Notesale: Turn your study into money

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P&S in different types of organisations
Non-profit
organisations

Private
enterprises

Public sector
organisations

 The size of sectors varies depending on
the economic system (e
...
, free market
vs
...

 The P&S function varies depending on the
sector
...
2-1

1
...


=

ITC

represent more than half
of GDP and half of
employment worldwide

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...
Private enterprises:
Disadvantages of
Depend on
their leaders

Lack skilled staff
& information
systems

ITC

SMEs
Vulnerable due to
limited product
range

Have difficulties
in raising
capital

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...
Private enterprises:

Constraints of P&S in SMEs

No IT support
Shortage of
working capital influences
size & timing of orders
P&S function
not well
developed

No specialised
P&S staff

ITC

Limited P&S knowledge
and skills

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...
2-6

1
...
2-7

1
...
2-8

1
...
2-9

2
...
2-10

2
...
)

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...
Public organisations:
The public sector difference and P&S
Private companies are driven by profit, whereas public
organisations are driven by accountability to the public
Increasing pressure
to ensure “better
governance” =




ITC

Value for money
Work is conducted ethically
Decisions based on clear and objective criteria
All parties treated fairly, and have equal access
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...
Public organisations:
Public procurement
The World Trade
Organisation’s
WTO
Government Procurement
Agreement aims at opening
the public sector to
competition
Complying with highly
prescriptive procedures can
cause delays and higher
costs,
= conflict with efficiency
and good value for money
...
2-14

Introducing competition in
public procurement

 Compulsory competitive tendering
...

 Public-private partnerships
...

ITC

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...
P&S in non-profit organisations
E
...
: Foundations
Non-profit
organisations

Co-operatives
Professional associations
Academic institutions, etc
...

ITC

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...

 Fishing, forestry,
agriculture…

The secondary sector:
 Conversion and processing
of raw materials into finished
goods (manufacturing),
 Electricity & water
utilities and construction
...

ITC

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...
3-2

P&S in different sectors
Primary sector

Secondary sector

• Purchase of
maintenance, repair
and operation (MRO)
items

• Supply of components
and materials to the
production line

• Large size of certain
plant and machinery
• Highly specialized
• Operational supplies

• Purchasing and supply
function fundamentally
important to most
manufacturing firms
• Focus = continuity of
supply

Tertiary
(services) sector
• Importers, wholesalers,
retail = P&S critical
• Banking, logistics, repair
& maintenance,
communications, tourism
& travel, consultancy…
...

P&S is also affected by the rate of change in
market conditions and in technological
developments
ITC

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...

delivered on time
...

at the right place
...


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...
4-1

Non-profit

To the public

To sponsors or members

Typically no

Generally not relevant

The law (in general)
The law (in general)
Constraints

ITC

Any self-imposed
constraints

Laws, regulations and
procedures applicable
to the public sector

The law (in general)
Major sponsors may impose
constraints

Changes in government Any self-imposed constraints
policy / politics

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...
4-1

Feature

Private

Public

Internal purchasing Generally required to
& supply policies
follow principles of:
and guidelines
 Transparency
generally apply
 Accountability
Can choose from
wide range of
 Open competition
supplier
 Non-discrimination
relationships
May also have to
Purchasing SMEs often
comply with other
characterised by:
policy considerations
and supply
 Centralised
(e
...
, social and
decision-making economic)
function

Non-profit

Internal purchasing & supply policies
and guidelines usually apply
May also be required to follow
donors’ procurement guidelines

 Limited technical Procedures can
skills and market cause delays and
knowledge
inefficiencies
 Limited funding
and supplier
credit
 Low value,
fragmented
ITC

Required to follow
donor guidelines
when procuring
under grants and
special loans
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...
4-1

About your organisation
Private

Non-profit
Public

SECTORS
Primary:
Extractive

Secondary:
Manufacturing

Tertiary:
Services

ITC

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...
4-2

About your organisation’s purchasing & supply function
1
...
Constraints related to size:
3
...
Share of total cost:

%
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