1st Answer

Introduction: Procurement would involve various activities that are involved in

obtaining the products as well as services. It involves different stages, from gathering
the business needs and sourcing of suppliers to ensuring that the receipt of goods is
tracked and the payment terms are updated.
Procurement process refers to a series of processes that are important in order to get
the products or services from requisition to purchase order and then invoice approval.
Concept and Application:
Following are the important steps in the procurement and supply procedures:
1st Step: Identifying the products and services needed:
The procurement process must start when the company realizes that they need to
obtain products and services from an outsourced company. With this in mind, their first
step must be to look at the entire business and identify the needs of every department.
For instance, if a mobile brand sourcing components has started out, they would outline
how many and what kind of components they would require. They would assess what
are the different components they require to fulfil the consumer demands and needs.
2nd Step: Considering a list of suppliers:
When a company is looking at their suppliers, they should weigh up their options. So, it
is recommended that the company can make a list and compare all the various options
on offer. So, in that way, they can compare the competition that the suppliers have
versus each other and find out the various areas in which they would excel.
Here are some of the ideal traits that a top supplier must have:
 Accountability
 Production capabilities
 Easy communication.
 Ethics
 Relationships with buyers.
For instance, the mobile brand sourcing components, for them, component is an
important commodity, and without them, the company cannot produce the products. So,
the company needs components that ensure smartphones and designs that cope up
with the demands of the customers, and so an array of different options from the
suppliers can be compared.
3rd Step: Negotiate Contract Terms: A mobile brand manufacturer can have contract
with various suppliers. Since they would be manufacturing mobile phones, they would
constantly need a refreshment of stock and components. So, instead of manually
ordering them each time, a rolling contract would save time and incur discounts too.
Finalizing Purchase Order: Once the contract has been submitted to the supplier and
both the parties are happy with the detailing. It is time to finalize the purchase order. A
purchase order refers to a document that would outline:
 A description of the products and service
 Total costs
 Quantity
 Workflow approval.
When the management or the head of procurement (me) has approved the purchase
order, it is signaled to the finance team that they have an access to all important
information required. For instance:

 Reference number (should they need to chase anything up)

 Agreed on payment terms
 Any other key information they require

When the mobile manufacturing brand’s procurement team needs an upgrade to a

machine, they would need an internal approval for their request to upgrade. So, a
purchase order has to be prepared, and this includes the description of the new
components, the price and all other details.

Step 5 – Receive Invoice and Process Payment: Once the supplier has received a
purchase order, the mobile manufacturing brand would receive an invoice from them
with details of the agreed price and terms (how to pay). The manufacturer, and the
procurement head (me) would find details of the order too, so I must ensure that I can
keep a record of them for any reference in the future.

Step 6 – Delivery and Audit: Depending on the terms that have been agreed in the
contract, the delivery would arrive soon after a purchase order has been sent by me to
the supplier. It is important to keep a record of when the order has been delivered in
relation to when it was ordered. For instance, if my team looks back the records of the
purchase orders and we find out that we have been overspending on materials, they
can decide to look for a new supplier.

Following are the criteria that needs to be fulfilled before selecting a supplier:

Must prove affordable: In order to sustain a long-term relationship and earn good
revenues, it is important that the supplier supplies the components or parts or repair
tools at a competitive price. Affordability is an important consideration while choosing a
supplier for a mobile manufacturing component procurement.

Reliability Factor: It is wise to choose a supplier with years of experience in the

industry would prove a sound decision because such a supplier would care about their
brand image and, therefore, supply only quality material.
Financial Stability: If the mobile component supplier is financially stable, we should go
ahead with them in sourcing components, as we can enter into long-term contracts
without too much fluctuation in the price.

Locality: Sourcing mobile manufacturing parts from a nearby supplier of strong

reputation may be beneficial. Such a location would mean possibility of quick delivery,
and of course, less shipping charges. So, it is worthwhile to check if there is any reputed
supplier fine with free shipping.

In-house QA Testing: It would be unwise to skip the important steps in today’s world of
increasing challenges to detect counterfeits that would compromise the integrity and
quality of the finished products.

It is important to ensure that the mobile brand (us) are having an access to a supplier
with an in-house testing laboratory and licensed, IDEA-certified inspectors.

Comprehensive Sourcing: Quality, quantity and variety are all important factors in
mobile component purchase. A supplier must represent a one-stop solution to providing
all kinds of mobile components, and this would make them the first choice for our brand.

Conclusion: So, it can be concluded that it is important to follow the main steps of the
procurement process, and these steps involve careful analysis of the requirements,
ensuring that the quality procured is excellent and the cost is brought down. The
supplier selection criteria involves careful consideration of the factors such as
affordability, in-house testing, certification, comprehensive sourcing and financial
stability.
2Nd Answer

Introduction: A contract is possible to be terminated by either of the parties or both by

consent or agreement. There are various ways in which a contract would come to an
end, such as on its completion, impossibility of being performed, breach of contract due
to fraudulent practices, rescission, novation of contract or force majeure.

