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Low-value procurement in humanitarian organizations - the importance of using purchasing management to improve supply function efficiency

Cabós Larroya, Hugo (2011) MTT820
Engineering Logistics
Abstract (Swedish)
Background: Public sector organizations develop procurement policies and regulations to ensure appropriate funds management and practice of “best value for money” by managers and purchasing specialists. Nevertheless, while these policies ensure compliance, they often convert the procurement process in resource intensive activities. Previous literature has also pointed the existence of tension between the public expectations of transparency and accountability, and of efficiency and effectiveness of resource management (i.e. Schapper et at. 2006).
If monetary resources are scarce to solve issues such as hunger, health or education; humanitarian organizations also face other issues such as the consequences arisen from disparity in... (More)
Background: Public sector organizations develop procurement policies and regulations to ensure appropriate funds management and practice of “best value for money” by managers and purchasing specialists. Nevertheless, while these policies ensure compliance, they often convert the procurement process in resource intensive activities. Previous literature has also pointed the existence of tension between the public expectations of transparency and accountability, and of efficiency and effectiveness of resource management (i.e. Schapper et at. 2006).
If monetary resources are scarce to solve issues such as hunger, health or education; humanitarian organizations also face other issues such as the consequences arisen from disparity in infrastructure development as industrial development is not equally spread around the globe. Humanitarian organizations need to adapt to resource limitations in each country, while complying with internal organizational regulations. It is suggested for purchasing and supply management to be considered as a strategic function (Ellram et al., 2002) to improve the overall efficiency and effectiveness in order to reach those who are in need. Purpose: Gain understanding of factors that need to be considered when humanitarian organizations want to improve efficiency in procurement procedures of low-value items.
Research question: What are the key elements affecting procurement of low-value goods in humanitarian organizations and how can purchasing management improve the overall efficiency of the supply function?
Method: An abductive approach was taken in this research matching empirical findings with relevant theory. Theories on public procurement have been compared to the findings from the case study research conducted at UNICEF. The case study data is collected from a combination of interviews, observations and focus groups.Conclusions: Low-value procurement, although not considered strategic, can constitute a significant resource commitment, hence a considerable part of the time spent on operational procedures. Procurement processes are to be streamlined with purchasing management practices to avoid additional costs, not only on low-value items, but in general procurement. However, in low-value procurement, administrational and transactional costs can become a significant part of the total cost of product. Policies, strategies, procedures and the structure of the organization are key issues to accomplish this goal. Outside of the organization, the operational environment and infrastructure availability, the technology available to manage information and link the supply chain, and the capabilities of suppliers to adapt to these practices also affect how the organization streamlines the processes. (Less)
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author
Cabós Larroya, Hugo
supervisor
organization
course
MTT820
year
type
M1 - University Diploma
subject
keywords
developing countries, low-value procurement, humanitarian organization, policy management, public sector procurement, purchasing, Keywords: Procurement
language
English
id
2164162
date added to LUP
2011-09-21 12:38:50
date last changed
2013-02-12 11:29:43
@misc{2164162,
  abstract     = {Background: Public sector organizations develop procurement policies and regulations to ensure appropriate funds management and practice of “best value for money” by managers and purchasing specialists. Nevertheless, while these policies ensure compliance, they often convert the procurement process in resource intensive activities. Previous literature has also pointed the existence of tension between the public expectations of transparency and accountability, and of efficiency and effectiveness of resource management (i.e. Schapper et at. 2006).
If monetary resources are scarce to solve issues such as hunger, health or education; humanitarian organizations also face other issues such as the consequences arisen from disparity in infrastructure development as industrial development is not equally spread around the globe. Humanitarian organizations need to adapt to resource limitations in each country, while complying with internal organizational regulations. It is suggested for purchasing and supply management to be considered as a strategic function (Ellram et al., 2002) to improve the overall efficiency and effectiveness in order to reach those who are in need. Purpose: Gain understanding of factors that need to be considered when humanitarian organizations want to improve efficiency in procurement procedures of low-value items.
Research question: What are the key elements affecting procurement of low-value goods in humanitarian organizations and how can purchasing management improve the overall efficiency of the supply function?
Method: An abductive approach was taken in this research matching empirical findings with relevant theory. Theories on public procurement have been compared to the findings from the case study research conducted at UNICEF. The case study data is collected from a combination of interviews, observations and focus groups.Conclusions: Low-value procurement, although not considered strategic, can constitute a significant resource commitment, hence a considerable part of the time spent on operational procedures. Procurement processes are to be streamlined with purchasing management practices to avoid additional costs, not only on low-value items, but in general procurement. However, in low-value procurement, administrational and transactional costs can become a significant part of the total cost of product. Policies, strategies, procedures and the structure of the organization are key issues to accomplish this goal. Outside of the organization, the operational environment and infrastructure availability, the technology available to manage information and link the supply chain, and the capabilities of suppliers to adapt to these practices also affect how the organization streamlines the processes.},
  author       = {Cabós Larroya, Hugo},
  keyword      = {developing countries,low-value procurement,humanitarian organization,policy management,public sector procurement,purchasing,Keywords: Procurement},
  language     = {eng},
  note         = {Student Paper},
  title        = {Low-value procurement in humanitarian organizations - the importance of using purchasing management to improve supply function efficiency},
  year         = {2011},
}