The influence of procurement efficiencies on the performance of a mining company

Abstract

The study investigates the influence of procurement efficiency on the performance of a mining company. Procurement efficiency entails that procurement in a mining company, continuously take up fewer resources while generating more value. The value generated in procurement could directly translate to the performance of the company and thus attaining procurement efficiency should exist at the centre of the company's objective. An in depth understanding of the construct of procurement efficiency and its influence on company performance is embarked on, to expand debate and knowledge on solutions that a mining company can adopt to deal with the numerous challenges in the business environment. A qualitative study employing a convenient sample of six managers working in the finance, procurement and commercial department was conducted. The participants were subjected to semi-structured interviews which were aided by an interview guide and self-administered. Several themes emerged from the qualitative analysis which included the understanding of procurement efficiency, the understanding of organizational performance, attaining procurement efficiency, managing the performance of an organization, the influence of procurement efficiency on organizational performance and improving the relationship between procurement efficiency and organizational performance. The study concludes that procurement efficiency positively influences company performance as it is associated with increased operational efficiency, performance, value realization, compliance with regulations, good governance, profitability and service delivery. Mining companies are faced with real challenges in attaining procurement efficiency, although the knowledge of what it entails exist. The challenge in attaining procurement efficiency can be explained by the inability to fully integrate procurement efficiency into the process of managing the performance of the mining company. Outsourcing skills to help with the integration of procurement efficiency with organizational performance could make valuable difference in the mining sector.