THE ROLE OF PROCUREMENT IN BUSINESS NEEDS

THE ROLE OF PROCUREMENT IN BUSINESS NEEDS

Changes in business environment and by extension business requirements mean that the role of procurement in business needs has to be given a fresher look less the organization fail to meet its objectives. Gone are the times when procurement functions were viewed as administrative or clerical whose whole existence was to take care of technical or operational requirements of the business. In the current century procurement officers have to play a more strategic, commercial and business focused role.

EVOLUTION OF PROCUREMENT FUNCTIONS

The role of procurement in business needs has taken various shapes depending on the methods that organizations have used in time, such include:

Passive procurement is the kind of procurement that simply reacts to the needs from other functions. It is clerical procurement in the sense that it has no strategic direction. 

Independent Procurement: which is focused on ensuring functional efficiency by contributing measures to reduce cost and ensure high supplier performance. This kind of procurement means adopting latest procurement techniques and process.

Supportive procurement means that the role of procurement in business needs is that of strategic facilitator, measured by its contribution to competitive objective of the business.  Procurement in this case supports the business’s competitive strategy by adopting the kind of techniques and products that strengthens the business’s position, techniques like just in time or even lean supply.

Integrative procurement as the name suggests means that procurement is integrated into the firm’s overall strategy. In this case there is exchange of information from all other business functions and the procurement department.

 WHY PROCUREMENT ROLES HAVE CHANGED

The way companies are handling their productions has changed. It is now easier to outsource mass production and also automation has increased, reducing the proportion of labour cost. This in turn means organization has to be good at procurement of goods, services or works from external organization. The need to secure proactive, consistent, high-quality performance from supply chains has driven a shift towards strategic suppliers relationships and supply chain development.

WHAT ARE THE NEW ROLES?

We can now agree that procurement is not just about meeting the operational or technical requirements of a firm but also to contribute to:

1. The bottom line profit of the unit or enterprise
2. Maximization of shareholders’ return and customer satisfaction
3. Securing an optimum balance of whole life cost and quality therefore achieving value for money
4. Cash flow management, meaning that the business maintains its “liquidity” to take care of short term liabilities and maintain operations
5. Fulfillment of other commercial and strategic objectives

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