Find out more about – Procurement

A basic definition of procurement would be ‘the best possible acquisition of goods and/or services at the right time, price and from the right source. Procurement at a complex level can involve locating long-term suppliers, essentially committing one organization to another.Procurement most commonly includes buyers making decisions in conditions of scarcity. A method often deployed at this time is cost-benefit analysis.COST-BENEFIT ANALYSIS - This process involves weighing up the total expected costs against the total expected benefits in order to choose the best or most profitable outcome.Procurement is often split into two groupings, these being direct and in-direct. Direct procurement is relevant to manufacturing scenarios unique and is also the main focus of supply chain management. This style of procurement takes into account all items that are part of the finished product; therefore it directly influences the manufacturing process.Just-in-Time (JIT) is a commonly employed timing system whereby the purchasing of consumables is time-based in order to keep inventory costs to a minimum. This method originated in Japan but was adopted globally by many manufacturing companies in the 1990s.The standard procurement cycle in modern business usually conforms to the following 7 steps:

1. INFORMATION GATHERING – This is the first step in the process and deals with searching for suppliers who can satisfy your specific requirements
2. SUPPLIER CONTACT – When one or more suitable suppliers have been located contact is made via a variety of methods including requests for quotations (RFQ) and requests for information (RFI). Alternatively they could be contacted directly.
3. BACKGROUND REVIEW – At this stage references are sought about the products/services of the companies in question.
4. NEGOTIATION – Negotiations take place over such issues as price, availability and any other key aspects of the deal.
5. FULFILLMENT – Payment, delivery and supply of the goods/services as agreed in the contract is undertaken.
6. CONSUMPTION, MAINTENANCE AND DISPOSAL – At this point the performance of the products and services are evaluated.
7. RENEWAL – When the products/services have been received or the contract has expired the company determines whether to continue with the current supplier or to consider other options.