The must know on procurement planning

Newsday

Most public procurement policies are driving towards the professionalisation of the function in order to achieve competitiveness necessary for survival of businesses. This is after most authorities recognised that procurement is an indispensable strategic tool for good governance and competitiveness. One characteristic of any profession is the ability to plan procurement. The era of shooting in the dark, trial and error, shooting from the hip or hit or miss is steadily fading in procurement decision-making.

Purchasing and supply with Nyasha Chizu

A procurement plan is a product of the planning processes. It develops procurement work plans, wherein, supplies, works and services required for the organisation over a defined future timescale are identified. The work plan will identify individual projects that will be procured over a given period of time where the scheduling would consider the implementation deadline in relation to the procurement process time.

To be assured that every procurement project is successful, strategic planning is essential justifying the drive to professionalise. Procurement practitioners should undertake pre-procurement engagement work to
ensure that the actions they envisage to take, are appropriate and consistent with the business requirements and other
market conditions prevailing at that time.

The use of the word procurement practitioners is deliberate when we embrace professionalism. Many procurement units for various organisations are resourced with non-procurement practitioners, who do not have the skills to plan procurement.

Non-procurement personnel occupying procurement offices lack the step-by-step knowledge of engaging the market, end users, as well as other stakeholders to come up with a plan that achieves the objectives. It must also be emphasised that a practitioner is not only measured by the level of qualifications, they must have the relevant skills derived from training and experience.
Training implies engagement is some educational activities that improve your skills. Experience on the other hand implies the exposure to different working environment, different problems as well as additional responsibilities that enhance your capabilities and capacities.

This assists the individual to have the capacity to develop effective work plans after a proper market analysis, spend analysis and needs analysis.

The activities necessary for developing an effective procurement plan clearly point to the fact that procurement is no longer merely an administrative process, it is now strategic in nature.

Procurement is now more than converting purchase requisitions into purchase orders. Procurement activities are very technical and would require a high level of skills.

Market analysis, for the purpose of developing a procurement plan implies that the practitioner has a strong understanding of the market dynamics of the industry they source from. There is need for the procurement practitioner to understand the factors such as the life cycle of the market supplying you.

Every market passes through the cycle of development, growth, peak, decline and stagnation. Every stage of the cycle has its dynamics that would need to be factored in when planning procurement. This process is highly technical, time consuming and very costly and can only be performed by trained practitioners.

Spend analysis on the other hand requires that the procurement department develops systems to capture historic data on the usage of supplies and services by the organisation.

With the absence of relevant data, it would be difficult to analyse with certainty and accuracy, the products that were procured and utilised for a period of planning.

Spend analysis is interested in all expenses incurred by the organisation save for salaries. Such information is necessary to align the sourcing strategy with the organisational strategy to achieve the company vision.
Practitioners would utilise the spend details to inform all future sourcing strategies to leverage significant benefits for the organisation.

The third element is analysis of organisation needs. This involves understanding of what is vital, essential and desirable for your organisation. Non-procurement practitioners prioritise procurement of desirable elements
ahead of the vital and essential leading to non-performance of their organisations. It is more of focusing on wood instead of trees or focusing on trees instead of forests in management. There are various models and techniques that practitioners use to plan what the organisation needs to survive.

The take away today is that successful procurement planning achieves the matching of market knowledge with demand after a thorough analysis by a competent practitioner.

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1 Comment

  1. Its now high time organisations make decisions on the issue of non procurement personnel occupying procurement positions.

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