Eskom Procurement Book 2015

THE PROCUREMENT PROCESS

2.2.2 MANAGING THE PROCUREMENT PROCESS

Procurement must effectively manage the internal processes involved in procuring goods and services. This includes, for example, developing and improving procurement processes, developing budgets and managing procurement against these budgets, implementing procurement information systems, etc. The procurement function deals with procurement of raw materials and components, and with capital equipment, project procurement, spare parts procurement for after-market service, defective returns and the warranty replacement process with suppliers. The procurement function works closely with procurement logistics or inbound supply chain. Aprocurement professional needs to have operational knowledge of: logistical activities in a supply chain network; the various agencies; policies; customs rules; taxation; commercial, logistical and customs documentation; as well as commercial trade rules and terms. All of the above must be accomplished using finite resources, including managing the employees within the procurement group, managing budgeted funds for procurement, managing information, time and knowledge. Procurement management, therefore, is responsible for the effective and efficient management of the resources at its disposal [1]. The procurement group within an organisation must effectively support and collaborate with other functional groups within the organisation and includes, for example: • Procurement synergies and working with other functions such as research and development, marketing or engineering. • Co-decisions between hierarchical levels. • Procurement-led, cross-project procurement management. In order to achieve this objective, procurement must understand the requirements of the various functions within an organisation from a purchasing perspective, including spend, specifications and quality requirements, total costs and so on. It must develop a close working relationship with other functions to fully support these functions. Figure 2.1 illustrates, and provides an example of, the types of knowledge and insights that procurement personnel need to have of various functional groups to provide effective support for these groups.

2.2.3 WORKING WITH OTHER FUNCTIONAL GROUPS

30 CHAPTER 2