Without the procurement process, many of the companies, goods, and services we rely on today simply would not be able to operate. To learn more, read on as we cover the basics of procurement as well as the management of it.
What is Procurement?
To understand the management of this concept, let’s first get a good grasp of the concept of procurement itself. Procurement is the business of obtaining or “getting” things, most often for a business. In many cases, this simply means “buying” things from outside providers. Every business needs something from another, outside source in order to fulfill continued operation. Procurement represents that goal and its fruition.
Procurement Management: The Basics
Now that we’ve covered what procurement literally means, we’re in a great position to consider how it is managed in a professional or business sense. In smaller businesses, the management of procurement typically falls to an individual already in a management position. In many cases, employees, like the manager, may make a list of needed items. The manager can then take this list and go about procuring or obtaining these needed goods or services from target outside sources.
In big business, however, the procurement management process can become a much bigger ordeal. For instance, a global, multi-faceted, tech-producing company may literally have hundreds of thousands of needs and in many simultaneous places. At this point, the procurement management process is most typically broken down into a multi-pronged, complex system.
Here we might see a company-wide procurement management plan instituted. Each of the company’s facilities across the globe, as well as the departments within them, would have a set of instructions and standards in place for properly handling the complexities of procurement management. People are certainly involved here, but as complexity grows, computers are increasingly invaluable in this process today.
Other Important Factors
As touched on above, computers are an increasingly important factor in professional procurement. This is a sure example of an associated factor that has a great effect on procurement efforts. As a result, computers and software that handle procurement matters, as well as the ability to correctly use them, are subjects of heightened and specific attention for procurement managers.
Another subject of attention for today’s procurement manager is that of pricing and negotiation. Companies must consider the providers from where they purchase their necessities so as to pay the most competitive prices and save the most money in the end. Initial price points and the subsequent ability to negotiate and add flexibility here are thus quite crucial.
Similarly, storage space is another concern often encountered by procurement managers. There must be space to store inventory, even when larger purchases are made. Attention to future inventory needs, current space, and shipping times can all then come into play here.
In conclusion, procurement, and the management of it, are the professional endeavors of “getting” or obtaining things necessary to a business from some outside source. So important is this matter in some cases that failure or success here can truly make or break an entire business. These are the basics of procurement management today. For even more help in answering questions like “What is procurement management?”, you are encouraged to inquire with the Chartered Institute of Procurement and Supply.
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