Eskom Procurement Book 2015

THE PLANNING, ORGANISING, LEADING AND CONTROL OF PROCUREMENT

The procurement planning task encompasses setting of the vision, mission, goals and objectives for the procurement department. It also involves problem solving, decision making and policy making. Procurement planning best practice requires the analysis of contractual risk and market research. 3.3 ORGANISING FOR PROCUREMENT Once the procurement planning is complete (although plans are always subject to revision as new or better information becomes available), the plans have to be put into action. However, in order to do this, the procurement department must organise itself appropriately. Organising for procurement entails combining activities so that procurement objectives and organisational goals can be accomplished. This encompasses such tasks as establishing the right organisational design and delegating authority. Organisational design refers to the process of assessing and selecting the structure and formal system of communication, division of labour, co-ordination, control, authority, and responsibility required to achieve organisational goals. An organisation’s design, including the specific features put in place to support that design, is much more than what an organisational chart can ever depict. Procurement executives must think about how their organisational design and structure can enable substantial improvements in performance and operational excellence. Specific types of organisational structures are presented later in the chapter. Organising for procurement is part of the overall management process and should therefore be conceptualised concurrently with the planning, leading and controlling functions of the business [6]. Since the business environment determines the procurement strategy to be adopted; and as the procurement strategy influences the structure of the procurement department, this means that organising for procurement should change as the business environment changes. The organising process starts with making decisions on how, when, by whom, and with which resources various tasks will be achieved. While there is no general consensus among the academics on the number of stages in the organising process, the following six steps are suggested [6]: • Gathering information – To build an effective and efficient procurement department, it is imperative to have accurate and up-to-date information, such as the physical, human and financial resources available to the department or the company for achieving its objectives. • Identifying and analysing activities – The procurement department needs to identify which crucial activities it is mandated to undertake in order to 3.3.1 ORGANISING PROCESS IN A PROCUREMENT DEPARTMENT

48 CHAPTER 3