NUMERICAL SOLUTION Case Solution
- The procurement fraud also affects the supply chain governance negatively. For example, this could be done by paying too much for goods and services.
- The bidding process would become meaningless as group of bidders secretly agree to submit a much higher bid for allowing the pre selected contractors to win the bid to divide the work and defeat the competitive process.
- The tendering process might also become meaningless when contractors are able to submit low bids in collusion with the procurement officials. Later on they can increase the profits and the price and submit the change order requests when the contract has been won.
- The company might lose money if there are conflicting interests of the procurement personnel. For example, if they have undisclosed interests in a contract or they might also engage in the unapproved employment discussion with the suppliers or contractors or even accept inappropriate gifts.
1.6Â Â Â Â Â Â Â Â Â Â Â The five key recommendations with examples are as follows:
- The management needs to ensure that all the staff members of the company are involved in the financial decisions of the company and trained to identify the procurement fraud. For instance, closer relationships with the suppliers, which are closerthan you think, should be marked as red flags.
- The staff members should be rotated on a continual basis in other departments. When the staff members move to the other department then all of their current authorities and permission should be removed, such as approving a vendor. New authorities should be assigned to them.
- Proper procurement process should be followed strictly in the organization. For example, the management should ensure that it has the paper work completed before an order has been placed.
- Segregation of duties should be followed as this is a strong barrier in procurement fraud. For instance, a two person system should be implemented to define who can add or delete a supplier from the list or even change the bank account number of the suppliers.
- Finally, a variation limit should be created for costs on projects and contracts. For example, of the costs go over a certain limit, then reason should be investigated and explained before it is too late.
Section B: Other Questions
2.1Â Â Â Â Â Â Â Â Â Â Â International purchasing is defined as the buying of the goods and the services from another country by crossing the borders. On the other hand, global sourcing is the practice of sourcing from the global market for goods and services across the geopolitical boundaries. This sourcing method aims to exploit the global efficiencies in the delivery of the service or the products which is not the aim in international purchasing. These efficiencies could include low skilled labor, low trade tariffs and low costs of raw materials
2.2Â Â Â Â Â Â Â Â Â Â Â There are a number of reasons due to which the level of trading between the African nations is at low levels. First of all, after the independence of the African countries, very little diversification has taken place in terms of the export markets and products. Moreover, the infrastructure which had been built during the colonial era was only outward oriented and it had no internal networks for allowing trade between the African countries(Menon, 2012). Apart from this, some of the sub-Saharan African countries impose more non tariff barriers on trade between the trading, which takes place between the African countries. Efforts of harmonizing the technical regulations and standards are also adding to the costs of doing trade with the African countries. …………………….
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