The document summarizes the results of a quality audit of the purchasing process of a public department. The audit found shortfalls in key quality areas like documentation, speed, and vendor management. Interviews with stakeholders revealed issues like a non-conducive environment for suppliers and delays. Performance statistics showed high rejection rates, delays, and low customer satisfaction. The audit identifies problems like dependence on outdated processes, lack of training, and non-strategic vendor relationships. It recommends improvements like selecting qualified vendors, simplifying processes through IT, increasing training, focusing on quality over price, and implementing a vendor relationship model based on partnership and trust.

1. 1
QUALITY AUDIT
PURCHASE PROCESS OF A PUBLIC
DEPARTMENT

2. 2

3. 3
F-09-149 AFTAB
SP-09-140 EJAZ
OUR KOALITY TEAM

4. 4
Defining Quality
Perfection
Consistency
Eliminating Waste
Speed Of Delivery
Compliance With Policies And Procedure
Providing A Good, Usable Product
Doing It Right The First Time
Delighting Or Pleasing Costumers
Total Customer Service And Satisfaction

5. 5
 Large and Equipment Intensive Organization
 Huge Variety of Non Standardized Equipment
 High Stake Logistic Support Operations
 Annual Budget Worth Billions Rs
 Newly Implemented Procurement Management System (IESS)
 Shortfalls Against Basic Quality Dimensions
Introduction

6. 6
To carry out Quality Audit of the Purchasing Process of ABC Public
Dept and suggest key improvements for quality purchase of spares
at affordable prices reducing the administrative & logistic delays
and focus on soft issues after analysis of various shortfalls
Project Statement

7. 7
The scope of this case study will be limited to procurement of vehicle
spares within country (local level) by a regional component of the
National Level Organization
Project Scope

8. 8
 Process Flow
 Sources of Procurement
 Problems Being Faced
 Methodology
 Quality Audit and Analysis
 Voice of the Stake Holders
 Performance Statistics
 Input by Various Professionals
 Identification of Problem Areas
 Core Issues
 Recommendations & Conclusion
How to Proceed

9. 9
Yes
Start
Demand
on
Store
Ava
l
EndItems
Issued
NA
Certificate
Demand on
Bulk Depot
Purchase Process
Delivery By Vendor &
Inspection
AvalItems
Issued
Yes
No (Not Aval)
No (Not Aval)
Process Flow

10. 10
Sources Of Procurement
 Govt Industries
 Indigenous Manufacturers
 OEM / OPM
 Importers
 Local Whole Sellers
 Shopkeepers
 Gen Order Suppliers (90 %)
…….isn’t this alarming ????.isn’t this alarming ????

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Grey Areas
 Diversified Equipment Type
 Different Suppliers
 Variation - Fatal for Quality

12. 12
 Comprehensiveness of Documentation System
 Good Ethical Practices
 Flexible System
 Fair Play & Justice
 Ability to Reach Out Source
 Simplicity in System
 Effective Vendor Evaluation System
 Vendor Pre Qualification
 Supplier Relationship
 Supplier Satisfaction
 Speed of Delivery System
 JIT
 Price for Money
Quality Indicators

13. 13
 Quality Consciousness of Vendors
 Maintainability of Logistic Stock
 Storage Life
 Inspection Methods
 Training of HR
 Assessment of Life Cycle
 Guarantee / Warrantee
 Supply Chain Mgmt
 Payment Schedule
 SOPs Availability
 Empowerment
 Ease of Demand Process
 Vendor Data Base
 Performance Based Vendor Assessment
 Vendor Appraisals
Quality Indicators

14. 14
Methodology, Quality Audit And Voice Of Stake
Holders

15. 15
Methodology
 Benchmarking (Organization following Best Practices)
 Questionnaire
 Interviews
 Quality Audit
 Average of 3 x Comparable Outfits
 Comparison With KSB
 Identification of Vital Issues
 Analysis of Vital Issues; Input of Stakeholders, Professionals
 Key Suggestions for Optimum Performance

16. 16
Quality Audit

17. 17
Quality Audit & Comparison
Ser Category
PUBLIC SECTOR KSB PUMPS
Marks
obtained
Quality %
Marks
obtained
Quality %
1
Documentation and
Transparency
17 68% 20 80%
2
Practicality, Speed,
Effectiveness
9 23% 34 85%
3 Supply Chain Mgmt 7 28% 22 88%
4 Vendor Mgmt 7 16% 29 64%
5 Quality 8 32% 21 84%
6 Cost Effectiveness 4 27% 13 87%
7 Training 5 33% 13 87%
8 Customer Focus 6 30% 17 85%
9 Soft Issues 4 10% 31 78%
67 27% 200 80%

18. 18
Comparison
0
10
20
30
40
50
60
70
80
90
Document Speed Supply Vendor Quality Cost Trg Customer Soft
Public Private

19. 19
Voice Of The Stakeholders
• SUPPLIERS
• CUSTOMERS
• EMPLOYEES

20. 20
Voice Of The Suppliers
 Environment not conducive (Soft Issues)
Uneven allotment of business
Lack of respect in dealings, sitting place, refreshments
Wastage of time, summon for meager issues
Bureaucratic Culture
Lack of info / specs on Tenders
No proprietary / long term relation
Delayed & unclean payments

21. 21
Voice Of Customer
Reactive, Rather Than
Proactive
Waiting Room
Delays
Quality Of Spares / Qos

