Procurement and Performance Management in an Organization

Procurement and Performance Management in an Organization

For an organization to be successful, it is critical to attain value through the core goals and objectives of the organization to the stakeholder. This is attained through embracing the appropriate processes of the product lifecycle. Standing (2010, p. 23) has defined value management as well-established and structured process used to define and maximize the value of money. Value management can be applied to various sorts of organizations regardless of the size and the product life cycle. Its advantages have been identified to be effective and efficient when management procurement is applied. Procurement performance is determined the success of required activities for the organization to ensure products and services reach the final destination. This cycle entails measurement, implementation, planning, and analysis. Therefore, procurement performance ensures efficient and effective organizational processes based on the value of money.

There is a clear association between procurement performance and value management in essence that when one is applied, it results into the other one. Value management mechanisms in organization management create best procurement performance. This is based on procurement management methods that consider the overall organization costing. For an organization to attain the best value management and procurement performance, the supplier must exhibit the best performance data. Procurement performance and value management have been the primary focus of successful management reforms across the world. Such reforms have incorporated outsourcing, managerialism, centralization, and corporatization within the organization. Apparently, frequent tensions have confronted such reforms to affect organizational transparency and accountability vs. procurement performance (Solanki 2009, p. 73).

Operational failures in procurement performance have been associated to weaknesses in the professional value management rather than inherent weaknesses. Management advocates have attributed the weaknesses in procurement performance to the regulatory regime to reduce the role of value management. Within the two frameworks, the policy roles and the political contexts are not frequently acknowledged (Wincel 2008, p.66). Across Australia, value management was initially used in the private sector, but currently it is being applied in the construction industry. Leading construction firms addresses value management to revamp development of design for the sole purpose of enhancing procurement performance. In turn, this reduces the overall cost of the project. Therefore, it is clear that value management is applied to make significant enhancements on operations of procurement, manufacturing processes and product development within companies.

Writers such as Lowe and Leiringer (2006) cite that procurement has become a complex management service that seeks to support the organization's strategic goals. Nevertheless, some of the intended customers of procurement have intertwined its association with value management. Therefore, it has become difficult to trust the motives of procurement performance. This has been partially because of misunderstandings among customers. While it remains to be a strategic business associate, most purchasing practices have become fact tactical hence self-serving. This has led to misunderstandings between the management of procurement performance and value management. Every day, collaboration between the two functions is a strategic approach, necessary to develop the organization's own functional units and business to be strategically relevant.