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Why centralizing procurement matters

According to the KPK, procurement is the second-most vulnerable field to corruption in the country, as evident in the myriad of graft cases related to the process.

Nadia Assegaf (The Jakarta Post)

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Mon, November 6, 2017 Published on Nov. 6, 2017 Published on 2017-11-06T08:39:53+07:00

Civil service: An official of the Civil Registry and Population Agency (Disdukcapil) print e-IDs at the agency's office in Tasikmalaya city, West Java, on Oct.24. (Antara/Adeng Bustomi)

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espite their differences, corporations share similarities when it comes to purchasing items to support their operations, such as IT networking and building management. Looking closely at those needs, procurement stands as a facilitator to get the requirements that companies have to fulfill.

Some say, however, that procurement is an opportunity to increase margin, while some others call it a potential silent killer of company profit.

During project deals, most companies focus on revenue generation, but lack attention to controlling total costs of ownership. Owing to its nature as a blind spot, the potential threats, including fraud, might not be easily identified for various reasons.

According to the Corruption Eradication Commission (KPK), procurement is the second-most vulnerable field to corruption in the country, as evident in the myriad of graft cases related to the process. Indonesia Corruption Watch (ICW) 2015 data said Indonesia had lost Rp 3.11 trillion (US$230 million) as a result of corruption in the procurement sector alone.