Procurement Planning And Operational Performance Of Selected Manufacturing Companies

1.0 INTRODUCTION

Background Information to the Study

In every organization, there is procurement of materials, supplies, services, as well as other resources that supports the operation of the organization and also ensures its continued survival. This is an indicator that procurement is a key doing that form a section of the main activities in the firm. In general, procurement is explained as the process used to obtain goods and services in all ways that may include leasing, borrowing or even by pillage (Lysons & Farrington, 2016). Okechukwu (2019) added that procurement is one of the essential functions of both private and public organizations all over the world, Nigeria is no exception. Procurement is the acquisition of goods and /or services at the best possible total cost of ownership, in the right quality and quantity, at the right time, in the right place and from the right source, for the direct benefit or use of corporations, individuals, and government. Procurement is the act of acquiring, buying for goods, choices or works from an exterior grant (Basheka 2018). It is favorable that the goods, offerings or works are appropriate and that they are procured at the high-quality manageable price to meet the wants of the acquirer in phrases of great and quantity, time, and location. Corporations and public our bodies regularly outline procedures intended to promote fair and open competition for their commercial enterprise at the same time as minimizing publicity to fraud and collusion. Almost all purchasing decisions include factors such as delivery and handling, marginal benefit, and price fluctuations.

Furthermore, basic concept of procurement is that advanced planning, scheduling and bulk purchasing result in economies of scale, hence cost savings, efficient procurement operation, and increased value for money (Guyana procurement planning manual, 2010). Significant procurement planning and development of sound procurement strategies lead to consistently better value for money; higher quality project and service delivery; improved opportunities for sustainable procurement; and reduced risks to institutions (Queensland government, 2018). Planning entails the identification of the purposes, scope defining, customer need determination and identification of the main procurement activities, the estimation of delivery schedules for goods and services, assigning of responsibilities and other related activities. Procurement planning describes the method in which an organization decides what to procure, when and from what source. The method of procurement is assigned and also the expectations for the fulfillment of procurement requirements are determined during the procurement planning process. Procurement planning can also be described as the process used by firms both in the public and private sector to plan purchasing activities for a given period of time (Agaba & Shipman, 2017). Additionally, Procurement planning is described as the purchasing function which organizations employ to obtain goods, services and works, from contractors and suppliers.

Generally, the contribution of procurement planning in facilitating an efficient and effective service delivery is undisputed. The purpose of procurement planning is threefold. First, planning is required to clarify the extent possible the technical, cost, and schedule objectives of the procurement; to define the plan for accomplishing the objectives; and, to determine methodology for evaluating performance against defined objectives during the time that the contract is being carried out (Northwest &Territories, 2019). To ensure a more realistic procurement plan, market analysis is carried out in-order to enable procurement objectives to be achieved and that the identified risks and opportunities related to the supply market are considered when developing an appropriate acquisition strategy. According to Public Procurement and Disposals General Manual (2009), planning the procurement requirements helps forecasting when a tender may be launched and proceedings are likely to result into a contract. Procurement planning therefore becomes an avenue for the entire procurement process review so as to inform sound judgments and good decision making that will facilitate the success of the overall project implementation in the procurement of goods, works and services.

For fact, sound and formal procurement planning offers the base of organizing works and effective and efficient running of the organization as well as allocating responsibilities to specific persons. Brown and Hyer (2020) clarify that planning entails the identification of the purposes, scope defining, customer need determination and identification of the main procurement activities, the estimation of delivery schedules for goods and services, assigning of responsibilities and other related activities. Planning will try to answer the question: by successfully completing this project, what does the organization hope to accomplish? What are the organizational results expected? In under-scoring the vital function that planning does in a successful implementation of project.

However, Frese (2017) argued that planning will require outstanding arrangements that entails in-depth development of implementation stage processes, fallback positions, task timeliness and re-planning. This is to the meaning that early planning alone is not sufficient. Saunders (2016), added that planning encompass all the aspects of predicting to aid in the costs forecasting process as well as cash flows. Eventually, the need of planning for procurement is to safeguard against the belated execution of publicly owned projects as well as to evade the incidences of constraints in budgets that may delay successful plan implementation as well as completion…