures consistent pricing and quality over a longer
period.
▪ Reduces procurement cycle time.
 o Disadvantages:
▪ Less flexibility if needs change.
▪ Requires careful management to ensure suppliers meet
expectations.
6. Electronic Procurement (E-Procurement):
o Description: Involves the use of electronic systems to manage
procurement processes, from ordering to payment. It can
include online tenders, RFQs, and invoicing.
o Advantages:
▪ Streamlines the procurement process and reduces
paperwork.
▪ Provides real-time tracking and transparency.
o Disadvantages:
▪ Requires technology infrastructure and training.
▪ Can be challenging for less tech-savvy suppliers.
7. Negotiated Procurement:
o Description: This method involves direct negotiation with one
or more suppliers, typically used for complex or high-value
contracts where open bidding is not practical.
o Advantages:
▪ Flexibility in negotiating terms.
▪ Can result in better value for money, especially for
complex contracts.
o Disadvantages:
▪ Can lack transparency and competition.
▪ Time-consuming negotiations.

Choosing the Best Procurement Method

When selecting the best procurement method, consider the following
factors:
1. Value and Complexity of the Purchase:
o For low-value, simple purchases, an RFQ or direct procurement
might be sufficient.
o For complex or high-value purchases, open tendering or
restricted tendering would provide more transparency and
competitive pricing.
2. Urgency:
o If speed is important, direct procurement or negotiated
procurement might be the best options, as they allow for faster
decision-making.
o Open or restricted tendering is slower due to the need for
formal bidding processes.
3. Supplier Availability:
o If there are few suppliers for a specific product or service,
direct procurement or a framework agreement might be more
appropriate.
o For a wider choice of suppliers, open or restricted tendering
would provide better competition.
4. Transparency and Fairness:
o Open tendering provides the highest level of transparency and
fairness.
o Negotiated procurement or direct procurement can be less
transparent and might raise concerns about favoritism or
fairness.
5. Cost Considerations:
o Open tendering and RFQs typically result in competitive
pricing.
 o Direct procurement may lead to higher costs due to the lack of
competition.

Recommendation:
• If cost competitiveness and transparency are a priority, Open
Tendering would be the best method.
• If you're working with a specific supplier or specialized goods,
Direct Procurement might be more efficient.
• If the purchase involves long-term needs with stable suppliers, a
Framework Agreement could ensure consistent supply at favorable
terms.
• If the procurement process needs to be fast and flexible, Negotiated
Procurement or RFQs might be suitable.

BEST PROCUREMENT METHOD: OPEN TENDERING

INTRODUCTION:
In procurement, choosing the right method can greatly influence the
efficiency, transparency, and cost-effectiveness of the purchasing process.
Among the various methods available, Open Tendering stands out as the
best procurement method, particularly when transparency, competition,
and value for money are key priorities. This method allows an organization
to invite bids from all interested suppliers, providing an open and
competitive environment that fosters fairness and often results in cost
savings.

Why Open Tendering is the Best Procurement Method:

