What Is Procurement?

Procurement is the process of obtaining goods, services and works from external sources with the expenditure of money or any other valuable consideration. This process includes the selection of vendors, negotiation of prices and terms of contract, and a contract for the goods, services, or works. It also involves the Receipt, Storage, Issuing and Payment for goods received; associated records maintenance, and disposal of unusable items.

Procurement involves the acquisition of goods, services, and works from sources that are outside the boundaries of the organization. These sources may include suppliers, contractors and other entities in the private sector. Procurement is necessary to help organizations meet their operational objectives and needs, and to ensure that the organization is procuring the most cost-effective solutions for its needs.

The Goals of Procurement

The goals of procurement are to provide value for money and ensure that goods, services and works are procured in an economic, efficient and effective manner. Other goals include ensuring consistent standards of quality, safeguarding the public’s interest, promoting competition and promoting compliance with applicable laws and regulations.

Procurement is also essential to help organizations develop and maintain long-term relationships with suppliers. The procurement process should strive to secure goods, services and works that meet necessary quality standards, on time and within budget.

Procurement in Action

The procurement process typically begins with the preparation of a Requisition or Request for Proposal. The requesting organization must define the goods, services or works that are to be procured. This document outlines the scope and specifications of the goods, services or works, and what parameters will be used to select a vendor or contractor.

The next step is to identify potential sources from which the goods, services or works can be procured. A bidding process is then conducted and an appropriate vendor or contractor is chosen. The vendor or contractor will present the organization with a quote for the goods, services or works. Once the organization accepts the quote, a contract is usually drafted and signed by both parties.

The final step in the procurement process is to ensure that the purchased goods, services, or works comply with either the contract itself or standards set by the requesting organization. After delivery, payment is made to the vendor or contractor and a record of the transaction is maintained.

Conclusion

Procurement is an essential process to ensure that an organization obtains the goods, services and works it needs, on time and within budget. The organization must define the scope and specifications, identify sources, conduct a bidding process, review quotations, sign a contract and ensure compliance with all applicable laws and regulations. It is a complex process, but essential to ensure value for money and consistent quality standards.