22. 22
Need Adequate Training
Processing Delays
Motivation
Voice Of Employees

23. 23
Performance Statistics And Input By
Professionals

24. 24
Rejection Rate
Month
Rejection % of
Sample 1
Rejection % of
Sample 2
Rejection % of
Sample 3
Average %
Sep-07 33 23 19 25
Oct-07 23 33 24 27
Nov-07 19 32 27 26
Dec-07 25 28 29 27
Jan-08 25 29 30 28
Feb-08 23 28 36 29
Mar-08 32 22 31 28
Apr-08 26 36 26 29
May-08 15 37 29 27
Jun-08 33 37 22 31
Total 254 305 273 277
Average 25 31 27 28

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Rejection Rates
0
5
10
15
20
25
30
35
Sep-
07
Oct-
07
Nov-
07
Dec-
07
Jan-
08
Feb-
08
Mar-
08
Apr-
08
May-
08
Jun-
08
Average %
Average %

26. 26
Process Delays
Demand
Serial
Prep Time (Days)
Time Taken to get NA
(Days)
Purchase Process
Delivery /
Inspection
Total Process Time
1 6 47 12 12 77
2 7 51 13 9 80
3 5 49 19 13 86
4 6 41 12 14 73
5 3 43 11 18 75
6 8 5 2 2 17
7 6 6 3 2 17
8 9 49 12 18 88
9 5 32 19 13 69
10 7 47 15 16 85
11 3 49 14 12 78
12 4 41 17 19 81
13 5 43 13 28 89
14 6 44 19 12 81
15 8 25 21 15 69
Total Days 1065
Average Days 71
Average Months 2.4

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Total Process Time
0
20
40
60
80
100
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Total Process Time

28. 28
Performance Statistics
• Rejection Rate - 28% (< 15%)
• Timely Delivery - 50% (>85%)
• Accuracy Of Order - 80% (>99%)
• Delays In Processing - 2-3 Months (1 Wk)
• Availability In Depots - 10% (>70%)
• Customer Satisfaction - 50% (>80%)
• Supplier Satisfaction - 50% (>70%)
• Cost Effectiveness - 40% > Than Mkt Price
• Durability/ Quality - 40% (90%)
• Waste/ Dead Inventory - 40% (<15%)

29. 29
Input By Professionals
• Various Interactive Sessions During QITC Course
• Mr Kamran Moosa, CEO PIQC
• Mr Shafqat Iqbal, Former Dir PNAC
• Brig Iftikhar
• Gen (R) Mian Salimuddin, CASE Faculty
• HoDs Proc & QM KSB
• Dir QM, NESCOM
• Dir QA, AWC

30. 30
Identification Of Problem Areas And Core
Issues

31. 31
Identified Problem Areas
 Process Inefficiency
 Soft & Ethical Aspects
 Bad Vendor Management
 Technical & Training Issues

32. 32
Process Inefficiency
 Dependence On Non Availability Voucher From Depot
 Lack Of IT Culture
 Untrained Employees
 Denial Of Repeat Orders / Proprietary
 System Overload (Bulk Depot Non Functional)
 Bulk Purchase Of Un Required Items At The End Of Fin Yr (Bar Chart)

33. 33
Utilization Trend Of Annual Budget
0
5
10
15
20
25
30
35
M
onth
Jul07
A
ug
07
S
ep
07
O
ct07
N
ov
07
D
ec
07
Jan
08
Feb
08
M
ar08
A
pr08
M
ay
08
Jun
08

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Soft / Ethical Aspects
 Less Accountability (Bad Inventory Management/JIT)
 Process Violation; Compromised Price/Quality
 No Respect For Suppliers
 Non Conducive Environment, Intricate Documentation & Payment
Procedures
 Diminishing Mutually Beneficial Relationship

35. 35
Bad Vendor Management
 Variance In Price & Quality
 Inefficient Tendering Process Without Mention Of Specs
 Suppliers Pre-qualification
 Old Suppliers Base; General Order Suppliers
 No Effort To Reach Out Close To Actual Source

36. 36
Technical / Training
 Old Vintage, Non Commercial Equipment
 Less quality awareness of all stakeholders
 Priority to economics only / lowest price

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Key Recommendations

38. 38
Recommendations
 Selection Of Quality Vendors: OEM/OPM/Sole Distributors
 Process Simplification & Speed: Remove False Customers, Inventory
Mgmt Through IT
 Training: Employees And Vendors
 Quality Of Supplier: Less Inspection, Quality Contracts
 Purchase Criteria: Quality Instead Of Lowest Price
 Reduction Of Waste/ Dead Inventory
 Forecasting
 No Mandatory Consumption Of Budget
 Accountability For Surplus/Dead Inventory
 Reward System For On Performance
 Customer Focus

39. 39
Vendor Management
 Factors
 Selection Of Quality Conscious Vendors
 Concept Of Partnership And Trust
 Performance Rating And Rewards
 Respect For Vendors
 Mutually Beneficial Relation
Vendor Relationship Model (Vrm)

40. 40
VRMVRM
SPEEDY CLEANSPEEDY CLEAN
PAYMENTSPAYMENTS
SUPPLIER
FOCUS
BUSINESS
SECURITY
CoQ
TRAINING
INFO &
TEAM
WORK
RECOGNITION
WIN WIN
RELATIO
N
Vendor Relationship ModelVendor Relationship Model

41. 41
CONCLUSION
A reduced variation, simplified processes and creation of an
environment of trust and respect between all stakeholders can lead to a
long-term and mutually beneficial relation; thereby exponentially
improving the quality & speed .

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43. 43 43
If You Have Your Sight, You Are Blessed.
If You Have Insight, You Are A Thousand Times Blessed

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