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EXPLAIN HOW PROCUREMENT PRACTIONER CAN BE MORE PROACTIVE WHEN IT COMES TO STRATEGIC PROCUREMENT IN ANY ORGANISATION Procurement is the systematic process of deciding what, when, and how much to purchase, the act of purchasing it, and the process of ensuring that what is required is received on time in the quantity and quality specified. Procurement is much broader than purchasing it involves activities that take place in many departments. The activities can be done prior to the purchasing of the actual goods or services. By definition Proactive quality management refers to a formal system designed to identify non-conformance and defects early in the project, while they are easily addressed. It identifies potential trouble spots ahead of time and puts in place processes to check those spots before moving to the next step. David N. Burt (1984), defined proactive procurement as the process of professionally and aggressively adding value during the four stages required for effective procurement, the determination of what to buy, the identification and development of the appropriate relationship with the desired source of supply, obtaining the lowest all-in or total cost associated with purchasing and converting the required material or service and ensuring that the required material or service is received in the quality required on time and that relations with preferred suppliers are used to ensure these suppliers' availability for future procurements. Proactive procurement requires the development and implementation of an integrated procurement system. Our experience has been that only a handful of firms and Organisations to include ZDF have actually progressed from reactive purchasing to proactive procurement. In proactive procurement the Practitioners exercise the best control over the cost and quality of purchased goods and services only when appropriate members of the various departments involved in the procurement process operate as an interdependent, integrated system. When this happens, a synergism takes place with the result that the integrated efforts become greater than the sum of the individual efforts. Conversely uncoordinated action by one department's representative may optimize the success of that department but cause undesirable results in another, to the detriment of the organization as a whole. For example, incorporation of extremely high tolerances may make a product of great technical excellence but one that is too costly to survive in the marketplace. The purchase of large quantities of materials or supplies may mean lower unit prices through quantity discounts, but there will be increased 1
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inventory carrying costs. In turn, inventories may be reduced in an effort to lower carrying costs, causing downtime in manufacturing due to stock outages, more frequent purchases at higher unit costs, or both. Slower modes of transportation may save shipping dollars but lead to larger inventories or downtimes in manufacturing.
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