NAME: Nyasha I.
Matimba
REG NUMBER: B260906A
PROGRAM: Supply Chain Management
LEVEL: 1.1
COURSE CODE: SCM101
COURSE: Principles of Procurement
Procurement is not just about buying; it is a management function that affects cost, quality,
compliance, risk, and service delivery. A well-designed procurement policy states the principles
and standards that guide purchasing, while procedures explain the exact steps staff must follow
in carrying out those principles. Without them, an organization is likely to experience
inconsistent decisions, waste, fraud risks, poor supplier control, and weak value for money.
A procurement policy and procedure are important because they promote consistency,
accountability, cost control, and efficiency in organizational purchasing. In economic terms, they
help reduce waste, improve allocation of scarce resources, and support better decision-making,
this was according to (McConnell, Brue & Flynn, 2009; Perloff, 2012; Mankiw, 2010).
Procurement guidance also shows that formal policies improve compliance, reduce risk, and
strengthen supplier relationships.
Importance of procurement policy and procedure
Ensures consistency in purchasing: a procurement policy creates one common way of doing
procurement across the organization. This means different departments do not buy in different,
conflicting ways, which reduces confusion and improves coordination. Procedures also give staff
clear instructions on approvals, quotations, tendering, evaluation, and contract award, so
purchasing becomes predictable and orderly.
Promotes transparency and accountability: a strong procurement system makes it clear who
requested the purchase, who approved it, who evaluated suppliers, and who made the final
decision. This traceability discourages favoritism, hidden deals, and unauthorized buying
because every step is documented. In this way, procurement policy protects both the organization
and its employees by showing that decisions were made fairly and properly.
Reduces fraud and corruption: one of the biggest reasons organizations need procurement
procedures is to prevent abuse of resources. If there are no controls, staff may bypass normal
processes, award contracts to friends, inflate prices, or split orders to avoid approval limits. A
policy introduces checks such as segregation of duties, approval levels, competitive bidding, and
record keeping, which make fraudulent behavior harder to commit and easier to detect.
Ensures compliance with laws and regulations: procurement is often governed by laws,
internal rules, donor requirements, and ethical standards. A policy helps the organization comply
with these requirements by making them part of daily practice. This is important because non-
compliance can lead to fines, disputes, project delays, cancelled contracts, or reputational
damage.
Achieves value for money: good procurement policy is designed to ensure the organization gets
the best balance of price, quality, and performance, not just the cheapest option. Competitive
sourcing, proper specification writing, and supplier evaluation help the organization choose
offers that provide real value. This means the organization saves money over time because it
buys wisely, avoids unnecessary items, and reduces poor purchasing decisions.
Controls costs and prevents waste: procedures require departments to justify their needs,
follow budgets, and avoid unnecessary or duplicate purchases. This reduces wasteful spending
and helps resources be used efficiently. In addition, standard procurement steps help
organizations negotiate better prices, consolidate purchases, and reduce “maverick spending,”
where employees buy outside approved systems.
Improves planning and budgeting: procurement policy links purchasing to the organization’s
budget and operational plans. When departments must plan purchases in advance, the
organization can forecast demand, allocate funds properly, and avoid emergency buying. This
improves financial discipline because managers can see what will be bought, when it will be
bought, and how much it will cost.
Improves efficiency and speed: clear procedures reduce delays because staff know the correct
process to follow from requisition to payment. Instead of relying on guesswork, they follow
standard steps, which reduces mistakes, duplication, and unnecessary back-and-forth. Over time,
this makes procurement smoother and allows the organization to respond more quickly to
operational needs.
Enhances quality of goods and services: a procurement procedure normally requires the user
department to define specifications and the procurement team to assess whether suppliers can
meet them. This helps the organization avoid low-quality goods, poor services, and unsuitable
suppliers. As a result, the organization is more likely to receive items that perform well and
support service delivery effectively.
Strengthens supplier selection and management: procurement policies usually require fair
competition, objective evaluation, and proper supplier monitoring. This helps the organization
choose competent suppliers and build professional long-term relationships based on
performance. Better supplier management leads to improved delivery, reliability, and service
quality, while also reducing supply disruptions.
For example, in a school, a procurement policy would require teachers or departments to raise
requisitions, obtain approval, compare suppliers, and receive goods only after inspection. This
prevents one person from buying items casually without authorization and ensures the school
gets quality textbooks, furniture, or equipment at reasonable prices. In the same way, a hospital
or company benefits because critical supplies are bought through controlled, documented, and
reliable procedures.
In conclusion, having a procurement policy and procedure is essential because it ensures
consistency, transparency, accountability, compliance, cost control, efficiency, quality, and risk
management. It protects organizational resources, improves decision-making, and supports the
achievement of organizational goals.
References
McConnell, C.R., Brue, S.L. and Flynn, S.M. (2009) Economics: Principles, Problems and
Policies. 18th edition. New York: McGraw-Hill.
Mankiw, N.G. (n.d.) Principles of Macroeconomics. 3rd edition.
Perloff, J.M. (2012) Microeconomics. 6th edition. Boston: Pearson.