×
NewsDay

AMH is an independent media house free from political ties or outside influence. We have four newspapers: The Zimbabwe Independent, a business weekly published every Friday, The Standard, a weekly published every Sunday, and Southern and NewsDay, our daily newspapers. Each has an online edition.

Maverick procurement: Is that your normal?

Opinion & Analysis
Procurement is defined as obtaining by various means of supplies and services with or without considering.

Procurement is defined as obtaining by various means of supplies and services with or without considering.

Purchasing and supply with with Nyasha Chizu

The various means that can be employed to acquire goods and services include loans, transfers and hire or purchase.

Maverick procurement is eccentric or weird procurement that can be adopted against policies, procedures, systems and laws. The “lost decade” in Zimbabwe developed and promoted unethical entrepreneurial ideas.

Procurement has been hard hit by such practices and the situation is compromised by the fact that a buyer is the link between an organisation and its sources of supply.

With the advent of the multicurrency regime, liquidity has been the challenge for both the government and individual companies.

When the government sneezes, businesses catch a cold. As the liquidity crunch heats up, competition for the limited business also reaches the boiling point. The after-effects of “the lost decade” system of business are still in operation for many.

Buyers are the most vulnerable. Temptations that they have to handle are many, leading to maverick buying that has profound effects on operations.

Buyers, for the desire to assist their kith and kin to survive, may adopt corrupt tendencies in procurement that would inevitably benefit them.

Organisations, trade with suppliers that are properly registered. Dealing with institutions that are legal provides security to the organisation. Buyers may process purchases from quotations obtained from phantom suppliers.

Phantom suppliers do not exist and highly expose organisations that deal with them in the event of mishaps with the purchase. Money is lost in the process.

Many organisations have been hit by such activities. “Air supply” is the other problem to manage in a procurement process.

Air supply comes in many ways that include false recording of receipts of goods or services, false certification of receipt of goods or services, acceptance of inferior goods or services, acceptance of wrong goods or services, acceptance of defective goods or services and payment without receiving the goods.

This type of problem normally involves stores staff responsible for receiving goods, certifying invoices and raising goods received notes.

The challenge is that money consistent with a certain quantity of goods or service of a certain quality would have been paid to a supplier.

The supplier will, in turn, supply goods or services of a less quantity or quality and to some extent, nothing is supplied at the peril of the buyer’s organisation.

There are some purchases that are easy to process while others are very difficult. Buyers tend to like push purchases that are easy. False justifications for excessive stock purchase are put forward.

Benefits of economies of scale are brought forward where they are not applicable, all for the desire to increase the value of a purchase to increase a buyer’s commission.

The problem discussed above would result in a company tying capital in stock that is not required, unavoidably affecting the organisations’ efficiency.

Organisations need to ensure that they put systems in place to manage these activities. Effective stock-taking programmes can be used to unravel such practices.

They also need to ensure that processes such as goods receipting, raising of goods receipt note, certification of invoice and invoice payment are performed by different personnel to allow for checks and balances in the system.

Nyasha Chizu is a Fellow of the Chartered Institute of Purchasing and Supply writing in his personal capacity. Feedback: [email protected]