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Role of Procurement within an Organization: Procurement Essay Sample

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Role of Procurement within an Organization: Procurement Essay Sample

The objectives of a world-class procurement organization move far beyond the traditional belief that procurement’s primary role is to obtain goods and services in response to internal needs. To understand how this role is changing, we must understand what purchasing is all about, starting with the primary objectives of a world-class purchasing organization. OBJECTIVE 1: Support Operational Requirements

Supporting this flow requires purchasing to:
•Understand business requirements
•Buy products and services
oAt the right price
oFrom the right source
oAt the right specification that meets users needs
oIn the right quantity
oFor delivery at the right time
oTo the right internal customer
Internal customers of purchasing include:
•Physical distribution centers
•Engineering and technical groups
•Research and development
•Information technology
•Transportation and other services
OBJECTIVE 2: Manage the Procurement Process and the Supply Base Efficiently and Effectively To manage the procurement process and supply base efficiently and effectively procurement must follow the following key steps: •Identify opportunities

•Manage internal operations
•Achieve objectives
Identify opportunities where the procurement team adds true value: •Evaluation and selection of suppliers
oAll purchases should go through the approved procurement processes oEngineering and other functional inputs are part of this process oSales personnel should not be allowed to enter contractual agreements without procurement’s involvement oIncreasing use of sourcing teams

•Review of specifications or statement of work
oReview the requirements for the material or service being provided oMay be able to suggest alternative standardized materials that can save the organization money oPeriodic review of requisitions can allow greater leveraging of requirements •Acting as the primary contact with supplier

•Determining the method of awarding contracts

•Managing the supply base
oCurrent suppliers are competitive
oIdentification of new potential suppliers and develop relationships oImprovement and development of non-competitive existing suppliers Manage its internal operations efficiently and effectively, including: •Management of procurement staff

•Developing and maintenance of policies and processes
•Introducing and leveraging appropriate technology and systems •Defining procurement strategy and structure
•Developing plans and measures
•Providing procurement leadership to the organization
•Providing professional training and growth opportunities for employees Achieve this objective through :
•Leadership of procurement for the organization
•Sourcing management
•Ownership and accountability for sourcing processes
•Communication of purpose, process and pay off
•Collaboration and partnering
OBJECTIVE 3: Develop Strong Relationships with Other Functional Groups
OBJECTIVE 4: Support Organizational Goals and Objectives

Develop integrated purchasing strategies that support organizational strategies. Effective purchasing strategies involve:
•Monitoring supply markets and trends (e.g., material price increases, shortages, changes in suppliers) and interpreting the impact of these trends on company strategies •Identifying the critical materials and services required to support company strategies in key performance areas, particularly during new product development •Developing supply options and contingency plans that support company plans •Supporting the organization’s need for a diverse and globally competitive supply base Case Study

Read Case Study 1 and consider the following questions:
•What initially appears to be the problem? What really is the problem(s) in this case? •How easy is it to switch suppliers? What could complicate a firm’s ability to switch to a new supplier? •What does it mean to get to the root cause of a problem? •What is the role of purchasing in helping to coordinate communication between different parts of the organization, and the external supply base? Did communication fall apart here? Why? Categories:

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