Concept and Application:

Following are the ways in which a contract gets cancelled:

Impossibility of Performance: A contract usually needs one or more parties to perform

something, and this is known as performance in legal terms. For instance, a company
may hire and enter into a contract to have a public speaker talk at an event in a
company. Once the public speaker would complete his duties and responsibilities that
have been agreed upon in the contract, it is known as performance. If, for some
reasons, it is possible for the public speaker to fulfil his duties, it is known as
impossibility of performance or sometimes, it is termed as “frustration.”

Breach of Contract: When a contract would be intentionally dishonored by one party, it

is known as a breach of contract, and the contract cannot be terminated on these
grounds. A breach of contract may not exist as one party failed to fulfill his obligations at
all or did not fulfil his obligations totally.

For instance, if a company purchase a product that has not arrived until a day after the
agreed upon delivery date, this can be termed as an immediate breach of contract.
However, if the order has not been received until two weeks after the date of delivery
and it has impacted the business of the person ordering it, then that is a material breach
of contract. Usually, with a material breach of contract, the injured party has the right to
seek financial claims or damages for this losses incurred and also cancel the
agreement.

Termination by prior agreement: The company may terminate the contract if the
company and the other party has entered into a written agreement before that would
call for a contract termination due to a specific reason. The usual name for this kind of
provision refers to a break clause. The agreement must provide the details on what
quality as a reason to terminate the contract would. It must also mentioned that actions
have to take place for one of the parties to terminate the contract. In most scenarios,
one party should submit a written notice to the other party in order to ensure that the
contract has been cancelled.

Rescission of a contract: A rescission of a contract is when the contract would be

terminated due to an individual misrepresenting himself or a company doing the same,
for instance, a company acting illegally, fraud, for instance, or making a mistake. For
instance, if a person has bought a house, but after further inspection, it is discovered
that the seller had intentionally hid the poor physical condition of the home, the contract
may be rescinded possibly. Rescission of a contract can often take place if one party is
not old enough to enter into a contract or if an elderly person cannot make legal
decisions due to incapacity.

Following are the implications of a contract that is cancelled:

Damages: It is the most common remedy in a situation of a breach of a contract where

the injured party is entitled to recover the compensation for the loss from the party who
had violated the contract. Damages are often said to be compensatory, liquidation,
punitive, general as well as nominal. While compensatory damages are the ones that
have been awarded with the intention of reimbursing the party that has suffered losses,
a punitive damage is rewarded with the intention to punish the party that is offensive for
breaching the contract. Liquidated damages refer to the damages that have been
agreed upon by the parties, while forming a contract, and therefore, the contract would
consist of the provision with respect to the liquidated damages.

Measure of Damages: Another question is to assess the amount of compensation or

damages for the contract breach. The factor which needs to be kept in mind while
making this assessment is to put the aggrieved in the same position in which he or she
must have been if the contract was performed.

Suit for Rescission: Rescission of a contract would refer to unwinding of a contract by

placing the parties, as far as it is possible, into a position where they were before they
entered into the terms of a contract. It is an equitable remedy and the party who would
seek this remedy would make an offer to return all the benefits that it has received.

Quantum Meruit: It is an exception to the rule that a company or an individual who has
not fulfiled his/her part of obligation is not to receive anything for the part that has been
performed by him/her. This gives the right to the party who has conducted a part of the
obligation under the contract but could not complete the remaining part as he/she was
stopped by the other party from the performance of it.

Suit for specific performance: Section 10 of the specific relief act would mention that
the performance of the contract can be enforced when the damages could not be
ascertained or when the compensation in monetary terms could not afford an adequate
relief. So, when the contract would get terminated by one of the parties and the case
would fall under either of the above situations, a specific performance of the contract
would not be possible to be enforced.

Suit for Injunction: It is another way to deal with a contract breach where the
aggrieved party can seek legal relief of performing or prohibition of certain tasks till the
time the main dispute would be resolved.

Conclusion: So, it can be concluded that Impossibility of Performance, contract breach,

termination by prior agreement, Rescission of a contract are the ways to cancel a
contract. The implications could be that the person cancelling the contract or the person
responsible for the breach of contract may have to pay certain damages, suit for
injunction, Quantum Meruit and Suit for specific performance.

3rd Answer

3a.

Introduction: Capital equipment purchase involves purchasing of assets that are

intended for a use that exceeds one year. In order to become a capital asset, it is
important that the item must have a lifespan of more than a year.

Concept and Application: This equipment is required to perform or assist in producing

a product, selling a product, or providing a service. This kind of equipment also involves
the items acquired in various ways, and it can be purchased, leased or donated. There
are many items that often appear to fulfil the general requirements by are excluded from
the category, such as land and software.

