8 December 2011 | Adviser Q&A
My company has no procurement policy or procedures’ manual
to govern day-to-day activities. What do I need to consider
in the writing of one?
Purchasing manager, Maseru, Lesotho
Donald Ferguson, head of procurement operational excellence, AstraZeneca
Start from a broader risk management/audit framework, as this helps make your policies most effective. Be clear on your organisational culture and the expectations of senior management. For example, business ethos, financial health and regulatory requirements vary widely and it is vital your approach aligns to your specific circumstances.
Assess significant risks and mitigating actions. Knowing risk levels before and after mitigation helps target policies effectively.
Make all standards and policies in documents clear, leaving no room for misunderstanding. Be specific about what is mandatory, and what happens when there are breaches.
Set out clear communications
and training plans. Lots can be achieved with technology, but use line-managers to reinforce the importance to employees. Monitor progress and report non-compliance regularly. Include investigation and disciplinary actions. Line-managers are vital in ensuring teams realise good governance is largely built on individual commitment.
Steve Jones, procurement and property director, Biffa
Company money shouldn’t be committed without appropriate approval, which in some cases is simply financial sign-off by the budget holder, or it may mean functional approval. Or it means procurement approval to ensure best value. Mostly it is all three.
Your methodology has not only to deliver a means to execute the principle, but also must be beneficial to all stakeholders:
- Operations – direct access to goods, services and suppliers.
- Management – clear financial outcomes measured against budgets.
- Finance – efficient transactional processes free from error.
- Procurement – collection of robust spend data for supplier selection.
- Suppliers – clear communications and effective administration.
Procedures should deliver a balance between the targets of the players and the resources employed.
High-value complex arrangements need cross-functional project teams, and procedures to cover who should be involved and when. Low-value high transaction rates require slick processes, p-cards or electronic catalogues.
Jaz Bains, group procurement director, DLP – AKW
Consider the size of your business and sector you are in because this will be a key point in how you detail and document your manual. Ensure you have a good understanding of your department’s roles and responsibilities across the business internally and externally. Break things down into the following areas:
- Include an overview of your department and its activities. Create your own purchasing policy statement, incorporating key goals.
- Document the role of the purchasing department with direct and indirect procurement areas and buyers’ responsibilities listed.
- Look at incorporating your department’s role with internal and external customers and break down responsibilities: departmental KPI’s that may include a supplier rationalisation programme; supplier performance measures; contracts.
- Include general objectives of the department and your cost reduction requirements. Provide basic buying principles: confidentiality; ethics;
and conflicts of interest.
- Finally, have an appendix with
all relevant blank forms used
in the department.
Key facts
1. Start from a broad risk management/audit framework. Be clear on expectations of senior managers
2. Benefit all
stakeholders – procedures should deliver a balance between targets and resources
3. Ensure you have a clear idea of your department’s roles and responsibilities
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writers’ personal views and should be regarded as general guidance only.
