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CHAPTER 4
PROCUREMENT AS A SUPPORT AND STRATEGIC FUNCTION WITHIN COMPANIES
one responsible individual those functions that are clearly interrelated makes
for a more effective organisation.
The supply management organisation is not a traditional pyramid structure for a
new functional initiative that will replace the procurement organisation. In fact,
it isn’t a structure at all. Rather, it is a comprehensive collection of work tasks
and role definitions, processes, organisational mechanisms, and competencies
that work together to span functional groupings and geographic and business
locations. The trick is to provide strong, singular-focused leadership for a new
initiative, while making provision for the various implementation tactics necessary
to support different businesses and locations.
Rather than focusing on structures and organisation charts, the new approach
seeks to define the work and simply put in place those things necessary to
complete it, share learnings and improve results over time. In this way business
can create a new order of things without creating new structures and new
overhead costs.
In carrying out the work of supply management, i.e., developing and implementing
supply-stream strategies that maximise the value of expenditures for purchased
materials and services, a number of new work tasks and roles can be developed.
A supply-stream leader, for example, can be appointed and made accountable
for optimising the total supply stream by developing and implementing supply-
stream strategies and improvement plans, while the location supply leader
would be accountable for optimising a location’s total purchase expenditure by
implementing a number of supply-stream strategies at that location (plant site,
business unit, etc.).
These leaders can work together as part of a team to develop supply strategies
and select preferred suppliers. Once the strategy has been developed, both
supply leaders would shift their focus to improvement and implementation
work [8].
4.6.3 PROCUREMENT’S INTERNAL LINKS
Procurement needs to maintain communication flows and linkages with a
number of internal functions. To support these internal functions a number of
critical linkages and interfaces have evolved between procurement and some
important groups.
4.6.3.1 Operations
Procurement has traditionally had strong ties with production and operations
groups within firms. In some firms the procurement group falls under and
reports to the operations group. A major link here is in the joint development
of the operations strategy. Since procurement directly supports operations, it
must have an understanding of production plans. In this regard, one area where
procurement has critical input to operations is through the Sales and Operations