Eskom Procurement Book 2015

THE PLANNING, ORGANISING, LEADING AND CONTROL OF PROCUREMENT

SYNOPSIS This chapter discusses four important aspects of procurement, namely Planning, Organising, Leading and Controlling (POLC). These procurement functions are strategically important for any organisation as they form the foundation of an effective procurement function, which, in turn, affects the success or failure of a company. The chapter also defines and explains key concepts related to these four functions in the context of procurement. 3.1 INTRODUCTION The procurement landscape has experienced a number of important changes. Among these are the continuous and rapid technological innovations that have allowed procurement practitioners to become ever more effective and efficient in their profession. As a direct result, the pace of globalisation has continued unabated. Another factor worth mentioning is the way in which the economic meltdown of 2008 forced organisations to search for ways in which to reduce costs and implement lean policies. Increasingly, organisations such as Eskom are looking to the procurement function to create and deliver new value. 3.2 PLANNING FOR PROCUREMENT Planning is a management function that forms the foundation for all others. When planning is properly conceived and implemented, it serves as an important mechanism for extracting, distributing and allocating resources [1]. Procurement planning has been defined as a process of determining the procurement needs of an entity while ensuring that acquisitions are made timeously at the most competitive price available [2]. Procurement planning involves, for example, determining whether or not to acquire certain production inputs from outside suppliers and, if so, how to acquire those inputs, what quantity of inputs to acquire, what price would be acceptable and when to acquire the required inputs. Procurement planning further involves identifying potential suppliers of the required production inputs. In this regard, procurement practitioners need to decide what degree of control they want to retain in the acquisition process. Procurement planning also requires the purchasing department to actively consult with internal users or customers (such as the operations department) regarding the options and alternatives available to acquire the required production inputs. For instance, the procurement department may need to discuss with the user department issues such as purchase estimates, product specifications, make- or-buy decisions, and outsourcing opportunities [3].

3.2.1 DEFINITION OF PROCUREMENT PLANNING

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