The procurement function is important at both micro and macro levels. Competitiveness of businesses has its foundation on effective procurement.
Efficient production methods will not yield results if sourcing is not up to standard. The quality and cost of in-bound logistic is very critical in ensuring competitiveness of operations.
Once businesses are efficient, the nation becomes competitive. This article will explore the ways in which procurement makes business tick.
Procurement is critical for project implementation. Project procurement starts with formulation of the project concept. Project concept involves identification of the financial, social and economic factors of the project to verify if it is sound.
The procurement unit is expected to assist in the formulation of budgets. Effective procurement will provide accurate estimates of the project costs and this is only possible if the organisations have employed the relevant skills to manage the function.
Procurement practitioners need to be abreast with the goings on the market. An efficient procurement person understands the business that he supports to the extent that they become engineers, production managers and maintenance managers by association.
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Project implementation activities also include designing of the invitation to tender (ITT) document. The intention of creating a good ITT document is to create a basis for identifying the most suitable contractor to engage on a project.
Procurement managers must ensure they avoid tender prevarication when designing ITT. Disqualification criteria must expressly show how compliance and non compliance is measured.
After production of a good ITT document, procurement skills are necessary in the evaluation process. Procurement is used as a development tool and the process must be fair and transparent in the public sector, efficient and competitive in the private sector.
Design of contracts documents is another critical stage in project procurement. Procurement is responsible for contract management and the organisational technical team is responsible for project management.
The two activities complement each other and require levels of technical expertise. Many organisations value project management and do not compromise on the skills required to manage such functions.
The same treatment is done to the contract management; it is overlooked and compromised at the detriment of many projects. Procurement skills are required to lead contract management to ensure deliverables are well captured in the contract and monitored during the course of the project.
Many projects are completed with or without loose contracts and challenges are experienced when parties fail to perform as expected. The solution to the problem is to ensure that the procurement cadre has contract management skills.
Procurement activities are regarded significant because of the large amounts of expenditure involved. Projects, together with day to day operations, consume a lot of resources and it is important that the drivers are skilled.
Just like driving vehicles, if a driver has responsibility of carrying a significant number of passengers, that driver must have a certain class of drivers license; have medical certificates and defensive driving certificates.
The same is necessary for procurement cadres responsible for large procurement. They must have necessary procurement qualifications, be certified, licensed and engage in continuous professional development.
From the above discussion, procurement is therefore, momentous because of:
The fact that it is the core for project implementation, It involves large amounts, The expectations from enhancing competitive exports, and Perception of fairness The big question is Is your procurement function adding value, and if not, what are the causes?