Home » What Is Procurement and What Does It Mean for Your Business?
Procurement is all about the acquisition of goods and services through competitive bid processes and tendering. Buyers release ‘contract notices’ through electronic portals. This is known as e-procurement software or e-tendering. Usually, this includes:
The delivery location
The length of delivery needed
The title and description of goods and services needed
Details regarding the timetable for your tendering process. This includes site visit dates and the submission deadline
The estimated budget and contract value
Suppliers will put a tender response together following the provided guidance. Buyers can then assess the response against a chosen evaluation criteria. A contract will then be awarded to a supplier.
Is Procurement Similar to Purchasing?
Even though they have a few similarities, procurement and purchasing aren’t the same. What is procurement? It is the general term describing the whole process of sourcing, choosing, and acquiring goods and services. It covers everything from the conception stage to the conclusion. Purchasing is a small part of the procurement process, and it doesn’t cover specifications like works, bidding, and evaluation.
The Importance of Procurement for Your Business
If procurement processes did not exist, it would be challenging for your business to continue its operations. With procurement management, you can access all your services and items properly. This ensures that your processes and projects go on successfully.
Procurement is a business necessity and more. You can leverage it as a competitive advantage as it helps you save time and money. Since it helps you avoid delays and make the most of your resources, procurement can minimize your expenses. It is suitable for your bottom line.
Procurement management is excellent when negotiating lucrative production and supplier contracts. It can help you spearhead innovative processes. Procurement management is necessary if you are hoping to take your business to global levels. It can encourage corporate social responsibility in inclusion and diversity. Here are the benefits of procurement management:
Procurement processes can improve your scope of options. They make it possible for buyers to find suppliers with the best value for money. The process also makes it possible for buyers to get tenders from suppliers all around the country. The suppliers may offer value and experience you wouldn’t find from local suppliers. The procurement process generally levels the playing field.
Streamlining the Workload
If you need a new supplier for ongoing service, you must ensure that you work with the best supplier possible. The ideal supplier should meet all your business requirements. Dedicating personnel to research and contacting possible businesses would waste resources. It could require plenty of time, and there is no guarantee that your needs will be met. The procurement process streamlines a process that would otherwise be long and messy. You need to follow these steps:
Identify your needs
Authorize a decision to get a supplier that can meet your needs
Come up with the parameters of proposed contracts
Create documentation for your tender
Publish your tender and evaluate submissions against criteria of your choosing
Find the most appropriate supplier and award your contract to them.
In conclusion, procurement is an integral part of your business. It can streamline your workload and save you precious time and money. Enforcing the right procurement management processes is critical to your success.