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CHAPTER 2
THE PROCUREMENT PROCESS
2.2.5 SUPPORTING ORGANISATIONAL GOALS AND OBJECTIVES
One of the most important, if not the most important, objectives for procurement
is to support overall organisational goals and objectives. It is therefore vital
to understand how procurement can contribute effectively to organisational
objectives and strategy. It is also important to understand how the organisational
objectives and strategy can properly reflect the contribution and opportunities
offered in the supply chain. By linking to and supporting corporate strategies
(see Chapter 6), the procurement function becomes a valuable strategic partner
within the organisation [1].
2.2.6 DEVELOPING SOURCING STRATEGIES
Procurement must be forward looking. In today’s world, firms face the challenge
of prospering despite stiff, often global, competition. Procurement needs to
relate effectively to outside environments, including social, economic, political,
legal and technological. It also needs to anticipate changes, to adjust to these
changes, and to identify and make the best of opportunities. In order to do this,
procurement needs to formulate and execute strategic plans that will play a
major role in generating future earnings and will be critical for survival.
In progressive firms, procurement is actively involved in the corporate planning
process and can provide supply market intelligence that contributes to strategic
planning. Procurement is responsible for the development of effective sourcing
strategies (see Chapter 4) and should play an integral role in the development
of overall corporate strategies.
2.3 KEY STEPS IN THE PROCUREMENT PROCESS
The procurement process is a cycle that consists of a number of distinct stages.
These vary in different organisations and may have different names; and are
dependent on whether procurement is sourcing a new item or an item that has
been previously purchased. The procurement process includes the purchase of
goods and services. The effective and efficient accomplishment of procurement
activities can help to maximise value for buyers and suppliers.
2.3.1 IDENTIFY USER NEEDS
The sourcing process usually starts by identifying or anticipating the goods
or services needs of a user. (This could be an individual or group within the
procurement professional’s firm.) In some cases, existing needs must be re-
evaluated because they change.
The process begins either with a user or user group within the firm communicating
a need to the procurement group and/or an individual within procurement
identifying a need within the firm. Once this need has been identified, the
sourcing process can start [1].