1. Transparency and Fairness:
o Open Tendering ensures that the procurement process is
transparent and fair. All interested suppliers have an equal
opportunity to submit their bids, making the process open to
 scrutiny. This helps avoid favoritism and ensures that decisions
are based solely on merit, promoting fairness and trust within
the organization and with suppliers.
o Public Access: Since the process is open to all qualified
suppliers, it provides a level of accountability, as suppliers and
other stakeholders can observe the process.
o Clear Evaluation Criteria: Open tendering typically comes
with clearly defined terms and conditions, making it easier for
the organization to evaluate bids objectively based on
predetermined criteria.
2. Cost Efficiency:
o Competitive Bidding: By inviting multiple suppliers to bid,
organizations create a competitive environment where
suppliers strive to offer their best prices and terms to win the
contract. This competition often leads to cost savings, ensuring
that the organization gets the best value for money.
o Market-Driven Prices: The bidding process helps
organizations receive offers that reflect the prevailing market
conditions. Suppliers often adjust their bids to remain
competitive, ensuring that the organization is not overpaying.
3. Wider Pool of Suppliers:
o One of the significant advantages of open tendering is the
ability to tap into a broad pool of suppliers. This gives the
organization a wide selection of vendors, allowing for more
options when it comes to selecting the best quality, price, and
delivery terms.
o Innovation: A diverse pool of suppliers can also lead to greater
innovation, as different suppliers may offer unique approaches,
products, or services that might not have been considered
initially.
4. Reduced Risk of Fraud and Corruption:
 o The transparent nature of open tendering minimizes the
opportunity for corruption and unethical practices. Since the
entire process is open to scrutiny, the likelihood of fraud or
manipulation decreases. Moreover, it helps ensure that the
procurement process is legally compliant and meets ethical
standards.
o Audit Trail: With open tendering, organizations maintain an
audit trail, which can be useful for future reviews and ensuring
compliance with regulations.
5. Better Decision-Making:
o With numerous suppliers bidding for the contract,
organizations have the opportunity to carefully evaluate a
range of options. This provides better decision-making power,
allowing procurement teams to select the supplier that best
meets the organization's needs, not just in terms of cost but
also in terms of quality, reliability, and service.
o Comprehensive Evaluation: Open tendering usually involves a
thorough evaluation process, which takes into account several
factors like price, quality, supplier experience, and delivery
capabilities. This helps make well-rounded and informed
decisions.

How Open Tendering Works:

The open tendering process generally follows these key stages:
1. Advertisement of Tender: The organization publicly advertises the
procurement need, inviting bids from all interested suppliers. The
advertisement typically includes details such as the scope of work,
tender requirements, deadlines, and evaluation criteria.
2. Submission of Bids: Suppliers submit their bids by the specified
deadline. The bids include their proposed prices, delivery timelines,
and any other requested information.
 3. Evaluation of Bids: The procurement team evaluates all received
bids according to the criteria outlined in the tender documents. This
may include price, quality, terms of delivery, and supplier experience.
The team often uses a weighted scoring system to ensure an objective
evaluation.
4. Awarding the Contract: The contract is awarded to the supplier with
the best overall offer, considering both price and quality. The decision
is communicated to all bidders, and feedback is provided if requested.
5. Contract Management: After the contract is awarded, the
procurement team continues to monitor the supplier’s performance
to ensure that the terms of the contract are met.

Challenges of Open Tendering:

Despite its advantages, open tendering can have some challenges that
organizations need to consider:
1. Time-Consuming: The process can be lengthy, especially when a
large number of suppliers submit bids. The evaluation of multiple
bids, negotiations, and contract management can take significant
time.
2. Complexity: For highly complex or specialized procurement needs,
open tendering may not always be the best method, as it requires a
high level of detail in the tender documents and can result in the
selection of a supplier that may not fully meet the technical
requirements.
3. Increased Administration: Managing an open tendering process
requires a dedicated team to handle the advertisement, evaluation,
and award stages. This increases the administrative burden for the
organization.
4. Potential for Bid Rigging: While open tendering promotes
transparency, it is not immune to unethical practices like bid rigging,
where suppliers may collude to fix prices. Proper monitoring and
regulation are essential to mitigate this risk.
Conclusion:
Open Tendering stands out as the best procurement method when
fairness, transparency, and cost-efficiency are the primary concerns. It
allows organizations to harness the power of competition to drive down
costs, improve quality, and select the best supplier for their needs. While it
comes with certain challenges like time consumption and complexity, the
benefits of open tendering make it the preferred method for many
organizations, particularly for larger and more significant purchases.
By choosing open tendering, organizations can not only ensure that their
procurement processes are ethical and transparent but also obtain the best
value from the market, fostering long-term relationships with reliable
suppliers.