In educational facilities, capital equipment often involves computers, X-ray machine and
microscopes. In the mining industry, items in this category could include drills, sifters,
or cargo containers.

Capital equipment that is used in the process of production is brought in with the
intention to generate more products, bring down the cost of production, and ensure
efficiency and productivity.

The capital equipment used for the production process involves the purchase of asset
that are used in the production process, and these involve, general-purpose material-
handling equipment, computer systems as well as furniture. A second category involves
capital equipment that is designed in order to fulfil the requirements of the purchaser.

Capital Assets: If the capital equipment has a life of more than one year, it is an asset.

The IRS would view the acquisition of a capital asset by a business as a capital
expense. Most of the time, a business would subtract their revenue that is received
during the same taxation year from their expense for that taxation year, and then the
difference has to be reported as their business income. However, most of the capital
expenses must be capitalized as assets and written off to an expense over a number of
years instead of being claimed in the purchase year.

Instead of allocation of the entire expenses to the year in which the asset was
purchased, a business makes use of depreciation to expense a portion of the value of
an asset over each year of its useful life. As per the matching principle of U.S generally
accepted accounting principles, the aim of depreciating an asset over a period of time is
to match the cost of an asset to the same year as the revenue it would generate.
Conclusion: Following are the factors that have to be considered before the purchase
of a capital asset or an equipment:

Nature and Size of expense: An expense of the company funds for a capital
equipment refers to an investment. If it is purchased wisely and operated efficiently, the
capital equipment would generate profits for its owner.

Lead time requirement: A unique feature in the purchase of capital equipment is the
lead time needed for its supply.

3. Availability of sources: Since most of the requirements of major equipment are

specific and typical for various kinds of industries, the number of suppliers available is
very less and the organisation has to decide carefully various factors.

4. Non recurring purchases: The buying of a particular piece of capital equipment

usually takes place only once every five to twenty years.

3b.
Introduction: Electronic procurement, also known as e-procurement or supplier
exchange, refers to the process of requisitioning, ordering and purchase of products
and services online. It is a business-to-business process.
Unlike e-commerce, e-procurement makes use of a closed system of supplier, and it is
only available to registered users. E-procurement facilitates interactions between
preferred suppliers and customers through bids, purchase orders and invoices.
Concept and Application:
The aim of using an e-procurement system is to ensure acquisition of products as well
as services at the best possible price and time. In order to fulfil this objective, it is
important for the business to establish relationships with suppliers. This would enable
procurement the personnel to negotiate contracts with suppliers.
Reduce Costs: Cost reduction refers to the most important advantage of e-
procurement system. Using an e-procurement software, an enterprise often reduces the
cost of transaction by elimination of paperwork, optimization of the process of bidding
and reducing the rework and errors.
Cost savings are often realized by making use of a centralized system of e-procurement
to take an advantage of overall demand, establishment of a structured supplier
relationships with built-in compliance and constant identification of savings
opportunities.
Improve the visibility of spend: The systems of state-of-the-art procurement would
present an enterprise-wide spend information in a manner that is organized on a single
platform. The advantages of an e-procurement system also flow into the domain of
contract compliance and management of savings. Firms that have an imprecise view of
their total spend often tend to be missing out on savings as well as opportunities in
order to restructure their supplier portfolio. A software for e-procurement would enable
centralized tracking of all the transactions pertaining to, and in-depth reporting of
purchase requests, orders that are processed as well as payments.
Boost Productivity: E-procurement systems would boost efficiency as well as
productivity. Making use of these systems, purchases often follow a consumer-like
shopping experience and purchase the items from pre-approved catalogs as per the
business rules of an organization, and thus, without the involvement of the team that
procures. So, the procurement team would be in a position to concentrate on improved
strategic sourcing as well as improved supplier relationships.
Enhanced Controls: E-procurement system would enable the data capture and
analysis in order to reveal the patterns of purchasing. In addition, the process is driven
through pre-defined workflows and a standardized approval with the least demand for
manual intervention. Using systems of e-procurement, each transaction is subjected to
a correct level of authorization that is non-compliant or maverick spent.
Promote Innovation: Huge companies often wish to emphasis on brand innovation,
and thus, they would look to outsource much of the process of purchase to suppliers
who can be trusted. An important factor in such an engagement refers to transparency
refers to the supplier relationship. Innovation would fail to succeed without a
collaboration with suppliers who can deliver to the requirements of an enterprise. A
platform of e-procurement has an important role to play in such an engagement as they
would enable seamless flow of information and supplier integration.

Conclusion: Procurement organizations strive to increase productivity and efficiency,

and enable higher functional and cross-functional visibility of spend. E-procurement
solutions help enterprises achieve their targets, and do much more and so are now the
obvious choice for forward-thinking procurement leaders.