What Is Procurement?

What is Procurement? Procurement can be defined as the process of purchasing goods, works or services at the most economical total cost, while adhering to any specific requirements. The Procurement process should be optimised for benefit of the authority, supplier, or individuals and should be secured by signing a contract.

Procurement usually involves the acquisition of goods, works or service which are required either as a raw material or for operational purposes for a company or individual. Quality checks are also required as part of the Procurement process, and suppliers are usually screened by the procuring company. Procurement processes usually lead to a good business relationship between the procuring company and the supplier.

Other terms for procuring include gaining, purchasing, buying and acquiring, and these provide in insight into what Procurement is. The Procurement process can vary between different companies, particularly when individuals are procuring goods or services for themselves, or when public sector organisations are procuring.

Electronic Procurement, which includes electronic invoicing, electronic ordering and electronic payments, is becoming more and more popular, with benefits including faster delivery and quicker payment.

Procurement procedures can also differ depending on the type of product or service being procured. While cost is the decisive factor in most Procurement exercises, factors such as reliability can outweigh cost when deciding on the successful supplier.

Procurement processes are carried out in some form or another in virtually every organisation, and are integral to smooth business operations.

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