Eskom Procurement Book 2015

PRINCIPLES OF SUPPLY CHAIN AND PROCUREMENT MANAGEMENT

1.6.2 TACTICAL PROCUREMENT MANAGEMENT

This second level of management is executed at middle-management level. Procurement planning and management is medium-term and includes the implementation of the procurement organisation that the strategic management has decided upon. The objectives of tactical procurement are to conduct on-going logistical analyses, including trade-off analysis, to ensure that the most cost-effective levels of inventory are maintained. The objective is also to ensure the sufficient and timeous flow of procured items to support the operations while avoiding excessive inventory volumes that tie up capital that could be invested productively in alternative opportunities. Other objectives include conducting research about new products, materials development and technological innovations; studying various inventory control systems available in the market and implementing the most appropriate one for the business; and studying the most appropriate materials flow systems and implementing the best one. Additional objectives involve receiving and processing intra-organisational requisitions and bills of materials to ensure continuation of the business operations while advising top management, in conjunction with the finance entity, on entering into contracts with the chosen suppliers. Tactical procurement personnel may also be actively involved with developing new and current suppliers [20]. This is a lower level of management and comprises short-term planning and the execution, monitoring and control of procurement operations. Activities performed at this level are guided by middle management. The objectives at this level are to: • Conduct inventory analysis and stock-taking. • Reduce inventories through scheduling. • Maintain and improve relationships with suppliers. • Assist suppliers by supplying technical and administrative support. • Timeously share operations schedules with suppliers. • Pay supplier invoices on time. • Adhere to suppliers’ contract clauses. • Co-ordinate incoming traffic with a view to receiving procured inputs on time and returning goods that do not meet requirements [20]. Operational procurement management is concerned with the day-to-day operations associated with procurement. These individuals are responsible for ensuring that the right quality and right quantities of products are delivered at the right time and right place.

1.6.3 OPERATIONAL PROCUREMENT MANAGEMENT

13 CHAPTER 1