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Definition of Procurement

Procurement is a term that is often not understood by many individuals in the industry. To elevate people’s awareness and familiarity, 1st Compucare break it down and offer  a brief understanding regarding what procurement means and how it really works.

 

 

What is Really Meant by Procurement?

Procurement pertains to the acquisition process being used to properly secure works, goods and services from known external sources; external to your institution, charity, company, organization or even to own person.

Prior to reaching an agreement, these external sources should be relatively appropriate and offer you with the right solution to your problem. By following this decision, the cost or price needs to be ultimately satisfactory. Larger corporate and public organizations prefer to promote greater competition and choices with acquisition programs and procurement. Quality and choice commonly goes hand in hand and can go a long way in businesses. Everyone can certainly benefit from this.

The Different Types of Procurement

 

There are two different types of procurement and these are highlighted below:

 

  • Direct Procurement –This type of procurement is often associated with raw materials and goods production.
  • Indirect Procurement-This type is often linked with facilities, repair, and maintenance and operating supplies. This is more likely to be in the 1st Compucare’s remit.

 

 

The Life Cycle of the Procurement Process

 

  • Recognizing needs
  • Researching and finding suppliers
  • Creating contact an communicating with suppliers
  • Negotiation of relevant terms
  • Evaluating the service  of the supplier
  • Satisfaction
  • Payment

Based on a study conducted in 2011 by Ardent Partners, it has been found out that procurement departments significantly manage about 60.6% of the total enterprise spending and make savings of about an average of 6.7% every year. This is a clear proof of how vital procurement is when running businesses as well as ROI.

 

Comments

 

The following are some of the responses to this blog that was published providing individuals definition of procurement and other essential information related to it. These comments were shared by different individuals coming from different sectors.

 

Comments from LinkedIn-Data Center and Build Professionals

 

Adrian Gamory, the Director of Client Services in Sabey Data Centres Corporation said that procurement pertains to a group of individuals who mainly focus in negotiating so that you can work or sell hardware absolutely free.

 

Kelly Drake, the Project Manager of Critical Power Exchange defined procurement as the process of obtaining materials, supplies and equipment.

 

Clarke Drummond on the other hand, the Account Executive at Netga Technologies INC. stated that procurement is defined as an acquisition process.

 

Roy Culligan of Critical Facilities Specialist and Consultant also commented on this blog post and according to him, the post was fine yet he noticed one big omission and that is the relationship existing between the team requiring goods in the first place and the procurement team. He has seen scenarios like teams that wish to properly procure goods all by themselves, believing that entrusting this duty to another team is just a waste of time and likely to reduce the content of their very own CVs.

 

Moreover, Roy Culligan revealed that he had seen IT teams and facilities teams that are reluctant to make use of procurement believing that while they want premium quality goods coming from small or known suppliers, procurement team usually want the cheapest available products. Procurement views technical teams as amateurs and must leave purchasing to experts. With these kinds of beliefs, joint relationships are strained as they turn out to be poles apart.

 

It is certainly fundamental that these all get together and be able to share their on sets of concerns in open manners so that they can fully understand the concerns of one another and what each can actually bring to the parties making it ideal and beneficial practice for the entire company.

 

These are just few of the many comments shared by different individuals from different industries. Every person actually has his own personal viewpoint and insight about procurement.

 

In real estate, the term “Procuring Cause “can also be used. This means that original agents who were considered the procuring cause which found the buyers and bring in the deals to fruition or maybe when there is meeting of minds. Therefore, procurement will be the same as procuring buyers.