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CHAPTER 3
THE PLANNING, ORGANISING, LEADING AND CONTROL OF PROCUREMENT
The procurement planning task encompasses setting of the vision, mission,
goals and objectives for the procurement department. It also involves problem
solving, decision making and policy making. Procurement planning best practice
requires the analysis of contractual risk and market research.
3.3 ORGANISING FOR PROCUREMENT
Once the procurement planning is complete (although plans are always subject
to revision as new or better information becomes available), the plans have to
be put into action. However, in order to do this, the procurement department
must organise itself appropriately. Organising for procurement entails
combining activities so that procurement objectives and organisational goals
can be accomplished. This encompasses such tasks as establishing the right
organisational design and delegating authority.
Organisational design refers to the process of assessing and selecting the
structure and formal system of communication, division of labour, co-ordination,
control, authority, and responsibility required to achieve organisational goals.
An organisation’s design, including the specific features put in place to support
that design, is much more than what an organisational chart can ever depict.
Procurement executives must think about how their organisational design and
structure can enable substantial improvements in performance and operational
excellence. Specific types of organisational structures are presented later in
the chapter.
Organising for procurement is part of the overall management process and
should therefore be conceptualised concurrently with the planning, leading
and controlling functions of the business [6]. Since the business environment
determines the procurement strategy to be adopted; and as the procurement
strategy influences the structure of the procurement department, this means
that organising for procurement should change as the business environment
changes.
3.3.1 ORGANISING PROCESS IN A PROCUREMENT DEPARTMENT
The organising process starts with making decisions on how, when, by whom,
and with which resources various tasks will be achieved. While there is no
general consensus among the academics on the number of stages in the
organising process, the following six steps are suggested [6]:
• Gathering information
– To build an effective and efficient procurement
department, it is imperative to have accurate and up-to-date information, such
as the physical, human and financial resources available to the department
or the company for achieving its objectives.
• Identifying and analysing activities
– The procurement department needs
to identify which crucial activities it is mandated to undertake in order to