OVERVIEW OF PROCUREMENT PLANNING
Procurement planning is the process of deciding what to buy, when and from what source. Procurement planning is the primary function that sets the stage for subsequent procurement activities. A mistake in procurement planning has wide implications for local governance, measured from the two indicators of accountability and participation. The ideals of planning suggest that procurement planning can be implemented in an atmosphere of complete harmony. As a function, procurement planning endeavors to answer the questions of what do you want to procure;
- When to procure it;
- Where to procure them from; when the resources be available;
- The methods of procurement to be use; how timely procurement or failure will affect the user of the item(s);
- The procuring and disposing entity; efficient in the procurement process; and the people to be involved in the procurement.
During the procurement planning process the procurement method is assigned and the expectations for fulfillment of procurement requirements determined. A good procurement plan will go one step further by describing the process one will go through to appoint those suppliers contractually. Whether you are embarking on a project procurement or organizational procurement planning exercise, the steps will be the same. Procurement is thus one part of the commissioning process. It refers to a specific method of purchasing services which involves tendering for a contract. Sometimes it is more appropriate for a public body to fund a service through the provision of a grant, but then it will have less control over the precise outcomes to be delivered.
Procurement must take a thoroughly professional view of its role in business as a whole and that must include planning. Any procurement begins with the planning decision to make the purchase and this will involve in the first place, deciding whether there is a need for the particular goods or services, ensuring that the purchaser has the legal powers to undertake the transaction, obtaining any relevant approvals within the government hierarchy and arranging the necessary funding. The ultimate goal of procurement planning is coordinated and integrated action to fulfill a need for goods, services or works in a timely manner and at a reasonable cost.
Procurement planning is undertaken as part of the program/service planning process. The primary concept of procurement is that planning, scheduling and bulk purchasing result in cost savings, efficient business operation, and increased value for money. The public sector is expected to use procurement planning as an opportunity to evaluate/review the entire procurement process so that sound judgments and good decision making will facilitate the success of the overall project implementation in the procurement of goods, works and services.
ROLE OF PROCUREMENT PLANNING
Good procurement planning is essential to optimize the contribution of the procurement function towards achieving the overall goals of the organization. It supports:
- Development of Key Performance Indicators (KPIs) according to milestones and accountabilities set in the procurement plan, and use of the same to monitor performance.
- Effective and timely solicitation of offers, award of contracts and delivery of the goods, services and works required.
- Early requisition to reduce any delays in procurement and timely delivery to project sites.
- Early identification of right commodities and quantities to meet programme needs.
- Sourcing the right suppliers on time to avoid cutting corners under rush procurement to meet deadlines or budget expenditure.
- Effective supply strategy and timely programme and project implementation.
- Avoidance of unnecessary exigencies and urgencies, enabling full competition and full compliance with standard rules and procedures.
- Sufficient time to fully explore alternative procurement approaches, such as joint bidding with other organizations.
- Strengthened procurement power vis-à-vis suppliers.
- Obtaining best prices for aggregate requirements.
- Establishment of criteria to measure effectiveness of the procurement function.
- Systematic and procedurally correct procurements.
- Development of long term agreements
Importance of procurement planning
The ultimate goal of procurement planning is coordinated and integrated action to fulfil a need for goods, services or works in a timely manner and at a reasonable cost. Early and accurate planning is essential to avoid last minute, emergency or ill-planned procurement, which is contrary to open, efficient and effective – and consequently transparent – procurement. In addition, most potential savings in the procurement process are achieved by improvements in the planning stages. Even in situations where planning is difficult such as emergencies, proactive measures can be taken to ensure contingency planning and be better prepared to address upcoming procurement requests. For example:
- Advance identification of suitable suppliers of potential products frequently requested in emergency operations, including confirmation by suppliers on willingness to respond on short notice.
- Development of standard specifications/TOR/SOW for products/services/works requested in emergency operations.
Procurement Planning is important because:
- It helps to decide what to buy, when and from what sources.
- It allows planners to determine if expectations are realistic; particularly the expectations of the requesting entities, which usually expect their requirements met on short notice and over a shorter period than the application of the corresponding procurement method allows.
- It is an opportunity for all stakeholders involved in the processes to meet in order to discuss particular procurement requirements. These stakeholders could be the requesting entity, end users, procurement department, technical experts, and even vendors to give relevant inputs on specific requirements.
- It permits the creation of a procurement strategy for procuring each requirement that will be included in the procurement plan. Such strategy includes a market survey and determining the applicable procurement method given the requirement and the circumstances.
- Planners can estimate the time required to complete the procurement process and award contract for each requirement. This is valuable information as it serves to confirm if the requirement can be fulfilled within the period expected, or required, by the requesting entity.
- The need for technical expertise to develop technical specifications and/or scope of work for certain requirements can be assessed, especially where in-house technical capacity is not available or is non-existent.
- Planners can assess feasibility of combining or dividing procurement requirements into different contract packages
The Benefits of Effective Procurement Planning
Effective Procurement Planning is essential for all procuring entities in the implementation of the purchasing objectives for the following reasons:
- An effective plan saves time and money
- An effective plan serves as a conduit to achieving entity‘s objectives
- An effective plan ensures compliance with regulatory policies
- An effective plan provides a framework to guide procurement officers in the achievement of their tasks and duties.
- Effective procurement planning enables organization and its staff to work smoothly to achieve the organization‘s goals with the right quality and quantity of inputs in place
When procurement practitioners outline their procurement activities prior to the beginning of a fiscal year, this process provides an organized means whereby time and money are saved. This happens when timelines are followed in the procurement of contract packages and when patience is exercised in the use of the right procedures enshrined by law to ensure transparency and competitiveness. Some individuals may argue that the process slower purchasing activities; however, imagine conducting the process of procurement in a hasty manner disregarding the processing steps required by law and ended up with items that are undesirable, unreliable, nondurable and costly; the results are loss to Government and probably the repurchase of similar items in the not to distance future, thus consuming your precious time and resources.