Procurement Practice
Procurement is one of the critical practices that propel a business towards the attainment of the essential goals. The performance of an organization may suffer if the procurement department fails to provide quality goods and services timely. The interest in achieving business goals attracts a framework that guides procurement practitioners. Procurement operations are governed by the fundamental principles of accountability, ethics, transparency, the value of money, and competition.
Summary of the Key Principles
- The procurement officers are required to handle the company’s funds with responsibility. This implies that the allotment of funds should be done with regard to company needs with minimal financial misappropriation (Komakech, 2016, p. 22). The procurement team should only order for what the company needs in a specific quantity to avoid excess supplies, which may encourage wastages. Moreover, every staff in the unit should be held responsible for their actions.
- Ethics are the moral foundations that guide one’s conduct. A procurement team must exhibit ethical practices in making various inventory management decisions. Some ethical foundations a concept that links to procurement include due diligence, confidentiality, transparency, integrity, fairness, and loyalty.
- The idea of transparency implies unhindered visibility. The procurement operations involve the usage of public or business funds in an accountably. Hence, transparency of all the events is dominant in all the procurement activities.
- Value of money. All the funds allocated to the procurement division should be accounted for. Therefore, the departmental employees should ensure to spend the funds on the intended supply chain items without deviating. Hence, the firm’s interests should be prioritized over personal desires (Komakech, 2016, p. 25). Thus, stewardship should be a critical procurement skill to enhance efficiency.
- Procurement officers may face competition from the supply side and should embrace it to the advantage of the public or the firm. The employees should embrace rivalry as it promotes high-quality supplies at minimized costs (Komakech, 2016, p. 21). As the supply increases, the suppliers decrease the prices for their consideration in the bidding process.
Importance of the critical Principles in Effective Procurement
The fundamental principles are critical in effective procurement. The guidelines ensure that the procurement department’ s human capital and processes are vetted and aligned with the code of government during the inception of the organization. The notions help in evaluating and approving the procurement team for their competencies. Additionally, the purchases, supply, and management of the procurement department’s finances are executed responsibly with the interest of the public (for government organizations), and the firm (for private venture) held supreme over that of individual workers. Therefore, the ethical principles are pivotal in achieving organizational goals at minimal costs and maximum quality of products.
Contracting Decision Evaluation
- The principle of accountability is well implemented. All parties to a contract or employees must review organizational activities and approve of accountable procedures (9). Cotteleer stressed on the essentiality of two-way accountability.
- All the communications during the process were made open (Austin, Sole, & Cotteleer, 2003, p.20). Hence, the information regarding the contract could be availed to any party to the agreement if need upon demand.
- Harley-Davidson engaged in a fair rivalry in the market (Austin, Sole, & Cotteleer, 2003, p.2). The operations prove that an American firm could embrace fair market rivalry with international rivals. Additionally, the contract process involved the evaluation of each of the providers to select the best based on functionality, process needs, and ease of use, among others (Austin, Sole, & Cotteleer, 2003, p.21).
- Value of money. All the supply chain decisions were made to enhance the business’s value as the ultimate goal (Austin, Sole, & Cotteleer, 2003, p.20). The team ensured the alignment of product quality, costs, and time factors in all the supply chain decisions.
- All the procedure was done with due diligence, integrity, and fairness. Hence, the process ensured ethical operations.