GUIDELINE ON PROCUREMENT

PURPOSE

The procurement guideline provides minimum  standards to ensure that co-operatives societies improve the speed and efficiency of the procurement function, reduce costs and improve the co-operatives society’s overall performance. Each co-operative should however, formulate its own detailed procurement policies in line with the Public Procurement and Disposal Act 2005 that take into account its special needs and circumstances.

SCOPE

PROThis guideline provides some suggestions in procurement management process optimization and supplier performance management.

RESPONSIBILITY

It is the responsibility of the bard to ensure that the co-operative society develops policies that would lead to best practice in procurement function.

PROCUREMENT PROCESS MANAGEMENT

The procurement process management seeks to provide solutions to the following challenges:

  • The length of time it takes to identify the right supplier
  • Inability to locate pricing agreements for specific suppliers
  • Lack of easy access to contract information
  • Measurement of suppliers performance based on contract terms and
  • The time required to correct problems that occur when supplier fails to comply with the contract.

Some of these procedures that result in optimal procurement include:

  • a co-operative society should establish common procurement data base. This could be undertaken by streamlining contract data across suppliers of various commodities/services. With common procurement data, the co-operative society would be in a better position to select and channel volume commodity purchasing requirements to the most competitive suppliers. This in turn would lead to reduction in the cost of goods/services and improvement in efficiency.
  • the co-operative should rely on up to date contract information to create purchase orders. These reduces chances of errors and the associated costs and also serve as a check on contract compliance.
  • The co-operative contract data base should be comprehensive so as to allow for easy and fast identification of the preferred supplier. This enhances procurement efficiency and a reduction in time spent sourcing a supplier. It also improves the operations of the co-operative society’s supply chain as delays associated with identifying a supplier are reduced or eliminated. In addition, the contract data base should be capable of the fast identification of suppliers in time of shortages.

ENHANCED SUPPLIER PERFORMANCE

  • The co-operative should constantly measure suppliers’ compliance to the terms of contract. This ensures that problems are identified at an early stage thus allowing the procurement department to take corrective action in time. The co-operative should identify and shift purchasing activities to good performing suppliers. By focusing on suppliers that perform well, the co-operative reduces the cost of multi-supplier maintenance and improve supplier relations.
  • The procurement department should monitor contract compliance at the transaction level. This minimizes the costs associated with non adherence to the contract.
  • Automated contract compliance checking frees the procurement department to devote resources to more strategic activities. This helps the co-operative to realize a better return on investment in procurement and improves the departmental productivity.
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