When most people hear the word “procurement,” they think of purchasing or acquiring goods or services. But procurement is actually a much broader term that encompasses all aspects of sourcing and obtaining materials, including planning, supplier management, contract negotiation, and more.
In business, the procurement process is the set of activities and procedures involved in acquiring goods or services from external suppliers. The goal of procurement is to ensure that the organization obtains the necessary supplies and services at the best possible price and terms.
Procurement generally begins with a needs assessment, in which stakeholders identify what supplies and services are required. Once the requirements are understood, Procurement professionals work with suppliers to get the best possible price and terms for the organization. This may involve request for proposal (RFP) processes, competitive bidding, and other negotiation strategies.
Once a supplier is selected, Procurement managers work with them to establish contracts that outline the terms of the agreement. These contracts typically cover pricing, delivery schedules, quality standards, and other important details. After the contract is in place, Procurement managers monitor supplier performance to ensure that they meet their obligations.
The Procurement process can be complex, but it’s an important function in any organization. By working with suppliers to get the best possible prices and terms, Procurement helps organizations save money and keep their operations running smoothly.