• the key objectives and responsibilities of the purchasing function
• different types of purchases made by organisations
• the purchasing process
• the evolution of the purchasing process, in particular the role of e-commerce tools
used in procurement
• different types and purchasing procedures
• the importance of procurement integration and the role that purchasing plays in
internal and external integration
• why procurement policies are important
• different types of procurement policies.
This topic introduces course members to:
• the procurement process;
• procedures for business procurement;
• integration/alignment of procurement with other internal functions and external
• policy for business procurement which determines:
the objectives, strategic and otherwise, of the procurement function in a
the responsibilities of the procurement function in the business.
Course members will note that MHGP approach this topic more from the bottom up,
dealing with procurement process (ch. 2) before policy and procedure (ch. 3) and supply
management integration (ch. 4). However, the present notes approach the topic somewhat
differently: as shown above (the order of MHGP chs.: 2, 4, 3). The approach taken in this
course is to recognise that every organization has its own policies and procedures
determining how the purchasing function should operate and that processes are embedded
within those broader understandings and guidelines. Whether the processes are consistent
with policy and procedure is a matter for analysis. Thus, as you read these notes course
members should also revisit those sections of MHGP that are specifically referred to in
the text. This will help to ‘sink in’ the material and revise the concepts learned.
In a course on procurement, the focus tends to be on how procurement should and does
take place. It is important to remember, however, that businesses always have a choice in
relation to anything they do: Should they buy (i.e., procure) or should they make what
otherwise would have been bought (outsourced)? We leave until later a more detailed
discussion of the Make-or-Buy decision itself. However, course members should look at
MHGP: 73-82 for an account of the items the procurement function may seek to source
from outside suppliers.
Introducing discussion of the integration of procurement with the rest of the organisation
and suppliers opens the door to the general strategic question of how purchasing and
supply chain management may generate competitive advantage – a key concern of the
This topic is divided into four sections:
• procurement process;
• procedures for business procurement;
• functional integration; and
• procurement policy.
2.2 Procurement Process
The procurement process is “the process used to identify user requirements; evaluate the
user needs effectively and efficiently, identify suppliers who can meet that need; develop
agreements with those suppliers, develop the ordering mechanism, ensure that payment
occurs promptly, ascertain that the need was effectively met, and drive continuous
improvement” (MHGP: 41).
The Procurement Process as a Cycle
The process comprises six steps that largely match the definition:
1. Forecast and plan requirement
2. Need clarification (requisition)
3. Supplier identification/selection
4. Contract/purchase order generation
5. Receipt of material or service and documents
6. Settlement, payment, and assessment of deliverable and deliverer performance.
The process is cyclic since judgments about supplier performance at Step 6 may be used
to inform decisions about awarding future contracts (or not). The process is summarized
schematically in MHGP Exhibit 2.2 and described in detail in MHGP: 45-51.
Course members are asked to read this section of the text for themselves with care and to
look at the Good Practice Example (MHGP: 82-83) for a glimpse of how the process is
put to work by the major US company, Coca Cola Consolidated.
The material is largely self-explanatory but course members should pay particular
attention to the following:
1) e-Procurement is said to bring many benefits, but can you imagine or does your
experience suggest that downsides and qualifications should also be included to
provide a more critical appraisal of electronic purchasing?
2) The mechanical business of working through the procurement process can be
transformed into an opportunity for creating competitive advantage by getting ahead
of what the firm’s rivals are doing. What examples can you find to support this view?
3) Do you find the Four Truths of Procurement approach persuasive?
4) What are the potential disadvantages of this approach?
2.3 Procedures for Business Procurement
Procedures are the operating instructions detailing functional duties or tasks, and a
procedure manual is really a how-to manual (MHGP: 108).
The answer to the question “Procedures for what?” includes procedures designed to
ensure the proper use of purchasing documents. These may either be hard-copy, paperbased
or electronic documents (e-procurement documents) and play a key role in
facilitating the procurement process.
Course members are now asked to read MHGP: 108-111 and fill in the blanks for the
headings listed below (also look up again the Procurement Policy model introduced
We value our customers, and so ensure that our papers are 100 percent original. Our Team of professionals does not miss the mark; they ensure that step by step each paper is written uniquely. We never duplicate or work as we compare papers rest assured. We deliver our work a day before time to ensure that you don’t miss your deadlines. It is not only doing the work but delivering it at the right time. We capture the consequences of late remittances. .
We value customer satisfaction here at popularessaywriters.com and make sure that you get the best value for your Money. It happens that sometimes you can pay twice for your order or may want to cancel it, or you feel that it doesn’t meet your requirements; our money back guarantee will give you the opportunity to get back your money. We will also refund 100% of money paid double. In case your paper does not satisfy your requirements , we request that you notify us via writing within 2 days otherwise on the third day we will assume that you have been satisfied. Do all your correspondences through our email address firstname.lastname@example.org.Read more
At popularessaywriters.com, our professional writers know the consequence plagiarism does for our clients. We have updated software’s such as article checker and copyscape to check for originality of the custom papers before submission of the final paper to the you. Our guarantee to the customer is that we will write 100% original papers for them that are quality, timely and of low cost. We have experienced professional and competent PhD writers who will write quality custom papers for you..Read more
. At popularessaywriters.com, we are proud to provide top-quality Essay writing service to our esteemed customers. We are ready to take up that challenging academic assignment that is giving you sleepless nights and simplify it for you according to your desired requirements. We are willing to revise your paper if it does not meet your requirements. At popularessaywriters.com, we do not compromise with quality; thus, we offer unlimited free revisions until the customer is satisfied with their custom paper. Our unlimited free revision services are provided under the following terms:.. .Read more
Popularessawriters.com knows that client’s information is an essential tool for our company. It means that whatever the client requests from our service is kept strictly confidential. It means that whoever writes for this company understands the terms and conditions hence you should not be worried because you will never see your work somewhere else...Read more
Rest assured that we will always be attentive to your needs and requirements. We belief in the phrase treat your neighbour as you would want them to treat you. We leave nothing to chance and always look forward to a good interaction with each other.. .Read more