PROCUREMENT MANAGEMENT BEST FINAL REPORT

Not only support me during internship time, Sapphire Entertainment Company in general and purchasing department in particular have raised me up with soft skills and have been a good work

CONTENTS

Abstract 2

Chapter 1: Theoretical Background 3

1 General definitions in purchasing management 3

1.1 Purchasing management definition 4

1.2 How to manage purchasing proccess? 5

1.3 Procurement function in supply chains management 8

1.4 Effective purchasing strategies 9

1.5 Strategies in controlling procurement process 10

Chapter 2: Effeciency supply chains in skybar management 11

Introduction to Sapphire Entertainment Co., Ltd 12

1 Company background 12

Company structure 19

2 Organization structure 20

Organization chart 20

Business actual situation Analysis of Sapphire Entertainment Co., Ltd 20

1 Company services business 21

2 Target customers 22

3 Possible competitors 22

Chapter 3: Works handling and problem solving in Sapphire Entertainment Co.,Ltd 23

1 Purchasing work handling 24

1.1 F&B purchasing in charge 24

1.2 Event products purchasing in charge 29

2 Procurement controlling in concerns 32

Chapter 4: Evaluations and solutions for enhancing procurement procedure in Sapphire Entertainment Co.,Ltd 34

1 Evaluations for enhancing procurement procedure in Sapphire 34

1.1 Evaluation input of purchasing request 35

1.2 Evaluate storage control 35

1.3 Evaluate delivery control 36

2 Solutions for enhancing procurement procedure in Sapphire Entertainment

Co.,Ltd 36

2.1 Short term solutions 36

2.2 Long term solutions 37

2.3 Individual solutions advised in business 38

Conclusion 39

ABSTRACT

Vietnam - an ordinary country, also a beauty signature in Asia together with developing economics, Vietnam is undoubtedly becoming one of the attractive country not only for the culture but also for the economics Since 2010, Vietnam has become well-known for drinking-beer culture From 2014, as announced by the Association of Beer - Alcohol - Beverage of Vietnam, the speed of the beer industry has slowed down compared to previous years, yet still increased about 10% The volume of beer consumed in the whole market reached 3.1 billion liters in Vietnam last year and continued to be one of most beer consumption markets in Asia According to market research firm Business Monitor International (BMI), industry sales of beer in Vietnam

is expected to grow up to 12% each year over the period 2014-2018 Therefore, recently, model Beer Club with soft style and luxury sky bars with preferable wines were born

to meet the needs of the market and become a new storm in Vietnam This kind of business is super profit business in Vietnam yet, has to cope with high risks and overcome many challenges regarding to traditional culture Skybar model was well received because the market has successfully combine two factors "drink" and "fun" If such models of restaurants only meet the demand for "food", beer club and discos are mainly meet the needs of "fun", then skybar business simultaneously meet both demand

“drink” and “fun”

Due to the demand of entertainment in Vietnam, which encouraged and interested me

to accept the opportunity working in Sapphire Entertainment Company Not only support me during internship time, Sapphire Entertainment Company in general and purchasing department in particular have raised me up with soft skills and have been a good workplace for me to apply my knowledge from university into pratical experience Therefore through experienc accumulated in workplace, I individually recognized that pratical experience is a key factor for me to step up to higher position in the future From approaching creative and active working environment, I learned by myself the way to cope with problems and how to resolve it by applying solution for every situation

in order improve myself for the future together with building relationships with others people which is consedered important for my future as a freshman

CHAPTER 1: THEORETICAL BACKGROUND General definitions in purchasing management

1.1 Purchasing management brief definition

Purchasing activities include collecting or purchasing goods and services This process includes the preparation and review requirements as well as the receipt and payment It generally involves:

( 1 ) Planning to buy, ( 2 ) Determine the criteria, ( 3 ) Research and selection of suppliers, ( 4 ) Value Analysis,

( 5 ) Finance, ( 6 ) To negotiate the price, ( 7 ) Buy,

( 8 ) manage supply contracts, ( 9 ) Inventory control,

( 10 ) Payments and other related functions

Procurement process is one of an important part of one corporation strategy, because the ability to purchase raw materials will determine the success or failure of other activities related to supply chains A business can not survive if input prices are higher than purchase sales profits , making the sales of products becomes unrealistic General supply chains involves 3 functions which purchasing raw materials play a leading step:

Ø Purchasing materials and components Ø Jump into intermediate products and final products Ø Deliver products to distributors and customers

According to the process approach: Purchasing management is the process of planning, organizing, leading and controlling operating purchasing activities of commercial enterprises to reach sales targets

Purchasing managment is managing by the following those steps such as identifying needs, search and selection of suppliers, monitor and supervise the delivery, evaluate the results of purchasing in order to achieve targets were identified

Purchasing process is the process of analysis to reach a purchasing decision with what?

of whom, what price? This is a complicated process which is repeatedly as the cycle, it relates to the implication the results of the element analysis in the management and supply chains

