58 / 252
46
CHAPTER 3
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].
3.2.1 DEFINITION OF PROCUREMENT PLANNING
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].