Skip to content Skip to sidebar Skip to footer

Procurement Definition

Procurement Definition

Procurement definition is the acquisition of goods or services. In acquiring goods, one must ensure that he gets the goods that will serve the intended purpose, of good quality and at an appropriate quantity. 

The goods must also be of the intended quality and must reach the intended user in good time in order to fully serve their purpose. Governments and corporations always try to carry out this exercise while at the same time minimizing fraud and bribery or other undue influence.

Procurement Definition

Procurement Definition usually involves activities like delivery, handling and taking care of elements like price fluctuations. Generally speaking, procurement involves buying goods when the goods are scarce. 

Procurement can also be defined as the conceptualization, initiation, design, development, testing, contracting, deployment, logistics support, modification and disposal of goods as per the needs of the client. 

It is worth to note here that not all procurement offices may undertake all the activities mentioned above. Some may not even deal with acquiring goods at all, only services. The roles of procurement differ slightly from organization to organization or from private sector to government.

The procurement process covers both acquisitions of goods from outside parties as well as from people inside the procuring organization. The process covers a wide range of activities beginning with identification of needs up to the end of a service contract or up to the time, the goods are delivered. 

Sometimes it continues up to the time when an asset reaches the end of its useful life.  In simple terms, procurement involves options appraisal and the very important decision to make or buy.

The procurement process can be one long tiring process especially where a high financial risk is involved.   For this reason, it is best left to professionals. 

The process of obtaining goods and services from preparation, processing requisition, and receipt of the goods up to the point where approval for payment of invoice is reached can take a long period and long tiresome days.

To break down procurement into finer details we can say it involves ten major steps. 

These include:

  • Purchase planning
  • Standards determination
  • Specifications development
  • Supplier research and selection
  • Value analysis
  • Financing
  • Price negotiation
  • Making the purchase
  • Supply contract administration
  • Inventory control and stores
  • Disposal

These are not the only functions of procurement. It also deals with lots of other related functions as may be required by the administration of each individual organization.

Procurement procedure may also differ depending on the product and use for the product. For instance, military products require to be efficient and reliable and the procurement process can be very thorough and slow to avoid faulty or poor quality hardware. 

In some cases, it may require to be very secretive to avoid endangering lives of citizens. The cost of goods involved can be a major determinant of whether the process will be a short and quick one or one that is slow and tedious. 

No one wants to rush through buying hospital equipment worth millions of dollars only to realize they were all faulty and over prized.

Procurement can be direct or indirect. Direct procurement is when the products bought are meant to be used as raw materials to produce other goods while indirect procurement is where the products bought are for operational purposes.

Basically, procurement is all about gaining, buying, purchasing or acquiring goods and services for an organization.

Post a Comment for " Procurement Definition"