Procurement Strategy: Competition

1. The AUB procurement strategy is to increase competitive advantage in the purchasing process by making sure that it is purchasing products from as large of a field of competitive bidders as possible.  AUB and its Purchasing Directors will constantly be looking at ways to increase competition in order to improve its ability to purchase goods at the best price available for the quality required.  This will be done by having the Purchasing Department and the members of the AUB community making requisitions that commit AUB funds:
   
   
1. Ensure that all products have at least three alternative brands or competitors to choose from so Suppliers have to provide the lowest market price to be selected;
2. Ensure that standardization of equipment, products and goods are done in a way that considers all competitive products and brands in the analysis before finalizing on a product for standardization and that the analysis is redone annually to ensure that it still economically justified or that a new product will become the standardized product;
3. Ensure that preference items are provided with equivalent alternatives by the end user making such a request or by the Purchasing Agent, if the end-user does not provide three alternatives;
4. Sourced on a global basis to the extent feasible.
5. Commit to volumes large enough to reduce prices and increase competition.
6. Utilize early discount payments whenever possible and resist cost inflation.
7. Proactively seek price reductions.
   
2. Commodity Teams are an important part of this strategy.  Commodity Teams are formed, either formally or informally depending on the nature and value of  the commodity (at the discretion of the Purchasing Director), consisting of the Purchasing Director and/or a Purchasing Agent with familiarity with certain commodities, and at the discretion of the Purchasing Director, with the help of end users and representatives of the applicable committee or technical departments  to analyze purchases across the organization of goods from the same or similar commodity category purchases to determine how to combine orders or bundle purchases of the same or similar commodities that are requested by various departments and analyze and evaluate the cost savings gained by bidding on certain commodities and tying the orders to larger orders under Purchase Orders or annual contracts/Purchase Orders or to arrange for the release of orders from Preferred Suppliers under existing Blanket Purchase Orders (with pre-agreed prices and terms) in order to make the purchase of such goods more competitive with more leverage for better prices. 
   
   
3. Effective management of key Suppliers with emphasis on ensuring contract deliverables are monitored and reported and action is taken when unsatisfactory results and performance is observed.  This first step in this process is to have diligent maintenance of Supplier Files, where complaints and performance are monitored and recorded in the Supplier Files and reports are generated in Oracle to keep track of products and Suppliers.  Effective management of Suppliers by diligently maintaining a Product and Supplier database also ensures that each request for quotes, RFQ, RFP or ITB is sent to each company with the same or similar product that is competitive with the product or equipment requested and in order to ensure that the goods are purchased from a reputable supplier that does not have a poor track record with AUB.  
   
   
1. The Purchasing Department will categorize its suppliers as “Approved Suppliers” who can be shortlisted on purchases, Urgent Purchases and Emergency Purchases (if feasible), and “Preferred Suppliers” and “LVO Preferred Suppliers” who can be contacted directly without competitive bidding since Blanket Purchase Orders or contracts with fixed prices and terms are in existence.
2. The Purchasing Director will be responsible for maintaining, or designating a Purchasing Agent to maintain, a file on each Supplier that is used by AUB or has products in competition with those used by AUB or that has submitted proposals or quotations in connection with an RFQ, RFP or ITB. 
   
4. Competitive bidding will also be ensured by the Purchasing Director who will have a plan for rotation of Purchasing Agents from time to time.
   
5. Reduce the cost of ordering and number of LVOs, and increase financial controls over LVOs by (i) rationalizing the number of suppliers by only allowing LVO through Preferred LVO Suppliers who have been selected as a result of a competitive bidding process and have entered in firm agreements or Blanket Purchase Orders with agreed upon prices or price formulas, (ii) ordering LVO on-line through Oracle once the inventory module is working.
   
6. Analyze orders from time to time and determine the major suppliers and enter into a dialogue with major suppliers on how to reduce the total cost of supply.
   
7. Increase over time the purchases made through Purchasing with Purchase Orders in order to have control over purchases, expenditures, supplier and contractor performance and inventory.