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Procurement Planning – IDM perspective (Part 2)

patriot by patriot
February 4, 2021
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Procurement Planning – IDM perspective (Part 2)
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In the previous article we discussed the overview of Procurement discipline in Botswana and the challenges it continues to face despite the number of years it has been practiced.

In this part 2 discussion, let us focus on Procurement Planning. As I indicated previously, 60 to 70% of any organizational spending goes to procurement. Understanding and appreciating the importance and benefits of procurement planning becomes crucial. Every year in February, the Minister of Finance and Economic Development announces the national budget plan. In this plan a significant amount of money is allocated to procurement (over 60%). It is on this basis that government ministries and departments must have long planned their procurement for the financial year to be each given their pie of the cake.

It is very ironic how ministries and departments are often reluctant to develop their procurement plans, making one to wonder why they must be pushed to produce this very important document. Do they really understand the importance and benefits of procurement planning?

The annual procurement and asset disposal plan is a written document indicating the goods, works and services expected to be procured, the procurement methods, recurring or non-recurring expenditure, the targets and milestones, and the estimated costs. Where payments are expected to be made on a regular basis then a cash flow chart should be created. The plan must include estimated timelines for each stage of the procurement process as well as the estimated cost of each activity. The procurement and asset disposal plan must be reviewed and adjusted throughout the given period. Effective procurement requires adequate, timely and efficient planning, which includes the production of an annual procurement master plan.

Benefits of Procurement Planning
 

Ø  Helps to quickly and easily define your procurement requirements

Ø  Helps to quickly define the appropriate  methods of procurement and the timeframes for delivery

Ø  Helps to get much out of supplier relationship

Ø  It ensures the procurement of the right products for government business at the right price, from the right place, at the right time, with the right and competent personnel, delivered to the right place etc

Ø  It helps to identify all of the items you need to procure

Ø  Creates a sound financial justification for procuring goods, services and works

Ø  It helps to list all of the tasks involved in procuring your products and schedule those tasks by allocating timeframes and resources

Ø  It creates a robust project procurement process for your business

Ø  It saves money by obtaining price reductions through quantity discounts

Ø  It allows for better workload planning and scheduling

Ø  It allows for consolidating requirements for greater economies

Ø  Creates room for providing sufficient lead time and resources in the selection of appropriate contract types and development of innovative contracting methods

Ø  Allows provision of sufficient time to obtain required approvals before submission of requisitions

Ø  Provides room for identifying and obtaining necessary reviews and approvals required throughout the procurement process

Ø  Allows for early identification and resolution of potential problems

Ø  It ensures the adequacy of specifications or statements of work to be done

Ø  Provides grounds for identification of capable sources sufficient to promote adequate competition

Ø  Prevents unrealistic delivery or performance schedules and provides for receiving acceptable products and services in a timely manner

Ø  Promotes market research before procurement

Besides the numerous benefits that procurement planning brings to an organization, we continue to see departments and organizations doing business without procurement plan. A lot of procurement professionals are coerced to produce procurement plans. Planning for procurement eliminates the necessity of emergency orders, or waivers, and the resultant complaints from the contracting community. Planned procurement results in lower purchase costs, as well as improved service delivery. Unplanned procurement leads to emergency procurement and unnecessary waivers which comes at a cost to the organization. Organizations end up paying exorbitant prices because of pressure and lack of adequate time to evaluate the tenders and award correctly.

*Theetso Ntsima MCIPS, Chartered Procurement and Supply Professional

Senior Consultant – Supply Chain Management, IDM    

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  • Skelemani mishandled Kgosi Mosadi Pan African Parliament furoreMarch 22, 2023
    Adam Phetlhe The ravaging inferno sparked by the purported resignation of Kgosi Mosadi Seboko from the Pan-African Parliament (PAP) is fuelled by the Speaker of the National Assembly, Phandu Skelemani mishandling the matter. Had he performed due diligence on […]
  • Ithuba to roll-out LottoMarch 22, 2023
    STAFF WRITERS editors@thepatriot.co.bw Ithuba Solutions Botswana is waiting with bated breath for an announcement on the issuance of a lottery license, by the Gambling Authority, following the successful conclusion of negotiations in December 2022, The Patriot on Sunday has […]
  • BDP rejects Living WageMarch 22, 2023
    BAKANG TIRO editors@thepatriot.co.bw Ruling Botswana Democratic Party (BDP) MPs on Friday defeated the motion proposed by MP for Nkange constituency Dr Never Tshabang, proposing for government to introduce a living wage, which will be adjusted according to the cost […]
  • Uganda passes a law making it a crime to identify as LGBTQMarch 22, 2023
    Report by Elias Biryabarema Reuters Uganda’s parliament passed a law on Tuesday making it a crime to identify as LGBTQ, handing authorities broad powers to target gay Ugandans who already face legal discrimination and mob violence. More than 30 […]
  • Ian Khama to receive African Icon Award  March 22, 2023
    KT Press Former Nigerian President, Dr. Goodluck Ebele Jonathan will headline other African greats who are set to be honoured at the maiden edition of The African Heritage Concert and Awards slated to hold in Kigali, Rwanda on April […]
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