1.2 How to manage purchasing proccess

Purchasing is significantly complicated coorporation process with the targets that take far away from the traditional definition that originally procurement’s principle function

is obtaining products and services in response to the demand of internal company The important targets of procurement are devided into 5 main sections: supply continuity, control sourcing procedure effectively, efficiently, development supply base management, develop targets with internal stakeholders, and develop advanced procurement tactical that help organization targets and goals

Enhance a strategic sourcing procedure is controlled by the recognition that strategical sourcing will not be successful in holding a supply base which resultsed in the profits

of cooperative relationships and strategic alliances The main steps in the sourcing procedure will be followed:

Ø Find out potential suppliers

Ø Measure potential suppliers

Ø Choose suppliers

Ø Intergrate suppliers

Ø Build up relationships with suppliers

v Find out potential suppliers

The Internet function has increased significantly the ability and possibility in discovering not only qualified suppliers but also competent suppliers Yet, a purchaser should not neglect others information sources which are already to make sure that the list of suppliers contains the best suitable suppliers such as

domestic A purchaser should follow a list of sources to keep in update a list of most appropriate suppliers:

1 Suppliers’s websites

2 Detail information of suppliers

3 Catalogues suppliers

4 Trade registers and directories of suppliers

5 Phone directories of supplers

6 Mail advertisements from suppliers

7 Sales personnel

8 Trade shows

9 Other supply management departments

Once identified the needs to purchase supplies, staff conduct research suppliers, choosing suppliers

For all kinds of materials were used frequently, then further investigation to choose the best supplier

For new materials or high value shipments must be studied carefully in order to choose the potential supply

v Evaluate potential suppliers

After updating potential suppliers list, a purchaser’s next step is to evaluate each supplier independently and individually Evaluation will be varried into standards such as nature, complexity, criticality, and purchasing value The matrix of Peter Kraljic, which was developed in 1983, support purchasers to evaluate types of relationships with suppliers as the standards mentioned above

Figure 1: Portfolio Matrix Kraljic in 1983

This stage in the strategic sourcing process is most important step because supplier relationship management and supplier performance are tight relationship, together with controling risks, brand, image Purchasing’s relationship with the supplier bases on the classification of the commodity in the matrix

The supplier’s strategies must also be followed with the strategies of the buying organization

There are 4 key areas mentioned (early supplier involvement, ethical considerations, environmental considerations, and social considerations) need additional consideration with each of the suppliers

v Selecting suppliers

Until supplier is reduced to a controllable stage and selected supplier has got through the initial measurement procedure, purchaser manager and sourcing group could ask potential suppliers to give out proposals Purchasers need to come up whether to have negotiation, or combination with bidding

As listed above, the final decision in selecting of suppliers is depended on a supplier scorecard or weighted factor analysis Enhancing it would included 4 principle factors:

• Enhance the elements which play a role as chosen standard serving and the weight that each element hold in making decision Which sectors are vital to your company for this type of commodity or service? For instance paper corporation must

consider to buy great quantities of starch for its production process, starch plays a principle commodity in regarding to its price

• Expand the sub-element or performance elements within the broader selection criteria and the weighting of those elements (inventory, finance, payment…)

• Establish a ranking factor to measure who are the potential suppliers This

is the standard scale used for measurement: 1 through 5, for instance

• Rank and measure each supplier in the list This step should be done personally by those who hold a good relationship with suppliers and for those who have access to the information For instance, on-time delivery may not be known by all members, but the person who responsible will rate the supplier

Considering evaluation the suppliers by using the scorecard allows the appropriate chosen of the supplier which definitely supports the demands of buying company It is possible that the highest number is not the best supplier due to the most priority factor

is matters (such as quality)

v Enhancing suppliers

Supplier enhancement is an activity overtaken by a customer to develop a supplier’s performance or capabilities to meet the buyer’s short- and long-term supply needs There would be confliction between the buyer corporation and the supplying firm, specially when a supplying firm does not see the need for Also, it is critical for purchasers to have a defined set of performance metrics that are transparent to the supplier and established goals for development Appropriate and effective supplier enhancement would require a commitment of finance condition and personal skills, precise detail sharing information, and developed procedure

v Managing suppliers

Metrics keys play a role is to help control suppliers Yet, purchasers must measure the supplier’s capabilities to reach the company’s long-term requrement The purchasers must question suppliers about general growth plans, design capabilities, and future

production capacity Avital process of controlling the supplier is building and keeping the suitable relationship

1.3 Procurement function in supply chain management

Sourcing function is analyzed into three processes:

A Find supplies for production inventory: Demand for unforeseen products should be stored at very large oscillations, the plant was forced to increase reserves to deal with unexpected orders Purchasing department often struggled to establish long-term relationships with suppliers and build supplier networks redundant

