Introduction
Procurement can be defined as the process of acquisition goods, works and services to satisfy the identified needs of an important function within an entity. Procurement can be defined as the process through which entities purchase their requirements to fulfill school requirements.
The traditional definition of procurement is acquisition by any means of supplies, services, or works. This definition was more associated with purchasing than procurement.
We can say that procurement, different purchasing, is a process not an event. It has to be conducted in a systematic manner; and involves a number of stakeholders.
What are the objectives of procurement?
The traditional five (5Rs) rights of procurement, Bailey and Farmer (1985) namely:
- Acquiring the Right product
- From the Right supplier
- In the Right quality
- At the Right time
- At the Right price
Just – In – Time (JIT);
Just-In-Time is defined as “the production of the minimum number of different units, in the smallest possible quantities, at the latest possible time, thereby eliminating the need for inventory”. The philosophy of JIT is elimination of waste from the acquisition of raw materials upto shipping. JIT is not about producing on time, it is Just –In – Time. JIT was developed by Taiichi Ohno the chief production engineer at Toyota after the World War II. The Japanese enterprises could not afford the waste in their systems after the devastation caused the World War II. Ohno was interested in reducing waste, muda and introduced lean production systems. Along the way, JIT became part of reducing waste especially inventory waste and associated costs.
The possible benefits a JIT system
- Reduction is inventory costs – there is no idle inventory
- Reductions in set –up time
- Producing products that customers want
- Produce products when the customers want them
- Reduce the lead time
- Produce without waste of resources ( labour, materials, or equipment)
Waste in supply chain management
In the current era, all businesses entities seek to become competitive in order to realize improved annual turnover; and profitability. Efficiency and effective are important to business entities that seek to produce quality products, market and sale them amidst intense competition. Waste, inefficiencies or muda in Japanese, is any activity that adds no real value to the product or service being created or delivered. Taiichi Ohno, who was in production of Toyota, developed the Toyota Production Systems aimed at eliminating muda in order to be competitive. These systems were focused on lean production systems. Ohno identified the seven primary sources of wastes in production, which he called “The Seven Deadly Wastes”. Muda – Anything that is wasteful and doesn’t add value. The story is usually told about one of the techniques that Ohno used whenever he visited a plant. It is that he would draw a circle (‘Ohno circle”) on the floor and make one member of his staff to stand in the circle – sometimes for the whole day. The purpose was to closely observe the operation (genchi genbutsu) and record areas of opportunity. genchi genbutsu refers to collecting facts and data at the actual site of the work or problem.
“The Seven Deadly Wastes”
- Waste
- Overproduction
- Delay or waiting
- Transportation
- Motion
- Inventory
- Over processing
- Defects/Correction
