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Centralising procurement - What staffing levels?

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  • Centralising procurement - What staffing levels?

    I have been given the task of centralising procurement for my company (great fun indeed!).

    The problem is staffing levels??

    The management information I have to work with is terrible, there is alot of duplicate processes and massive areas of spend to work on. We spend approx 30million pounds on non-pay expenditure and there is plenty to do.

    Approx 10million is spent on travel and the setup I have planned will have 3 dedicated staff for travel.

    The other 20million I don't know, I don't want it to fall on its arse but at the same time asking for 20 staff ain't gonna happen!

    Based on a spend of 30million with minimal management information. How would you structure you department at the planning stage and looking for funding?

  • #2
    Re: Centralising procurement - What staffing levels?


    From my eperience one purchasing person should be able to handle a a commodity or pend pool of >15Mil pounds in this regard i would spilt my 30 Mill expenditure between three personnel.
    In this reagrds you will be challenging the individuals to step up in terms of thier skills and they will need support and tools which you will have to build when you are in process of centralising the department.

    This will help you in not asking for more staff making sure that you keep your staff overheads down but i should think that your training budget will increase as you will be helping the staff upgrading thie skills...

    Just remember that we are tasked to do more with less but upside of it is that comapnies are willing to spend on training staff...

    so good luck ...


    • #3
      Re: Centralising procurement - What staffing levels?

      That seems like a practical number and good explanation of how you came to it.

      Many thanks,


      • #4
        Re: Centralising procurement - What staffing levels?

        From your statement: your organisation would like to create a one-stop procurement office - My take is put processes on paper and then revise your procurement policy to include all the recommendations.

        1. Travel Co-ordinator(s)
        This function requires an analytical thinker, who does not require desktop managment and remembers you are cutting out travel agents all together. This person will be responsible for flights; car hire, shuttle services, transfers, chauffeur drivers, train, coaches, venue hire / conferencing and accommodation. As a manager you must secure performance based contracts with your suppliers and negotiate standard or escalating rates. Encourage supplier rotation at all costs to keep all suppliers on their edge. The number of staff dependeds on the number of travellers and the maturity of your organisation in terms of organised travellers.

        2. Co-ordinator of Procurement Above PPPFA Threshold - Scoring per Terms of Refernce (TOR)
        This person should be skilled in figure analysis. The person must score a supplier to give them points as per TOR. The person must recommend the successful supplier based on performance / fuctionality, price and preferencial points claimed / promotion of economic / wealth distribution. In South Africa it is called the BBBEE Strategy. Rotation of suppliers is also encouraged as bigger suppliers can disadvantage small supplier by price reduction.

        3. Administrator Procurement - the person will be mainly involved with consumables: stationary and urgent procurement. This person should be an all rounder to relieve others during vacation or staff leave. This person is important as he or she can also be used on special / strategic once-off projects and support. The person must have excellent report writing and can be used as supplier performance monitor to post audit for above coordinators for fairness and proper policy implementation.

        4. Yourself - Market Scanner and read a lot on business newpaper and surf the Internet. you are a journalist of your division. Create a procurement plan and support your shareholders at all cost (internally and externally). Review your procurement policy. Come reporting-time you burn the midnight oil and crunch numbers.

        Good Luck.
        Last edited by liamm; 10-12-2010, 07:00 AM.


        • #5
          Re: Centralising procurement - What staffing levels?

          Start by getting a better breakdown of your spend, itís the first principle for all Procurement Managers. There are companies such as Roslyn Analytics and Spikes Cavell that can analyse your spend to provide you with a detailed breakdown. Only ever look at the AP (Accounts Payable) data, which is actual money you have paid out to your suppliers. PO or contract spend can be misleading.

          Donít look to buy the actual goods yourself, you should be able to buy a managed travel service through one supplier. One member of your team should be able to manage that supplier relationship and a few more...

          Typically, depending on what business you are in the rest of the £30m will be made up of IT; HR; Facilities and MRO (Stationary and operational items). Bet IT will be the next biggest area of spend and you should look to buy a managed service/outsource provision of IT and then manage that relationship.