Oct
9
Companies can win on sustainability by engaging procurement
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Many companies adopt corporate responsibility policies that within them take accountability for both understanding and managing the environmental impact of their business. Increasing levels of legislation and consumer awareness have made this move a necessity. Many companies, however, find developing an appropriate strategy to deliver on the “mission statement” complex and challenging.
Indeed, whilst many companies are keen to devise and pursue a strategy many fail to understand the key drivers and focus significantly within the business, without fully understanding the relationship between a successful environmental policy and an organizations supply chain. This failure to engage, particularly with procurement, can be a major barrier in achieving corporate responsibility targets.
The relationship between supply chain and the environmental footprint of the business is considerable. The UK National Health Service for example recognize that 60 percent of the total NHS carbon footprint is generated by procurement. (18% comes from travel and a further 22% comes from energy usage). Failure to engage procurement will make achieving environmental targets challenging if not impossible.
Once the relationship between procurement and corporate responsibility targets are well understood the staff managing the activity from the commodity managers to the buyers themselves need to become equipped with the right tools, information and processes to help deliver.
Commonly existing strategies and processes need to be overhauled – it’s not just enough to inform the buyer to “buy green”. Sustainable procurement policies must take account of social and environmental considerations ensuring they get as much visibility as cost and quality in the sourcing process. Cost concerns can become a significant stumbling block. It’s a misnomer to think that sustainable procurement means more expensive procurement. There are savings to be had whether at the time of the initial buy or throughout the products life-cycle.(e.g. storage and disposal costs).
Once an organization has decided upon its core environmental policies its imperative that the transactional team are appropriately equipped – whilst not an exhaustive list consider the following requirements:
• Policies and guidelines – these should describe how procurement functions in order to meet objectives.
• Training in standards and legislation
• Appropriate Performance measurement – deployment of key performance indicators coupled to objectives to measure progress.
• Effective material and supplier evaluation tools which includes environmental requirements as part of the decision making
• Suitable supplier contracts and agreements that encompass sustainability
• Communication to the existing supply chain of business expectations
• Commodity information such as catalogues or material specifications that facilitate the procurement of appropriate alternatives.
As organizations look for enablers to help them meet their broader strategies, sustainable procurement will become a key weapon. Buying green however is more than a mindset and requires both organizational change and suitable tools and skills. Industry is well equipped – standards such as BS EN ISO 14000, coupled with government think tanks, legislation and an increasing number of industry associations are providing the framework upon which to deliver on the promise all that’s required for business is to act.
Oct
8
A Purchase Requisition Form, which may also be referred to as a Purchase Request, is a document that is used within an organisation, whether in the public, private or voluntary sector, to tell the department responsible for purchasing items, that an item is required. Generally the form will offer information about the number of items that are required, the type of items and when the items are needed by.
However, there is other information that should be included to ensure that the Purchase Requisition Form (PRF) is as comprehensive as possible. The PRF is the trigger for the purchasing of items and needs to clearly show who authorised the purchase of goods and where the need originated, so that it can be retained if required for proof in the future.
If items are simply bought with no records kept then there is no proof of who bought the item, why they bought the item and who authorised it, in fact it would simply be unmanageable for companies to exist without purchase requisitions, especially if the company is a large one and it is hard to keep track of expenditure authorisations. It needs to have some key elements, but should not be overly complicated, or it will require too much administrative overhead.
Layout
The requisition requires the purchasing department to supply goods. So if an employee requires10,000 screws, then they would fill out a PRF. The layout of the form needs to include the following:
What is required: This section outlines exactly what is required. There needs to be room for the employee to describe or provide specification on what is required, so that the correct items are bought.
Quantity required: This part of the PRF indicates exactly how many are required. After all the purchasing department may not be familiar with end user requirements, so they have to be told the minimum of how many items are needed (note this may not be how many are procured due to Minimum Order Quantities dictated by the supplier).
Details of Supplier: Possible sources of supply need to be highlighted to support the purchasing department in obtaining price and delivery information. There are occasions when the purchasing department may hold details of suppliers for specific goods, so the supplier put forward may not be used.
Need by date: It is important to know when the items are required. If they are urgent then this needs to be highlighted but the delivery date does need to be included. If items have to be secured by a certain date then this has to be clearly stated within the form.
Budget information: The purchasing department will need to know how much money its authorised to spend coupled with what booking/cost code will be charged.
Who Authorised this: There is a need for a signature or electronic input as to who actually authorised this purchase. Then if there is a problem in the future, then it is clear who actually said that it was ok to purchase these items.
Any other information: This section should include any other relevant information that needs to be included for some specific orders. That could be information about the fragility of the goods requested or the way that they need to be transported or stored. It is the section where any ‘special needs’ can be highlighted.
Purchase Requisition Forms And Purchase Orders
A PRF is an internal document. It cannot be used to secure the actual goods and items themselves. It does not leave the organisation, whereas a purchase order is an order between two companies and leaves one company to be received by another, even if this is done electronically. A PRF cannot be used outside the company but simply is a clear record of what was purchased and who instigated the order.