B Find supplies for production according to the order form: anticipated demand, purchasing department easy to build long-term relationships with suppliers, help them to set up according to the required standards Purchasing department selection and allocation of orders for different vendors according

to ability and their prices

C Sourcing provides design form of orders: require rich source of raw materials and suppliers, subcontractors must have the capability to design really Value

of products demonstrated by the idea, design and implementation of their way Purchasing department build broad relationships with suppliers to meet the diverse needs of the product Collaborative process development of new products to help companies shortten the gap between them and to help detect potential suppliers

1.4 Effective purchasing strategies

Appropriate strategies in purchasing procedure would envolve:

Ø Controlling supply markets and trends (e.g., material price increases, shortages, changes in suppliers) and interpreting the impact of these trends on company strategies

Ø Identifying the critical materials and services required to support company strategies in key performance areas, particularly during new product development

Ø Developing supply options and contingency plans that support company plans

Ø Supporting the organization’s need for a diverse and globally competitive supply base

1.5 Strategies to control purchasing process

ü Manage suppliers

- Each item must have at least 3 suppliers to evaluate and purchase order

to suppliers according to priority 1,2,3

- For food items purchased regularly, or raise prices, they must have at least five suppliers and must have at least two suppliers for each sector markets, supermarkets , company

- The purchase from any vendor (including the already approved) must

be approved by Director preview

- Make sure that the principle of vouchers for VAT invoices

ü Manage quality of products in purchasing

- Department used last responsible for the quality of the goods delivered

by the suppliers Therefore, if the supplier delivery not meet qualified quality, must record the notification to the supplier no later than 1 day from the time of delivery

previous price calculated according to the number of imported goods

=> shown in contracts and purchasing regulations

- Monthly or when prices rise, purchasing staff must survey the market price 2 times/month Study sites include: market price, the supermarket, the price of the company Staff have to report purchasing price gap to the Director at the latest 3 days prescribed quotation

ü Manage delivery timelead

- - All delivery notes must be signed by the delivery, the consignee and the accounting or security guards (if overtime working time) This provision must be specified in the contract with the supplier

- Goods must ensure the right quantity and quality

- All goods must have clear standards and must be trained accounting standards to be able to check the quality and quantity of the goods on delivery (applies only to fresh food)

ü Manage relationship in related

- Supplier warrants that no gifts or other benefits to employees of shop,

if there had been must have the director approval

- Suppliers must make a commitment following rules mentioned in the contract

by truly Westerners and enjoy live music with comfortable environment; Crab Shack – Seafood Restaurant which meets demand of highslass customers in food aspect To meet the development needs continuous growth, Sapphire Entertainment Co Ltd opened up a great opportunity to work with attractive remuneration, competitive salary and sustainable professional development in an international environment, specialized now with a staff of senior Executive from the nations, have many years experience working for culinary attractions, entertainment celebrities all over the world from Sweden to America and many other Westen countries

Urban Kitchen and Loung bar is an elegant, casual restaurant venue which caters to the cosmopolitan consumer on the lifestyle center of Ho Chi Minh and tourists from foreign countries It provides such a charming environment with a relaxed atmosphere and a friendly ambiance that suit for people who look for a warm place to enjoy coffee in the morning and Western lunch in the afternoon and romantic dinner in the evening The restaurant was awarded by Tripadvisor as 2014 Certificate of charming Western restaurant in Ho Chi Minh

Company business information:

Domestic business name: Công ty TNHH Giải Trí Sapphire

International business name: Sapphire Entertainment Co.,Ltd

Head office: Floor 2, The President Place Bld, 93 Nguyen Du Street, Ben Nghe Ward, District 1 HCMC

Phone: 08 6251 5635

Email: www.glowsaigon.vn

Tax code: 0312602137

Logo of Sapphire’s leading brands in restaurant & bar:

Photos on air of Sapphire Corporation business:

1 Glow Sky Bar

Photo 1: Glow sky bar design

Photo 2: Glow sky bar night view

2 Urban Kitchen & Lounge

Photo 3: Urban Kitchen and Lounge

Photo 4: Urban kitchen & lounge interior

Photo 5: Urban kitchen & Lounge interior

Photo 6: Urban Kitchen & Lounge

3 Play Club

Photo 7: Play club at night time

Photo 8: Play club bartender booth

Photo 9: Play club night view

Photo 10: Crab Shack Restaurant

Photo 11: Crab Shack business

Glow Sky Bar: The mission of the Sky Bar is to be the premier host, creating a great experience for every person every time coming into bar in high place and to provide not only Western style cuisine but also unique alcohol with leading brand wine but also the finest facilities and services in providing employees a good position to work for experience

Vision:

Urban Kitchen & Lounge: To be well-known restaurant which mixes between Western restaurant and bar lounge and to be no.1 in service, to have the best staff in serving, and

to bring special cuisines from Western countries to Vietnamese people

Glow Sky Bar: Our leading target is the long-term satisfaction of customers We guaranty it through loyalty, consistency, creativity, and extreme attention to detail

Sappbire Entertainment Co.,Ltd

Glow Skybar Play night club

Urban Kitchen

& Bar

Crab Shack Restaurant