Where Should Procurement Sit Organisationally?

Introduction

Attention all business enthusiasts! Are you struggling with the placement of your procurement department within your organization? Do you find yourself pondering whether it should be part of finance, operations or maybe even supply chain management? Worry no more! In this blog post, we explore the various options available to help you determine where procurement should sit organisationally. Join us on this insightful journey as we break down each option and provide recommendations based on industry best practices. So, fasten your seatbelts and let’s get started!

Purpose of the Study

The purpose of this study was to explore the different ways in which procurement can be organised within an organisation, and to find out which method is most effective for a particular organisation. The study looked at three organisations – a private company, a public sector body, and a research organisation – and analysed how they procured goods and services. The results of the study showed that there is no single best way to organise procurement within an organisation, but that each approach has its own strengths and weaknesses. It was found that the private company was the most successful in terms of acquiring new business, while the public sector body was the most successful in terms of reducing costs. However, both organisations were less successful when it came to retaining existing customers. The research organisation was the least successful in terms of achieving objectives, but it was found to be more efficient than both the private company and the public sector body when it came to procureing goods and services from outside sources.

Evaluation Criteria

Evaluation Criteria

There are a number of evaluation criteria that should be considered when making the decision where to place procurement within an organisation. These include the following:

Strategic priorities – What are the organisation’s key goals and objectives? Is procurement playing a role in achieving these goals?

Operational needs – What is the current procurement process like, and how effective is it? How much time and resources does it take to carry out procurements? Is there room for improvement?

Functional requirements – What do specific functions within an organisation need from procurement, and what are their individual requirements? Is there a specific type of procurement that would best support these functions?

Business processes – How are business processes related to procuring goods or services, and how can procurement help improve these processes? Does any part of the process require more attention from procurement than others?

Methodology

Organisations should decide where procurement sits within the organisation based on its objectives and the type of procurement that is needed. There are four main types of procurement: supply chain management, procurement for value, procurement for capacity building, and procurement for innovation.

Supply chain management typically deals with getting products from suppliers to customers in an organised and efficient manner. Procurement for value focuses on getting the best price for products and services. Procurement for capacity building is used to build or expand capabilities within an organisation by acquiring goods or services that are not required immediately but will help improve the organisation in the long run. Procurement for innovation is used to procure new or innovative products or services that can help improve business operations.

Each type of procurement has its own specific objectives that should be considered when deciding where it should sit within an organisation. Supply chain management should be located at the top of the organisational hierarchy because it Deals with getting products from suppliers to customers in an organised and efficient manner
Procurement for value should be located near the bottom of the organisational hierarchy because it Focuses on getting the best price for products and services
Procurement for capacity building should be located near middlemanagement because it is used to build or expand capabilities within an organisation by acquiring goods or services that are not required immediately but will help improve the organisation in the long run
Procurement for innovation should be located near frontline employees because it F

Results and Discussion

Many organisations are still struggling to make the correct decision about where to procure their goods and services. Procurement should sit at the heart of an organisation, as it is an essential part of managing assets and resources. However, many organisations are unsure where this sits within their organisational structure.

There is no one-size-fits-all answer when it comes to where procurement should sit within an organisation, as the decision depends on the specific business and operational goals of the organisation. However, there are a few key areas where procurement should typically reside: in the finance or accounting department, as this is responsible for budgeting and forecasting; in marketing or sales teams, as they are responsible for selling products and services; or in operations or technical departments, as they are responsible for producing goods and services.

However, placement of procurement within an organisation is not always easy to achieve. Many organisations struggle with how best to organise their various departments, which makes it difficult to place procurement within its designated area. Additionally, some businesses may have a separate division for procurement but feel that this creates too much bureaucracy. In these cases, it may be preferable for procurement to exist within other divisions such as marketing or sales instead.

Ultimately, the decision about where to place procurement will depend on the specific goals and objectives of the organisation. However, placing procurement at the heart of your organisational structure can help you manage resources more effectively and ensure that you receive necessary goods and services at a fair

Conclusion

In light of the ever-changing landscape of business, organisations must find new and innovative ways to procure goods and services. With a rapidly changing technological landscape, companies must also consider how they can best use technology to support their procurement processes. Outsourcing is another option that can be used in order to reduce costs while still meeting quality requirements. All these factors are important when it comes to finding the best way for your organisation to procure goods and services.