Eskom Procurement Book 2015

PROCUREMENT AS A SUPPORT AND STRATEGIC FUNCTION WITHIN COMPANIES

one responsible individual those functions that are clearly interrelated makes for a more effective organisation. The supply management organisation is not a traditional pyramid structure for a new functional initiative that will replace the procurement organisation. In fact, it isn’t a structure at all. Rather, it is a comprehensive collection of work tasks and role definitions, processes, organisational mechanisms, and competencies that work together to span functional groupings and geographic and business locations. The trick is to provide strong, singular-focused leadership for a new initiative, while making provision for the various implementation tactics necessary to support different businesses and locations. Rather than focusing on structures and organisation charts, the new approach seeks to define the work and simply put in place those things necessary to complete it, share learnings and improve results over time. In this way business can create a new order of things without creating new structures and new overhead costs. In carrying out the work of supply management, i.e., developing and implementing supply-stream strategies that maximise the value of expenditures for purchased materials and services, a number of new work tasks and roles can be developed. A supply-stream leader, for example, can be appointed and made accountable for optimising the total supply stream by developing and implementing supply- stream strategies and improvement plans, while the location supply leader would be accountable for optimising a location’s total purchase expenditure by implementing a number of supply-stream strategies at that location (plant site, business unit, etc.). These leaders can work together as part of a team to develop supply strategies and select preferred suppliers. Once the strategy has been developed, both supply leaders would shift their focus to improvement and implementation work [8].

4.6.3 PROCUREMENT’S INTERNAL LINKS

Procurement needs to maintain communication flows and linkages with a number of internal functions. To support these internal functions a number of critical linkages and interfaces have evolved between procurement and some important groups.

4.6.3.1 Operations

Procurement has traditionally had strong ties with production and operations groups within firms. In some firms the procurement group falls under and reports to the operations group. A major link here is in the joint development of the operations strategy. Since procurement directly supports operations, it must have an understanding of production plans. In this regard, one area where procurement has critical input to operations is through the Sales and Operations

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