Procurement Process

Topics: Supply chain management, Management, Procurement Pages: 5 (830 words) Published: August 11, 2013
Role of Procurement within an Organization: Procurement : A Tutorial 1
Published on: Jan, 26, 2011

by: Robert Handfield, PhD
Role of Procurement within an Organization
Overview
Key Procurement Objectives:
OBJECTIVE 1 – Support Operational Requirements
OBJECTIVE 2 – Manage the Procurement Process and the Supply Base Efficiently and Effectively OBJECTIVE 3 – Develop Strong Relationships with Other Functional Groups OBJECTIVE 4 – Develop Integrated Purchasing Strategies That Support Organizational Strategies, Goals and objectives Case Study

Overview
The objectives of a world-class procurement organization move far beyond the traditional belief that procurement’s primary role is to obtain goods and services in response to internal needs. To understand how this role is changing, we must understand what purchasing is all about, starting with the primary objectives of a world-class purchasing organization. OBJECTIVE 1: Support Operational Requirements

Supporting this flow requires purchasing to:
Understand business requirements
Buy products and services
oAt the right price
oFrom the right source
oAt the right specification that meets users needs
oIn the right quantity
oFor delivery at the right time
oTo the right internal customer
Internal customers of purchasing include:
Manufacturing
Physical distribution centers
Engineering and technical groups
Research and development
Information technology
Transportation and other services
OBJECTIVE 2: Manage the Procurement Process and the Supply Base Efficiently and Effectively To manage the procurement process and supply base efficiently and effectively procurement must follow the following key steps: •Identify opportunities

Manage internal operations
Achieve objectives
Identify opportunities where the procurement team adds true value: •Evaluation and selection of suppliers
oAll purchases should go through the approved procurement processes oEngineering and other functional inputs are part of this process oSales personnel should not be allowed to enter contractual agreements without procurement’s involvement oIncreasing use of sourcing teams

Review of specifications or statement of work
oReview the requirements for the material or service being provided oMay be able to suggest alternative standardized materials that can save the organization money oPeriodic review of requisitions can allow greater leveraging of requirements •Acting as the primary contact with supplier

Determining the method of awarding contracts

Managing the supply base
oCurrent suppliers are competitive
oIdentification of new potential suppliers and develop relationships oImprovement and development of non-competitive existing suppliers Manage its internal operations efficiently and effectively, including: •Management of procurement staff

Developing and maintenance of policies and processes
Introducing and leveraging appropriate technology and systems •Defining procurement strategy and structure
Developing plans and measures
Providing procurement leadership to the organization
Providing professional training and growth opportunities for employees Achieve this objective through :
Leadership of procurement for the organization
Sourcing management
Ownership and accountability for sourcing processes
Communication of purpose, process and pay off
Collaboration and partnering
Teamwork
OBJECTIVE 3: Develop Strong Relationships with Other Functional Groups
OBJECTIVE 4: Support Organizational Goals and Objectives

Develop integrated purchasing strategies that support organizational strategies. Effective purchasing strategies involve:
Monitoring supply markets and trends (e.g., material price increases, shortages, changes in suppliers) and interpreting the impact of these trends on company strategies •Identifying the critical materials and services required to support company strategies in...
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