41 Summary of Unit 2

Summary of Unit 2

The fundamental purpose of organisation is to provide a structure that facilitates the motivation of people and the coordination of their efforts towards the common goals of the firm. A poorly designed structure can inhibit such accomplishments, just as a well-designed structure can facilitate them.

Location of the Procurement department within a firm’s organisational hierarchy is determined very simply by one factor — management’s perception of the importance of the function. Increasingly in a majority of firms, with the growing importance of supply chain management as the core competency for organisational success, the Procurement function is a strategic function reporting to top-management executives.

Moreover, as Procurement managers continue to transition to a more strategic role in many organisations, they will also continue to test and apply new technologies to the supply process. The challenges are great, but those who see the opportunity for cost reductions, faster cycle times and improved communication flows will continue to seek ways to use these new tools to their best advantage.

From a supply management standpoint, the important thing to remember about using procurement technologies and e-procurement is that the buyer still plays a critical decision-making role in the process. The organisation benefits from having procurement personnel with the investigative and analytical skills to source, evaluate and select suppliers; the influencing and persuading skills to negotiate the best deal for the organisation, and a strategic and long-term planning approach to anticipate and prevent problems down the road. With the technologies, the transactional side, not the decision-making side, is streamlined and responsibility for actually placing orders is delegated to the user whenever possible. It is the ‘decision-making side’ that makes the difference between success and failure in organisations as systems can be acquired and copied.

We shall explore this ‘decision-making side’ from the next unit onwards, beginning with planning supply and specifying requirements.

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