Strategic Procurement Management

Introduction

What is procurement? Why strategic procurement management? What is the procurement cycle?

Procurement is a term that has been commonly, loosely, wrongly and interchangeably used with the term purchasing in reference to business. After undertaking this module however, the student appreciates that these two terms are as identical in meaning and, stir as much debate as with varied answers to the question, “which comes first, the chicken or the egg?.

The student argues that one is a subset of the other and, in this case, procurement is the bigger function and purchasing a sub-activity therein.

The various definitions of procurement that the student sought cite that it can be a role, a department and/or a process (Chartered Institute

The procurement cycle is a cyclical process of key steps undertaken when procuring goods or services (Chartered Institute of Procurement and Supply).

Discussion

The ensuing discourse attempts to answer the assignment question.

The procurement cycle can be summarised as four generic (key) stages (African Development Bank Group) which are; the identification of need(s), tendering, contracting and contract execution and monitoring. The Chartered Institute of Procurement and Supply chain management highlights an elaborate cycle that undergoes thirteen steps as shown in figure 1 (Chartered Institute of Procurement and Supply).

Figure 1: The procurement cycle (Chartered Institute of Procurement and Supply)

For purposes of this assignment however, the student will highlight ten stages of the procurement process as explained by Jorge (The Procurement Classrom).

These

Of critical importance is identifying the requirement. In an organisation, in order to apply strategic procurement management, forecasted requisitions are compiled and planned for in a cycle that could run over the year or be subjected to bulk purchase once a year.

Some procurement requests may be subjected to competitive bidding or, single sourcing may be applied to pre-qualified suppliers particularly for items that do not attract large expenditures (ceilings which are determined by existing procurement laws).

The choice of the procurement methods determines the procurement cycle stages but most importantly, obtaining exhaustive specifications for purchase requisitions can offset wastage of resources in goods that to not meet the need of an organisation. Irrespective of the specifications, appropriate approvals have to be obtained as these are audit requirements and are part of due diligence