Eskom Procurement Book 2015

PROCUREMENT AS A SUPPORT AND STRATEGIC FUNCTION WITHIN COMPANIES

engineering to identify new sources of technology that could potentially be integrated into new products and services.

4.6.3.4 Accounting and Finance

Procurement works with the finance department to update accounts payable systems by, e.g., providing information on inbound items that have been procured. Procurement also requires data from the cost accounting system to determine, for example, material re-work costs or the total cost of an item. In addition, procurement would work closely with finance to obtain the kind of data that would help in make-or-buy types of decisions or when making capital- acquisition decisions [9].

4.6.3.5 Marketing

Procurement maintains direct links with marketing. Marketing may develop new product ideas that procurement must support. Marketing may develop sales forecasts that convert into production plans. In this case procurement must source the materials required to support these production plans [9].

4.6.3.6 Legal

Procurement often works with the legal department when contracts are being developed. Issues that arise include patent ownership terms in new product development, intellectual property, liability claims, antitrust issues, escape clauses and so forth.

4.6.3.7 Environment, Health and Safety

The whole area of sustainability or ‘green’ design and manufacturing is one where procurement gets heavily involved, as it is responsible for purchasing items that must comply with legal and organisational policy requirements. In addition, procurement will also work with health and safety groups to help ensure that suppliers are compliant in this regard.

4.6.4 PROCUREMENT’S EXTERNAL LINKS

Procurement serves as the link between a firm’s supply partners and the firm, as well as other entities.

4.6.4.1 Suppliers

Procurement’s primary link is with the firm’s suppliers. Procurement’s prime responsibility here includes the identification and selection of suitable suppliers, on-going monitoring of supplier performance and ongoing communication with suppliers. Procurement acts as the primary commercial link with suppliers. It is responsible for matters pertaining to the conditions of purchase, as well as

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