Procurement Definition – A Changing Environment

The procurement definition is the purchase of goods and services at the best possible prices, delivery dates and legal terms.  Or procurement is a more up market name for purchasing.  In many companies the procurement definition is that of sending out RFP’s (request for proposals) and then reviewing what proposals and bids come back.

There is then a period of negotiating with the chosen company to get the best possible price and terms.

There are some decisions and strategies that need to be taken and decided upon in procurement.  These include:

• Ascertaining the demands from your customers in the short and long run.  This is to ensure that you procure the correct amount of stock.
• Identifying your suppliers to ensure that you are meeting your procurement definition of purchasing goods at the right prices and terms etc.
• Choosing the best computer software and purchasing processes to support your procurement and communicate with your suppliers.
• Ensuring that your purchasing department links with your accounts and warehousing departments.
• Establishing the best policies to interact with your suppliers.
• Setting procedures to evaluate any proposals and quotes that may come from your suppliers.

Procurement definitions are changing all the time.  There is now a very strong trend towards environmental purchasing.  This means that companies only purchase goods that are the most environmentally friendly and have the least packaging. How the goods are manufactured and how far they are transported is also frequently investigated.

Governments are frequently quoting political procurement policies that demand best value, goods that are manufactured or grown in their own country and the need to support and develop local companies.

E procurement, which is almost paperless purchasing via inter and intranets is also gathering pace.  Purchase orders can now be sent via emails or interfacing directly with the suppliers computers. There are modular software systems that support the whole procurement process, interact with other departments, and feed directly into the general ledger, stockroom and warehouse systems. 

The definition of procurement is truly changing all the time and where it will be in a few years time is hard to guess.

 

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