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CHAPTER 4
PROCUREMENT AS A SUPPORT AND STRATEGIC FUNCTION WITHIN COMPANIES
Planning process (S&OP). This identifies the levels of sales, product mix and
required production levels to meet these sales levels, typically over a one year
planning horizon.
Procurement’s strategies and plans must align with the sales and operations
plan. For example, procurement must know what components are required by
production as well what services are required for production to fulfil customers’
requirements. These components could include sub-assemblies, information
technology, packaging materials and so on. Procurement is responsible for
sourcing the inputs needed to support operations’ plans and must, therefore, work
with operations to execute these plans. Close and continuous communication
and contact between procurement and operations is required to accomplish this
and, in some instances, these departments are co-located [9].
4.6.3.2 Quality Assurance
The procurement and quality assurance functions go hand in hand. Most firms
source a large percentage of goods and services externally and must rely
heavily on the quality of these goods and services. To ensure that suppliers
perform as expected, the procurement and quality groups within a firm need to
work closely together.
Joint projects between quality and procurement include, for example, quality
training for suppliers, process capability studies, quality engineering and
corrective action planning. In some firms the responsibility for supplier quality
planning resides within the procurement group [9].
4.6.3.3 Engineering
One of the most important links in a firm is between procurement and engineering.
Procurement and engineering typically work together on projects with suppliers
and collaborate on supplier selection and/or product development projects. In
some cases firms employ commodity managers with technical backgrounds
suited to the types of engineered products and services being procured. An
example of this is a major package delivery firm that has its vehicles and their
components engineered to its own specifications to ensure exceptionally high
levels of reliability and durability. This firm employs a group of procurement
professionals who have a high level of engineering experience. They work closely
with the firm’s internal engineering group and strategic suppliers to engineer
and/or re-engineer automotive-related components and products.
Engineering typically looks to procurement to perform certain tasks to support
its work. This includes, for example, procurement being tasked with identifying
the most technically capable supplier/s for an item or ensuring that suppliers
meet engineering’s quality and delivery targets. Also, engineering works with
procurement to help assess a given supplier’s production capabilities, to involve
procurement early on in the design process and, in working with suppliers, to
encourage them to develop innovative ideas. Procurement also works with