What Is Procurement?

What Is Procurement

The term Procurement is mentioned a lot in Business, but many still find themselves asking the question – What is Procurement?

Procurement is the full cycle of the acquisition of works, goods or services, beginning from the point where a requirement has been identified, through to awarding and managing a contract with a supplier to provide the required service. Procurement processes can be used to acquire anything from stationery to the building of a new school.

The term Procurement is regularly used by public sector organisations such as local authorities and National Health Service.

Public bodies’ Procurement processes can have varied objectives; while receiving the most economically advantageous service is the most common objective, Procurement processes are often used to meet other objectives, such as to obtain a more environmentally friendly service.

what is procurementCollaborative contracts are becoming more commonplace; where multiple public bodies will combine their requirements and run a single Procurement process to meet their merged requirements. Due to the higher volume of business promised by collaborative contracts, suppliers will usually offer larger discounts. Collaborative contracts are usually led by one public body, acting on behalf of the others. In addition to this, some Procurement Centres of Expertise set up and manage contracts on behalf of public bodies, allowing all public bodies to use these collaborative contracts. Some examples of these Centres of Expertise are OGC, Buying Solutions and Procurement Scotland.

The stage of the Procurement cycle when suppliers are invited to submit bids is known as the Tendering process. Usually, in addition to submitting their monetary bid, suppliers are required to respond to a questionnaire which the public body has put together with the intention of identifying and eliminating suppliers who are unable to meet their basic requirements, thereby preventing their tender from being successful regardless of whether they have the most economically advantageous bid.

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