Eskom Procurement Book 2015

PREFACE Over the past 20 years it has become clear that certain macro trends and forces are changing procurement and supply management groups. As firms rely on fewer suppliers to provide increasing amounts of value across all sorts of areas and as the compensation that suppliers receive consumes an increasing amount of corporate revenue, procurement and supply management begins to look quite important. Continuous pressure to reduce costs also ensures that the procurement group must become an important contributor at corporate level. Welcome to the exciting world of procurement and supply management. It’s a world where the traditional and often reactive function called purchasing is replaced with a forward-looking and progressive approach to sourcing called procurement and supply management. It’s a world that requires shifting from a focus on transactions with a large supply base to one where procurement professionals routinely achieve the lowest total cost for goods and services with a more select group of suppliers. A challenge when operating in this environment is having personnel with the right knowledge, skills and abilities. The quest to develop the knowledge and capabilities of the procurement professional is one of the primary motivations behind this book. As an executive leader of a global logistics company commented, ‘We must not be content with executing the day-to-day tasks at hand but, more importantly, we must focus on the future and vision of our organisations, ensuring that supply management is strategically placed at the forefront.’ This can only be accomplished with the right people. The central objective of this book, which is organised into three distinct sections, is to help the reader contribute to the development of a procurement and supply organisation that provides reliable sources of supply and, eventually, competitive corporate advantage. The following discusses the three sections and their chapters. The first section in the Procurement Book includes three chapters that provide a foundation for establishing a procurement and supply management organisation. Chapter 1, Principles of Supply Chain and Procurement Management, presents the principle components of supply chain management and procurement. It discusses the relationship between the supply chain and procurement; examines some of the supply chain and procurement principles that have been put forward; and stresses the importance of supply chain and procurement management. Chapter 2, The Procurement Process, covers the key steps in the purchasing process and the requirements for ensuring that this process is carried out effectively. This includes a review of some important topics that relate to the procurement process, including understanding procurement objectives; key steps in the sourcing process; types of purchases; evaluating the importance of purchased items and services; managing the sourcing process; and improving the sourcing process.

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