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CHAPTER 2
THE PROCUREMENT PROCESS
2.2.2 MANAGING THE PROCUREMENT PROCESS
Procurement must effectively manage the internal processes involved in
procuring goods and services. This includes, for example, developing and
improving procurement processes, developing budgets and managing
procurement against these budgets, implementing procurement information
systems, etc.
The procurement function deals with procurement of raw materials and
components, and with capital equipment, project procurement, spare parts
procurement for after-market service, defective returns and the warranty
replacement process with suppliers. The procurement function works closely
with procurement logistics or inbound supply chain. Aprocurement professional
needs to have operational knowledge of: logistical activities in a supply chain
network; the various agencies; policies; customs rules; taxation; commercial,
logistical and customs documentation; as well as commercial trade rules and
terms.
All of the above must be accomplished using finite resources, including
managing the employees within the procurement group, managing budgeted
funds for procurement, managing information, time and knowledge. Procurement
management, therefore, is responsible for the effective and efficient management
of the resources at its disposal [1].
2.2.3 WORKING WITH OTHER FUNCTIONAL GROUPS
The procurement group within an organisation must effectively support and
collaborate with other functional groups within the organisation and includes,
for example:
• Procurement synergies and working with other functions such as research
and development, marketing or engineering.
• Co-decisions between hierarchical levels.
• Procurement-led, cross-project procurement management.
In order to achieve this objective, procurement must understand the requirements
of the various functions within an organisation from a purchasing perspective,
including spend, specifications and quality requirements, total costs and so on.
It must develop a close working relationship with other functions to fully support
these functions.
Figure 2.1 illustrates, and provides an example of, the types of knowledge and
insights that procurement personnel need to have of various functional groups
to provide effective support for these groups.