What are five elements of corporate governance
- Vision and Mission
- Procedures and policies
- Code of Ethics
- Core Values
- Strategic Objectives
What are the four D’s
In procurement and supply management, professionals may face conflicts of interest that could influence their decisions. According to the Chartered Institute of Procurement & Supply (CIPS), individuals should manage conflicts ethically by applying the Four D’s: Disclose, Distance, Delegate, and Disassociate. These actions help maintain transparency, fairness, and integrity in procurement activities.
Disclose
Meaning:
Inform the appropriate authority (e.g., manager or organization) about any actual, potential, or perceived conflict of interest.
Purpose:
Ensures transparency
Allows the organization to manage the conflict appropriately
Example:
A procurement officer informs their manager that a supplier bidding for a contract is owned by a relative.
Distance
Meaning:
Remove yourself from decision-making or discussions related to the situation where a conflict exists.
Purpose:
Prevents bias or influence
Maintains fair procurement processes
Example:
A buyer steps away from supplier evaluation meetings because they have a personal relationship with one of the suppliers.
Delegate
Meaning:
Pass the responsibility for the task or decision to another qualified colleague.
Purpose:
Ensures the procurement process continues without bias
Maintains accountability and fairness
Example:
A procurement manager assigns the tender evaluation to another team member due to a conflict.
Disassociate
Meaning:
Completely remove yourself from the situation or relationship causing the conflict.
Purpose:
Eliminates any possibility of influence
Protects professional and organizational integrity
Example:
A procurement professional withdraws from a project entirely because of a serious conflict of interest.
What are ILO
Creation of conventions that protect people who are working.
What are some ILO”s?
Decentralized, Hybrid, Centralized Procurement
Procurement structures determine how purchasing decisions are organized within an organization. The three main procurement structures are decentralized, centralized, and hybrid procurement, each offering different levels of control, flexibility, and efficiency. Organizations choose a structure based on their size, operational needs, and strategic goals.
What is Decentralized Procurement
Purchasing decisions are made by individual departments or business units, not a central team.
Benefits of Decentralized Procurement
Benefits (Pros):
Faster purchasing decisions ⏱️
Departments buy items that best fit their specific needs
Greater flexibility and responsiveness
Stronger local supplier relationships
Risks of Decentralized Procurement
Risks (Cons):
Higher costs due to smaller purchase volumes
Duplicate purchases across departments
Harder to enforce standard policies
Less spend visibility and control
Example:
A hospital where each department buys its own medical supplies.
What is Centralized Procurement
A single procurement department manages purchasing for the entire organization.
Benefits of Centralized Procurement
Benefits (Pros):
Bulk buying power → lower prices 💰
Better spend control and oversight
Standardized processes and contracts
Stronger supplier negotiation leverage
Risks of Centralized Procurement
Risks (Cons):
Slower decision-making
Less flexibility for department needs
Procurement team may be less aware of specific requirements
Possible bureaucracy
Example:
A large company where one corporate procurement team purchases all office supplies and equipment.
Hybrid Procurement
Definition:
A combination of centralized and decentralized procurement.
Benefits of Hybrid Procurement
Benefits (Pros):
Combines cost savings with flexibility
Strategic items bought centrally
Departments retain control over specialized purchases
Better balance between efficiency and responsiveness
Risks of Hybrid Procurement
Risks (Cons):
Role confusion (who buys what?)
Requires strong coordination and policies
Potential conflict between central and local teams
Example:
Head office buys IT equipment and major contracts, while departments purchase small everyday items.
Quick Summary of Decentralized, Centralized and Hybrid Procurement
Quick memory trick for exams:
Decentralized = Flexible but costly
Centralized = Cheaper but slower
Hybrid = Balanced but complex
Four structures under Hybrid
Consortium
Shared Services
Outsourced
Lead Buyer Structure
