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CHAPTER 4
PROCUREMENT AS A SUPPORT AND STRATEGIC FUNCTION WITHIN COMPANIES
• Establish tasks to be completed and their timelines.
• Assign accountability for executing the strategy.
• Ensure adequate resources are made available.
• Develop contingency plans.
The individuals and teams responsible for implementing the strategy will then
execute the plans.
4.4.7 MONITOR RESULTS AND REVIEW PERFORMANCE
Regular reviews must be held to determine if the strategy is achieving the
required objectives and to determine if modification of the strategy is required.
The key steps involved in monitoring and reviewing performance are as follows:
• Conduct regular review meetings to determine if the strategy is achieving
the desired results.
• Share results with stakeholders.
• Assess internal and external stakeholder perceptions.
• Where necessary, take action to ensure the objectives and goals outlined in
the strategy are met and/or adjust the strategy if necessary.
• Provide feedback on actions taken.
The above steps are relatively general. The outcome of the strategy development
process may vary considerably on the specific commodity and supply market
involved [2].
4.5 KEY SOURCING STRATEGIES
Organisations employ a variety of procurement strategies to achieve a
competitive advantage. In this section we will briefly review various procurement
strategies.
4.5.1 SUPPLY BASE RATIONALISATION
The process of rationalising the supply base is aimed primarily at determining the
appropriate number and mix of suppliers. This process is ongoing as the needs
of the business unit change over time. The process requires an analysis of the
number of suppliers required to serve current and future needs for purchased
items. Supply base rationalisation initiatives focus on developing the most
appropriate blend of suppliers given the requirements of the organisation. The
intention is to identify the best value and the appropriate number of suppliers
for each commodity based on the overall business strategy.
Supply base optimisation should be continuous. The elimination of sub-par
suppliers, and those from whom relatively few purchases are made, constitutes
the first step in the optimisation process. The next stages of optimisation
involve replacing good suppliers with better suppliers and/or upgrading current