PROCUREMENT
Procurement structure
The core structure of a Procurement team is often defined as either “centralised” or “decentralised”. Under a
centralised structure a team of skilled and experienced professionals will oversee the procurement activities
of the organisation. Under a decentralised model a functional and integrated approach is taken towards
procurement within respective technical areas. It is most common for WA Local Government to centralise a
team of Purchasing Officers who are responsible for running compliant procurement processes, and who
then deliver executed contracts back to business units for Contract Management.
A centralised system has the advantage of better control, greater expertise, and recognition of the
procurement function. However workflow and resource pressures can lead to bottlenecks and lack of
technical input relating to business requirements. Conversely, decentralised procurement improves supplier
relationship management, however can also result in a lack of scale and experience in procurement
competencies and risk breach of policy/compliance. There is also greater inconsistency within approach,
leading to different expectations in the marketplace.
WALGA advocates a hybrid procurement structure whereby there is centralised procurement control (policy
and compliance) and devolved end user access. The eQuotes system developed by WALGA supports this
structural model, delivering process control such that the risk of procuring from unauthorised or uncontracted
suppliers is removed.
The structure of the procurement team, its management, and reporting also requires strategic consideration.
Currently it is common for the purchasing staff to report to Finance and/or Corporate Services, and the
functions of the team are predominantly transactional in nature. However strategic procurement is critically
important to the planning and effective operation of the organisation and procurement can also be structured
into the organisation in areas such as governance, economic development, and even technical services. By
positioning procurement as more than an administrative function within the organisation structure, a
statement is made about the value and importance of procurement as an enabler and efficiency generator to
the entity. Many corporate (private sector) organisations have a CPO (Chief Procurement Officer) that
directly represents spending efficiency and analytics to the Executive table. There are currently no CPO
roles within Western Australian Local Government however there are several CPO’s within Local
Government in the Eastern States, charged with oversight of expenditure into the hundreds of millions.
Within Business Units, a category management structure can be applied to key strategic functions. For
example centralising the energy contracts and spend within one business team (e.g. sustainability services),
centralising the fleet and fuel spend with depot administration, and facilities maintenance with an area such
as asset administration or parks and gardens can also be critical to delivering optimal contract management
and supplier relationship management.
Summary:
The reform challenge for Local Government is to provide an organisational structure for the procurement
team that is sufficient in size, commensurate with the expenditure levels, supplier numbers, and workflow of
the new Local Government. Process efficiencies can be identified through technology (electronic tendering,
online contract management, eQuotes, etc). The structure should take into account those elements of the
procurement process that are to be centralised and which components of activity will be driven by functional
business units.
Procurement Structure notes | Page 1