Identify an existing company and give an overview of the organization and its purchasing function. Highlight the critical areas of purchasing such as the tendering process, outsourcing and insourcing decisions and supplier selection among other areas (30 mks) ANSWER:
The Kenya Power and Lighting Company limited is a public company with shares trading at Nairobi Stock exchange. The Company was incorporated on 1922 with the principle mandate of electricity generation, transmission and distribution throughout Kenya. Over the years, the company has undergone various structural reforms to improve operations efficiency and service delivery to the customers such as separation of generation and transmission units to independent entities. The Kenya power has a vibrant purchasing and Procurement division headed by a Chief Manager at the central office. This office is involved in policy formulation and oversees operations of Procurement departments in all the five regions in the country. The main functions of the Purchase Departments are defined as follows: •Procurement of supplies through indigenous and foreign sources in accordance with Public Procurement and Disposal Act, 2005 and procurement regulations thereof. •Checking of requisitions/purchase indents.
•Selection of suppliers for issue of enquiries.
•Issuing enquiries/tenders and obtaining quotations.
•Analysing quotations and bids etc., and preparation of comparative statement (quotation charts). •Consultation with the Indentor for selection and approval of quotations and with Accounts Officer for pre-audit. •Negotiating contracts.
•Checking legal conditions of contracts. Consulting with the legal office where necessary. •Issue of Purchase Orders.
•Follow-up of purchase orders for delivery in due time
•Verification and passing of suppliers’ bills to see that payments are made promptly. •Correspondence and dealing with suppliers, carriers etc., regarding shortages, rejections etc., reported by the Stores Department. •Maintenance of purchase records.
•Maintenance of progressive expenditure statement, sub-head wise. •Maintenance of vendor performance records/data.
•Arrangement for Insurance Surveys, as and when necessary. •Clearance of foreign consignments
•Keeping various Departments/Divisions informed of the progress of their indents in case of delay in obtaining supplies. •Serving as an information center on the materials’ knowledge i.e. their prices, source of supply, specification and other allied matters. •Development of reliable and alternate sources of supply. •Particularly ensuring:
(a)that all purchase are made against properly authorized requisitions, and valid sanctions, showing the correct and detailed end-use.
(b)that all the materials requisitioned are duly ordered from the right source after full enquiries on most competitive price taking into account the trade discounts and tax benefits etc.
(c ) that the right quantity of the goods consistent with the quality and the specification required is bought.
(d) that the deliveries of all goods are received within the stipulated period. (e) that claims due to shortages or any other discrepancies are settled promptly.
(f) that cordial and harmonious relations with all sections/divisions are maintained for becoming an efficient service unit in the museum/center.
•It is the duty of the purchase section to check purchase indents against needs and suggest modification of quantities wherever necessary.
Objectives of the purchasing department in Kenya Power
•To maintain uninterrupted flow of materials to support the operational schedules. E.g poles and conductors for prompt electricity supply to customers upon application. •To procure materials economically at a cost consistent with the quality and service required. However, generally all purchases may be attempted at the lowest cost. e.g thorough bid evaluation to ensure both technical conformance viz a...