Exploring the Effects of Centralised Procurement on Projects in South African Matrix Mining Organizations

Abstract

Synopsis: The increasing use of centralized procurement in South African mining organizations has led to the need to understand the effect that this procurement governance model has on project procurement performance in matrix organizations. The purpose of this study is: a) to understand the challenges experienced in projects in South African matrix mining organizations using centralized procurement; b) to explore how the aforementioned challenges impact project performance in terms of time, cost, quality and client satisfaction. Relevance for practice education: The study has identified knowledge gaps in centralized procurement literature especially in the context of the South African mining industry, which encourages further research in this field. Research design: This paper presents the findings of a qualitative study, where 13 semistructured interviews were conducted with project managers, procurement officials and suppliers of 5 different mining organizations in South Africa. Main findings: The study found that centralized procurement in a matrix mining organization is not perceived by the research participants to significantly influence procurement or project performance. The perception of the interviewees is that there are mainly positive effects in adopting centralized procurement in matrix mining organizations. Research implications: The study highlights the relevance of centralized procurement in the mining industry in South Africa and denotes areas of improvement within the industry which could improve project procurement as well capital expenditure.