Procurement Function And Its Fundamental Impact on the Success and Continuity of the Organization

Posted on Sep 01, 2021 at 03:09 PM

The procurement function represents an important activity in various projects for its main role in providing hundreds of items, materials, tasks, and requirements required by production conditions.

This function is not only a set of steps or operational procedures to complete the purchase order, but also holds a high place in the organizational maps in both productive and service projects.

The role of procurement management in obtaining tasks and materials in the right quantity and from the right source of purchase, price, quality and at the right time has a substantial weight to influence the ratio of profits and performance economics of the organization.

The definition of procurement function

It is the activities that help the organization to get various needs like materials, tasks, supplies, machinery, and equipment in the right quantity, quality, price and time and from the appropriate source in order to achieve the continuation of production and operation processes, in accordance with the conditions of the establishment, and to achieve its objectives with a high degree of efficiency and economic performance.

Procurement activities cover all dimensions related to needs in terms of the appropriate quantity in accordance with the nature and type of the organization and the quality of its production and products, as well as to check the quality of the purchases to ensure their validity and approval of the conditions before receiving them.

It is practiced in various types of projects, whether public or private, large or small, industrial or service, targeted or non-profit.

The Development of Procurement Activity

It has developed gradually in large projects, and the volume of production and industrial development has become a management with its planning, regulatory aspects. It is essential on the map of management in projects, equal to the level of the main departments.

This activity grew bigger when the modern management realized that the procurement and production control device and the department of handling, shipping and storage are closely related sections.

They are integrated activities and that these departments work together to achieve the overall goal of the project. These activities are subject under the authority and supervision of one manager, namely the director of materials management or the director of procurement.

The importance of evaluating the performance of contracts

Evaluating the performance of a particular contract on a permanent and regular basis is important to ensure providing services and goods on time and within budget, and that quality standards are met particularly for more complex and high-risk contracts.

After fulfillment of a contract, evaluation includes several activities to ensure that the delivery of services meets the requirements. This includes identifying performance standards, such as KPIs, time of formation of contracts, providing adequate resources for evaluation, and providing a trained workforce to oversee the contractor's activities.

Deficiencies in Procurement Contracts

Despite of the significant efforts that many organizations make to strengthen contract monitoring by issuing improved guidance and monitoring procedures. It has been reported that monitoring is not a high priority in the procurement life cycle, where the main objective of senior managers and contract staff is to complete the timely award process, to support the implementation of the programme and support the beneficiary of the service.

The main weaknesses of most organizations are the lack of key performance indicators considered in the contract preparation stages that allow effective monitoring of performance during the implementation of the contract. In addition to the lack of training in contract management activities after awarding them.

Human Resources and capacity-building

Regular training of procurement officers and contract managers is considered a challenge faces many organizations. They decided to hold training sessions in procurement and contract management to build the capacity of post-award contract management staff, thereby addressing critical contractual issues.

Conclusion

The procurement function is governed by a set of principles that contribute in achieving the objectives of organisations and their activities. It is a basis for the success or failure of economic establishments.

When talking about the procurement function, we should not ignore the storage function, they are both the main outlet on which enterprises depend in the face of current competitive conditions, and have been prominent on the regulatory map of the facility.

Enterprises are now considering these functions in terms of their importance and their active role in achieving the goals and objectives they seek.

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