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Comprehensive Analysis Of Procurement Process

A comprehensive analysis of the Procurement Process at




Dinesh Appavoo (200610111)
20 April 2006

1. Introduction

Discovery Health established itself as a successful and innovative company with currently the largest open medical scheme in South Africa with 1.8 million members (Discovery A, 2006: on-line). Discovery is a specialist insurance company with five strong and distinct businesses. The businesses are Discovery Health, Discovery Life, Discovery Vitality, Prudential Health (UK) and Destiny Health (USA).

Discovery listed on the JSE in 1999. The company’s strategy is to grow the business organically by building a strong foundation of innovation and engaging people in the management of their health in order to achieve better social and financial outcomes (Discovery A, 2006: on-line). While a medical aid would be an essential ‘commodity’ which consumers would not normally aspire to buy, Discovery positioned itself as a value-adding company that provides products and services that consumers want to buy. For an organisation that has approximately 4000 employees, the procurement process plays an important role in ensuring that the organization’s everyday business in not hindered in anyway. Being a service organization, Discovery believes in its people and thus ensures that they have all the tools to carry on its day-to day function without any hindrance

Procurement is the “process of buying”. One way to view the supply chain for a company such as Discovery is to divide its logistics system into inbound logistics (materials management and procurement) and outbound logistics (customer service and channels and distribution). Procurement is the department within materials management which is concerned with the process of ascertaining the organisation’s material and service needs, selecting suppliers, agreeing terms, placing orders and receiving goods and services. Discovery would like to obtain the right material, in the right quantities, with...