In this new-age technological world, use of information technology with products such as computers, Internet, intranet, wireless and communication facilities has become the order of the day, and more and more organizations are reaching out to unleash the power of information technology. Large organizations have created a separate department – IT procurement department – to take care of the requirements of the organization with a specific set of strategies and policies in place, with the primary objective of reducing costs while ensuring that the quality is not compromised at any cost.
What is a procurement policy?
It is nothing but a set of rules framed by an organization to be followed by the procurement department while conducting their duties of procuring the required equipment and / or services for the organization. Procurement does not refer to a single activity of going to a vendor, picking up or purchasing the equipment and handing it over to the required member in the organization. A series of activities or processes need to be carried out, of which purchasing is one, to ensure that the correct equipment is procured to the required department at best possible price and quality.
Before framing a typical IT procurement policy, some points need to be considered. The size of the organization, the availability of competitors for the products in the market place, payment policy of the company including the credit period and such other things need to be borne in mind.
A typical procurement policy might be laid wherein purchases can be made in bulk quantities or minimum reorder quantities and the department will refrain from or does not encourage single purchases.
An organization employing information technology needs a range of equipment such as software, hardware, and accessories. Taking into consideration the broad objectives of the organization, a policy might be put in place to short list probable vendors for meeting the equipment and service requirements for the organization. As part of the policy to encourage competition, floating tenders to pre-qualified suppliers and inviting competitive bids could be framed as a policy of the organization.
A shrewd procurement policy, especially in organizations using information technology, would be to not give primary importance to brand names or branded products. This would result in discouraging competition.
The availability of vendors, the proximity of distance between the vendor place and the organization, the importance of the equipment, and the minimum lead period that is required for the equipment to reach the company premises should be assessed in detail. A typical procurement policy requires that the need for additional equipment should be planned and intimated to the procurement department well in advance such that there is no break in continuity of jobs for want of equipment.
The primary goal of a procurement department is to reduce the costs of equipment, maintain optimum level of inventory and play a vital role in the smooth functioning of the organization, while giving importance to cost saving, efficiency and quality.
One aspect of the procurement policy would be to authorize the head of the IT procurement department as the solely person responsible for all procurement related activities in the organization.