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5 months ago

Why businesses need procurement specialist

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Procurement practices have been existing for thousands of years. This practice dates back to as early as 3000 BC. In Egypt, during pyramid design, papyrus was used to record the amount of labour and materials needed for construction. Ancient Romans created contracts with scribes when the empire engaged in trade with private suppliers. Procurement received greater importance during the Industrial Revolution. During the world wars, purchasing was a clerical job. During 1960s, with the upswing of economy, the business world recognised procurement as a management function. With the creation of the internet, procurement took on more a dynamic role in the late 20th century, engaging in B2B, e-commerce, etc. As the economy is more robust, procurement becomes strategic. As we move into the future, procurement will be more important and complex. It will be the hub of company spending and profit.

When I was a small boy, I used to go to bazaar, a local market place, with my late father. It was basically for kitchen marketing. My father used to bargain with the shop keepers and I had to walk and walk with my father. One day I asked him; "why dose he bargain so much?" His answer was: "It is to save money and buy good things." Presently, I am a logistician and procurement specialist in my army. I have my senior leadership who emphasizes austerity, savings of public money and procurement of quality items. He advises everyone to treat the Public/Office money as sacred and to be very careful during expenditure. I recollect my childhood; relate my childhood experience with present day's profession and can realize the importance of public/office money. As a procurement specialist, my job is to save government money and procure quality items for my organisation.

What is Procurement? Procurement is the process of obtaining or purchasing goods or services utilising any type of procurement method. In general, it includes sourcing, acquiring, bidding, tendering, negotiation, contracting, payment, inspection, after -- sales service, etc. Procurement has a direct link or connectivity with finance. Because, to procure something it needs to exhaust the budget. Thus, best value for money needs to be ensured for a Good Procurement. Procurement is aligned with the financial goal or objective of any organisation. It also plays a critical role in controlling costs and minimizing financial risks. There are five elements of any procurement. These are Five Rights or Five 'Rs'; "Right Quality", "Right Quantity", "Right Place", "Right Time" and "Right Price". There are mainly four types of procurement: (1) Direct procurement refers to anything that is required to produce an end -- product. It is the purchase of raw materials, machinery, components and parts. (2) Indirect procurement involves the materials significant to aid the day-to-day operation without a direct contribution to the company's product. e.g marketing and consulting services, office supply, equipment maintenance, etc. (3) Goods procurement emphasizes the goods or physical items. It also includes software subscriptions. Goods procurement may also include indirect and direct procurement. (4) Services procurement involves hiring third parties, leasing software or vendors to work for the original organisation. It may also include both direct and indirect procurement. The goal of any procurement is to award timely and cost-effective contracts to qualified vendors for the provision of goods, works and services to support that organisation or project or office in accordance with set regulations/policy/principles/ procedure. Stakeholders of any procurement are those who stand to benefit from the results of procurement who might be affected directly or indirectly by any procurement action. Actors play an active role in the procurement process. Now the questions are: Is procurement a specialist job? If yes, How a procurement specialist can add value to his organisation?

In general, a person who is responsible for procuring quality goods and/or services in a minimum cost within time and maintains records and follow up that procurement is a procurement specialist. He should have sufficient understanding of business process, sufficient skill on math and finance, excellent verbal and written communication skills, strong interpersonal skills, an excellent business negotiator and analytical thinker, fair idea on banking procedure, knowledge on business law and arbitration procedure, etc. Procurement is a highly stressful and complex job, but it is also rewarding and exhilarating. An efficient procurement specialist can save money, can prepare a good tender specification, can make a good contract, place acquisition request at right time, ensure timely payment, no ambiguity, no legal dispute, ensure efficient after -- sales service, keeps records for future. In one sense, he can make both seller and buyer smile. In any case, if a dispute arises between the buyer and the seller, then fair knowledge by the procurement specialist on Alternative Dispute Resolution (ADR); such as, arbitration, mediation, negotiation will help his organisation in many ways. So, procurement is no more a routine job, rather a specialist one. A good procurement specialist can bring good results for his organisation. That's why few has named a procurement specialist as 'Procurement Engineers' too.

Let us compare procurement with some other examples. The Dhaka-Chottogram highway is termed as the lifeline for Chittagong Port. To keep our economy rolling, we need to keep the lifeline alive. For a human body, heart is the lifeline. If the heart beat stops, the person no longer exists. To keep our heart functional, we need to depend on Almighty's gift for mankind, Oxygen. In the same way, procurement is the lifeline for any company. Corruption in procurement are the like inhaling CO2 for that company. Transparency and accountability in procurement is same as inhaling fresh O2 for that company. It helps the company to make good business, ensure good governance, add value to its money, circulate a good brand image, increase customer loyalty. At the end, it makes a good legal profit for that company. A procurement specialist is a trained professional who can run the entire process to get the most efficient results. He invests his time, effort, energy and wisdom in business and ensures legal profit for his organisation. The procurement process involves a very crazy deal with math, rules and regulations, understanding economics and finance, relationship management, etc. Thus, a specialist needs to take calculative measures and steps throughout the business process. He can train his team and supervise the entire process. As he is a specialist, he knows how to escape fraud, where to trigger to boost the efficiency of the process, knows whether budget is planned for the right procurement or not, can call suitable suppliers for quotation, knows own requirement and a lot more.

Let us take an example 'Company A' has planned to procure one equipment. The procurement section did not sit with the technical team during preparation of technical specification. Thus, wrong tender specification was prepared. The contract was completed and the huge equipment arrived. But the room where the equipment was supposed to be installed was in a wrong shape and a size. Thus, it was kept outside without installation. Operators' training was not completed. The machine is basically used in cold countries and few rubber items were going to be damaged due to extreme heat and humidity in Bangladesh. The supplier was not paid as installation of the equipment was not done. So, the supplier went to court. Thus, the whole process was in a mess. It was due to mishandling of the procurement section. It is only a professional procurement specialist who can make the difference between good or bad procurements. He can save variable cost and increase gross profit of his company. He can fulfill the goals of the organisation. He will analyze the market; carry out market research, cost analysis, increase transparency, accountability, fairness and professionalism. I bear the same spirit I learnt in my childhood that austerity need to be maintained but not misery. It helps someone save money and buy good things which is very much necessary at this moment. Due to COVID-19, the Russia-Ukraine war, the situation in Gaza and Red Sea, the world economy is boiling. Bangladesh is no exception too. At this point, we need to take care of our public/office money, maintain austerity and prioritise our procurement. A logistician and procurement specialist can take the lead and make the change. He can think differently, perform differently and ensure good governance in his organisation. Thus, public and office money can be saved and utilised for some other good causes. We need to be very professional and technical during the procurement process. We should avoid bad procurement. We may carry the spirit that "No Procurement is better than a Bad Procurement". A bad procurement involves extra man-hours, cost, time and efforts to solve the disputes not desirable by anyone.

Brigadier General Md Munirul Islam is a logistician and procurement specialist in Bangladesh Army. He did his Ph.D on Public Procurement. His research topic was, "Public Procurement in Bangladesh - A study in the health sector."

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