What is Procurement?
Procurement is the larger capacity that describes all activities and processes relating to the acquisition of goods and services. It also includes the activities included in establishing essential requirements, vendor evaluation, negotiation of contract and sourcing activities, such as market statistical research. It can likewise incorporate the purchasing activities needed to order and get merchandise or goods.
In the least complex sense, it also includes a progression of activities and procedures that are vital for an organization to get important goods or services from the best suppliers at the best cost. Such goods or services that are acquired include raw materials, services, supplies, furniture and offices, specialized technical equipment and support, printed insurance or collateral, telecommunication, unforeseen laborer enlistment, travel-related services, testing and training, and office equipment, among many others.
Procurement is nuanced and interlaced with a several center business capacities, and as such, it ought to be viewed as a center part of an organization’s corporate strategy. For instance, if an organization’s identity is dependent on being environmentally cognizant, then the procurement specialist’s technique must concentrate on connecting with green suppliers. If an organization has particular objectives, it needs to secure the right workers to assist it with accomplishing them.
Procurement Policy Example
How it is done in my current organization
My organization is provided with the procurement policy and it is followed strictly. We consider three aspect of the procurement policy; the procurement function, which serves as the major grapple point for internal and external efficiency, and which must form an effective departmental structure, considering the fact that it’s an international organization. Different functions that must be firmly interlinked with purchasing, including R&D, production, and finance; and, lastly, suppliers, whose significance is managed by their market influence and a need for their goods. Some strategies we follow to achieve procurement success are;
- Key sourcing first. This is the most usually applied strategy to achieving procurement excellence. On this path, reducing expenses and developing value begins on the supplier side. It starts by setting an all-encompassing objective no one can oppose—for instance, accomplishing million of dollars in savings instantly—so there is minimal initial resistance or fear within our organization. So we ensure procurement changes on the side of the supplier to build a probable organization.
- Organization first: We concentrate on the internal organization- noting the internal rules of the game that are particularly related to collaboration, and then we take the rules to the supplier market. This rule contains roles and responsibilities for procurement and other function. It is achieved with relatively little investments.
- Direct: This route aligns external and internal efforts simultaneously, which helps achieve procurement excellence faster. It requires top management attention with the board’s full commitment aligned with the procurement transformation program.
What to consider to decide to buy or make
In order to make or buy, the things I need to consider include
- The reviews people make about the product or be procured
- Gathering much of information from different mixed sources
- Be sure of the reasons to prefer a particular product or services
- Check out the product the masses go for
- Prefer the product or services that are familiar and easier to understand
- Consider the appearance and presentation of the arena
- You can track the seller’s activities via the social social media, and
- Consider your emotional decisions and rational justifications
One Contract type and who bears more risk (sellers or buyer)
Fixed Price Contract. The Seller bears more risks since he is bound by the task within the amount of money or time agreed in the contract with the buyer.
Also Study: Supply Chain Management Project
References:
- https://www.hcmworks.com/blog/what-is-procurement
- https://conversionxl.com/9-things-to-know-about-influencing-purchasing-decisions/
- Thank you for Studying “Understanding Procurement With Procurement Policy Example”
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