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CHAPTER 3
THE PLANNING, ORGANISING, LEADING AND CONTROL OF PROCUREMENT
The consultancy service should meet the highest standards of quality and
efficiency and provide advice that is unbiased and does not conflict with the
interests of the principle. It should ensure that the advice proposed or assignment
executed meets the ethical principles of the consultancy profession.
The method of selection of consultants should be based on the scope of the
assignment, the quality of service, the complexity of the assignment and whether
the assignments are of a standard or routine nature. Consultants consider six
critical goals while negotiating for their service: avoidance of misunderstanding;
maintenance of working independence and freedom; assurance of work;
assurance of payment; and avoidance of liability/litigation [22].
3.6.5 RISK MANAGEMENT
It is imperative that procurement considers the potential risks in the supply
chain management process. There are many risks in the public, private and
service sectors, considering the length of the supply chain and the many
processes involved with moving goods and information from suppliers through
to manufacturing, through distribution of the finished product, and finally to
customers. To pre-empt the risk issues, procurement should identify risk on
an individual case basis, assign risk management to the party best equipped
to manage a risk, and exercise risk management in a proactive manner by
adequately addressing residual risks. Contract documentation should indicate
clearly relative risks to the contracting parties [21].
Advance provision should be made for procurement-related risk by taking out
the appropriate insurance coverage. This allows the organisation to mitigate
risk and to avoid financial loss. This is particularly important in cases where
large volumes of goods are handled and supplied and delivery routes are long.
It may be worth remembering that insurance does not usually cover risk arising
from war, piracy and in-transit delay [23].
Suitable arrangements should also be made to ensure that the payment of
insurance-related excess does not negatively affect small and micro enterprises,
especially in public sector procurement [24].
3.6.6 PERFORMANCE GUARANTEES
Performance guarantees are essential for all procurement contracts, but
especially for large and complex contracts. All engineering and construction
contracts should include non-performance clauses.
3.6.7 ETHICS AND FAIR DEALINGS
In supply chain management all parties are required to comply with the highest
ethical standards to promote mutual trust and an environment that is conducive
to conducting business with integrity and in a fair and reasonable manner. This
is a crucial discipline that procurement should adhere to without compromise.