Procurement And Supply Management Definition
Procurement and supply management is the process of acquiring goods and services from external sources. It includes the planning, sourcing, contracting, and managing of supplier relationships.
The goal of procurement and supply management is to obtain materials and services at the best possible price while maintaining quality and delivery standards. The procurement process begins with identifying the need for a good or service. Once the need is identified, the organization must determine how to source the good or service. There are four main types of sourcing:
-Make: The organization produces the good or service itself
-Buy: The organization purchases the good or service from an external supplier
-Lease: The organization rents the good or service from an external provider
-License: The organization obtains a license to use the good or service from an external provider
After the sourcing method is selected, the organization must identify potential suppliers. Suppliers can be found through online directories, trade shows, industry associations, etc. Once potential suppliers are identified, the organization must select a supplier based on criteria such as price, quality, delivery time, etc.
Once a supplier is selected, a contract must be created. The contract should include terms such as price, quantity, quality standards, delivery date, etc. After the contract is in place, it is important to manage the supplier relationship to ensure that they meet all contractual obligations.
