THE AUTHORITY OF A COMPREHENSIVE PROCUREMENT POLICY

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THE AUTHORITY OF A COMPREHENSIVE PROCUREMENT POLICY

July 27, 2018

THE AUTHORITY OF A COMPREHENSIVE PROCUREMENT POLICY

 

In every organization, there are policies (written or unwritten) that guide decision making. From multipage folders – sometimes automated, to the thoughts and whims of the ‘Oga’, these policies are the guiding rails of activities of employees and departments within the company.

 

For those people who say that their organisations don’t have any, I will only ask you to wait patiently until you or someone else does something to disrupt operations; you will become aware (very quickly) of these policies!

 

Now, policies are guidelines for action set up by government and non- government organizations that define the way they want to work. Policies are like big signboards that say, “Look out, this is how I want to do things!”. They inform insiders and outsiders of what is allowed, and more importantly, what is not allowed within that space. In fact, one of the reasons they say African businesses don’t outlive their founders is because of the absence of business policies.

 

With Procurement, this becomes even more critical, as for most companies, the Procurement department is the only funnel through which money goes out. If the main avenue through which resources are spent doesn’t have strong guidelines, there is a risk that such an organization will not remain in business for long.

 

I will now address 2 major benefits of having a good procurement policy in your organization

 

The first is Control – a comprehensive procurement policy gives you control of your operations and puts you in charge of your work. This means that you get to write your own manual. A lot of work in procurement has to do with managing exceptions. You have a process for getting things done, but your boss, or an important stakeholder wants it done a different way. With a well written policy, you can capture typical exceptions and how they should be handled, who requests for them, and who approves them. Learning this early in my Procurement career completely changed the way I managed expectations. Don’t sit down frustrated and feeling like a victim under the pressure of so many non-compliant requests, build those exceptions into your policy, and take control!

 

The second is Audits – Internal and External Auditors are the bane of procurement organizations. No matter how hard you’ve worked through the year, an audit report can make you feel completely helpless. These auditors can find snow in a desert! They seem to target the only transactions you failed to regularize, and they end up making a big deal out of those. However, if you recognize that they are only doing their jobs, and that audits will never go away, you can learn to embrace them, and work with them to improve your processes. Use the feedback from the auditors to strengthen the weak areas of your policy documents and include a process for self-reporting violations. You must also note that an auditor will only evaluate your work based on the policy documents you have, and this further builds on my case for a well written, comprehensive policy document!

 

In later articles, I will break down the elements of a good procurement policy document, and how you can go about developing one for your company.

 

Harold Nwariaku MCIPS, MSc

Principal Consultant, Harold&Co Procurement/Supply Chain Consulting

Email: harold@haroldandco.com

Website: www.haroldandco.com

+234(0)7034442020, +234(0)8032009415

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