Purchase, Objectives, Functions & Responsibilities
QUESTION
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
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