Procurement is a term you will hear often in business, but it may not be one which you are instantly familiar with. Procurement is all about making sure that all products a company gets are from trusted suppliers and are of good value. For example, if you had a company whose sole focus was to be environmentally friendly, the procurement team would make sure that their suppliers were environmentally friendly and that all product is sourced naturally wherever possible.
Why is it important?
Procurement is a huge part of your business strategy and it is vital to get it right in your business. If you think about it, over half of your business revenue is used to source materials and products for your company to sell on, so procurement is a department which needs to be managed correctly. You can buy Sertica’s procurement software for better management of your procurement team and this can make life much easier when researching for the correct suppliers. Making sure that the correct decisions are made with products and suppliers is absolutely essential for any business.
In the procurement process, one of the important things to think about is visibility. Visibility means that as an organisation, you can see exactly where your money is being spent, and in turn, you can make changes to save the business money and be more successful as a result. Segmentation is a strategy which is often used for monitoring spending as it puts spending into different categories to make it easier to see what impact each type of spending has on the business.
The procurement process
The process of procuring items can involve several different steps, and here is a basic rundown of those steps which are involved here:
- Identify requirements
- Authorize purchase request
- Identify suppliers
- Make inquiries
- Get quotes
- Negotiate terms
- Make a decision
- Creating a purchase order
- Sort out shipping
- Receive invoices
- Make payment
Is Procurement Purchasing?
Most people use the term purchasing and procurement as the same thing, but they are different in the fact that purchasing doesn’t concern itself with the sourcing and researching of suppliers, it is only concerned with the shipping, making an invoice and paying for the goods. Procurement is a department which you should have alongside the buying department in your business for maximum efficiency.
In this day and age, we are lucky enough to have software for pretty much any business process, and our procurement process is no different. Because the process of procuring items can be complicated, technology can help massively by organising data and comparing different quotes to come up with your final decision. It can make life much easier and allow for more productive working on the case.
If you don’t already have a procurement manager or team in your workplace, now is the time to take that leap and hire yourself a new member of the team. Procurement is a vital role in any business, and it can make a massive difference to your success and growth in the industry.