Organisational structures sway buyers’ performance

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The last issue focused on factors that influence the quality of buyers.

Organisational architecture was identified as fundamental to allow for creation of a professional purchasing and supply environment at a micro level. Organisational architecture has five elements namely:

  • Control systems: the metrics used to measure performance of a sub unit and make judgement on how management are running those sub units. In the public procurement systems, we have the State Procurement Board Act and its Regulations. On the other hand, the Urban Councils Act legislate local government procurement. Private sector entities use procedure manuals to govern purchasing and stores systems.
  • Incentives: the device used to reward appropriate managerial behaviour and closely tied to performance. This goes just beyond salary to perks that are available for the incumbent responsible for purchasing and supply function.

  • Processes: the manner in which decisions are made and work is performed within the organisation. This describes whether purchasing and supply is recognised as a value adding and strategic business function. This describes who makes what decision regarding purchasing and supply within an organisation.
  • Organisational culture: the norms and value systems that are shared among the employees of an organisation. Does your culture within organisations promote and enhance accountability, responsibility, and ethical behaviour? Do the people in the system value such organisational culture?.

  • People: the employees of the organisation including the recruitment strategy, training and personal development, skills, values and orientation. This includes capabilities and capacities of staff involved in purchasing and supply to add value to the business.

    It is imperative that organisations understand the dimension of the purchasing and supply structure.

    This is because if the organisational structure and its underlying designs principles which construct it are not in tune with core purposes of the organisation and its many environments, then it is unlikely to endure.

    The structure shapes patterns of relationships between roles in the organisation and its different parts.

    This includes the allocation of responsibilities in order to direct activities and achieve organisational goals.

    The goal of purchasing and supply are to ensure uninterrupted flow of material and services taking into cognisance the fact that financial resources are limited.

    It is a disappointment that many organisations in these modern days still recognise purchasing and supply as a clerical activity responsible for merely sourcing for quotations.

    The functions are reactive and do not initiate value adding strategies due to deficiency of one or more of the five elements discussed earlier.

    With the exception of the uniformed forces in public sector that have autonomous purchasing functions, most government departments, have humiliated the procurement function to supervisory level.

    The situation is further compromised by the reporting structure which normally relegate the function to be a sub-function of the finance and administration function.

    Whilst many argue that procurement decisions involve finance, their measure of effectiveness is how they put to good use financial resources in support of operations and not how much money they spend.

    Goal incongruence between objectives of finance to preserve funds, and production that needs inputs to respond to customer needs arise.

    Modern organisational structures have recognised the goal incongruence and restructured the materials function linking it directly with the CEO.

    This ensured that financial and operational objectives do not unnecessarily overshadow the decisions and performance of purchasing and supply functions.

    Given the above, Zimbabwean institutions need to radically change corporate structures to position purchasing and supply at a strategic position within the organisational architecture to increase operational efficiency of purchasing and supply function and the organisation at large.

    Nyasha Chizu is the chairman of CIPS Zimbabwe branch and writes in his personal capacity. Email: chizunyasha@yahoo.com