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CHAPTER 4
PROCUREMENT AS A SUPPORT AND STRATEGIC FUNCTION WITHIN COMPANIES
engineering to identify new sources of technology that could potentially be
integrated into new products and services.
4.6.3.4 Accounting and Finance
Procurement works with the finance department to update accounts payable
systems by, e.g., providing information on inbound items that have been
procured. Procurement also requires data from the cost accounting system
to determine, for example, material re-work costs or the total cost of an item.
In addition, procurement would work closely with finance to obtain the kind of
data that would help in make-or-buy types of decisions or when making capital-
acquisition decisions [9].
4.6.3.5 Marketing
Procurement maintains direct links with marketing. Marketing may develop new
product ideas that procurement must support. Marketing may develop sales
forecasts that convert into production plans. In this case procurement must
source the materials required to support these production plans [9].
4.6.3.6 Legal
Procurement often works with the legal department when contracts are being
developed. Issues that arise include patent ownership terms in new product
development, intellectual property, liability claims, antitrust issues, escape
clauses and so forth.
4.6.3.7 Environment, Health and Safety
The whole area of sustainability or ‘green’ design and manufacturing is one
where procurement gets heavily involved, as it is responsible for purchasing
items that must comply with legal and organisational policy requirements. In
addition, procurement will also work with health and safety groups to help ensure
that suppliers are compliant in this regard.
4.6.4 PROCUREMENT’S EXTERNAL LINKS
Procurement serves as the link between a firm’s supply partners and the firm,
as well as other entities.
4.6.4.1 Suppliers
Procurement’s primary link is with the firm’s suppliers. Procurement’s prime
responsibility here includes the identification and selection of suitable suppliers,
on-going monitoring of supplier performance and ongoing communication with
suppliers. Procurement acts as the primary commercial link with suppliers. It
is responsible for matters pertaining to the conditions of purchase, as well as