Traditionally, the procurement and stores activities are separate units that operate in silos.
This promotes the wheelbarrow mentality of staff concerned who just perform as far as they are pushed.
The major reason for such a structure has been the need to enhance control.
It is considered that procurement and stores activities require separation so as to minimise the risk of air supply when non-existing receipts are processed and later written off by the same authority.
The dilemma is that procurement and stores unit sometimes unnecessarily compete.
The storekeeper’s performance is measured by the service level — availability of materials on demand, whereas the procurement unit is measured based on the cost, quality and time that requirements are acquired.
The result of the competition of business activities that compete instead of collaborating due to the limitations from the structure inevitably adds incompetence to the business.
Most organisations control stocks using stock levels where procurement requisitions are raised by the stores unit when the re-order level has been reached.
The system is appropriate only for independent demand, but is sadly applied to dependent demand with disastrous results.
Incomplete provisioning of related requirements is impossible leading to availability of huge stocks of part of the bill of
quantity items impeding on the ability to complete production.
Business process re-engineering calls for fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical and contemporary measures of performance such as cost, service and speed.
This requires revolutionary thinking where organisations are expected to abandon conventional thinking of separating
procurement and stores function and make a paradigm shift to control of supply chain activities.
This achieves breakthrough improvements on harnessed control of procurement and stores activities that will give
procurement unit the ability to source the market and apply innovative techniques to manage availability of requirements that assist on the control of quality, cost and speed.
Organisational structures need to be built with a genuine focus to meeting identified customer needs.
As discussed, most structures promote silo management of the procurement and stores activities at the detriment of organisational competitiveness.
Structures on which the systems are built need to empower procurement functions to drive the materials management strategy rather than limiting it to clerical work of processing requisitions.
This will build a corporate culture that genuinely empowers procurement staff.
The other benefit will be procurement job enhancement from job redesigning, providing more rewarding and satisfying jobs for procurement staff.
The apprehension of the need for control through separation of duties is corrected by effective systems that manage inbound and outbound logistics.
Apart from physical movement control of inventory that involve appropriate authorisation of stores requisitions by users coupled by financial controls of control of costs centres also need to
be harnessed in organisations to reduce the risk of loss from material related fraud.
This, thereby, reduces the fear that most organisations have of an integrated materials management unit that enhance effectiveness of business operations.