Eskom Procurement Book 2015

PROCUREMENT AS A SUPPORT AND STRATEGIC FUNCTION WITHIN COMPANIES

other issues of importance determined in the negotiating process with suppliers and spelled out in the contracting process.

4.6.4.2 Government

Procurement will sometimes maintain links with government departments at various levels. Procurement may need to consult with, and obtain guidance from, government agencies on various matters including environmental protection and prohibited goods.

4.6.4.3 Local Communities

Procurement may have contact with local communities. Procurement groups can have the ability to affect certain social goals. This can include sourcing from local suppliers, awarding a certain percentage of business to minority suppliers and ensuring ethical business practice in all dealings with local business communities. 4.7 EVOLVING SOURCING STRATEGIES AND BEST PRACTICES The value proposition of virtually every procurement organisation evolves through several major stages. These start, at the foundation, with addressing business continuity issues by assuring on-time delivery of quality goods and services, and move through tactical sourcing and transactional purchasing and expediting. Procurement organisations move up the value chain to focus on reducing purchase costs and then total supply costs. The former is usually done by cross- functional strategic sourcing teams, led by procurement and organised around supply markets. Unfortunately, rather than being true cross-functional supply teams that are extended to suppliers to reduce overall lifecycle costs, they tend to get implemented as ‘drive-by sourcing events’. This sees the contacts being thrown back at office and operations groups to figure out how to implement them. The real tipping point occurs in the latter stages of the evolutionary model and this is where world-class firms focus primarily. While the first stages of the model are supply-centric, the final two shift the focus to internal and external customers. This helps procurement gain the voice of the customer and assurance of relationship from the budget owners, rather than just looking for assurance of supply, and also helps procurement to shape consumption and supply drivers so the broader organisation can gain more value from its spend. At the final stage – value management – the chief procurement officer’s agenda should be in sync with that of the CEO and CFO (innovation, growth, sustainability, predictability, and so on) and there should be no parallel measurement system for procurement that’s different from that of the enterprise [10].

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