Eskom Procurement Book 2015

PROCUREMENT AS A SUPPORT AND STRATEGIC FUNCTION WITHIN COMPANIES

information for this research can come from the Internet, supplier literature, government reports, professional associations, trade magazines, the Thomas Register and database research [2].

4.4.4 SET GOALS AND CONDUCT A GAP ANALYSIS

The next step is to establish specific targets for evaluating progress against goals. Goals should relate directly to the objectives and requirements of the business and business unit/s. Effective goals, which are established jointly with stakeholders, should be measurable and action-oriented, evaluate internal progress over time, and compare performance to external benchmarks and competition. They should also go beyond price and are based on total costs. Goals should also be based on competitive analysis, comparison with market leaders and future trends. The proposed strategy must include details on the specific actions required to achieve these goals. As an integral part of this, a gap analysis should be carried out to determine the firm’s current standing in terms of its competition [2]. The strategy should include the relevant criteria included in the research, including best suppliers, risks, costs, profit potential and so on. The strategy should include the following: • Recommended suppliers, location and relative size (local, regional or global supplier). • Number of suppliers and amount of business to be awarded to suppliers. • Length and type of contract. • Product design requirements and extent of required supplier involvement in product and/or service design. • Supplier development and relationship management required, and activities. • Overall market supply recommendations. Many of these criteria will flow from and be a function of the area of the portfolio analysis matrix in which the commodity and/or service was classified. For example, a commodity that falls into the market quadrant would not be a candidate for a strategic alliance with a supplier or suppliers. Conversely, items with high purchase volumes have a potential for significant savings by, for example, consolidating spend with fewer suppliers and through standardisation.

4.4.5 DEVELOP SOURCING STRATEGIES AND OBJECTIVES

4.4.6 EXECUTE STRATEGY

In this step, procurement professionals carry out the strategy. Key elements of strategy execution include the following: • Document and communicate the strategy to all concerned, including owners, stakeholders, customers, suppliers, etc.

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