After this lecture you should be able to: Define the role of procurement, appreciate the importance of procurement in the logistics chain, choose an appropriate supplier, appreciate the advantages of choosing single or multiple sourcing, discuss the steps in a procurement cycle, describe e-procurement and its advantages, talk about different arrangements for purchasing. | PROCUREMENT After this lecture you should be able to: ■ DEFINE the role of procurement ■ APPRECIATE the importance of procurement in the logistics chain ■ CHOOSE an appropriate supplier ■ APPRECIATE the advantages of choosing single or multiple sourcing ■ DISCUSS the steps in a procurement cycle ■ DESCRIBE e-procurement and its advantages ■ TALK about different arrangements for purchasing LEARNING OUTCOMES Introduction In a supply chain, each organisation buys materials from upstream suppliers, adds value, and sells them to downstream customers. As each organisation, in turn, buys and sells, the materials move through the whole supply chain. The trigger that initiates each move is a purchase. This is basically a message that an organisation sends to a supplier, saying, ‘we have agreed on terms, so send us materials and we will pay you’. Purchasing Vrs Procurement; any Difference? Yes ‘Procurement’and ‘purchasing’ are often taken to mean the same thing. Purchasing refers to the actual buying, while procurement has a broader meaning. It can include different types of acquisition (purchasing, rental, contracting, and so on) as well as the associated work of selecting suppliers, negotiating, agreeing terms, expediting, monitoring supplier performance, materials handling, transport, warehousing and receiving goods from suppliers. Definition of Term: Procurement is the process of identifying and obtaining goods and services. It includes sourcing, purchasing and covers all activities from identifying potential suppliers through to delivery from supplier to the users or beneficiary; Purchasing is the specific function associated with the actual buying of goods and services from suppliers; Sourcing is simply: “Identifying and working with appropriate suppliers”. Just read it and compare Importance of procurement Procurement is clearly an essential function within every organisation. We know that every organisation needs a supply of materials, and procurement | PROCUREMENT After this lecture you should be able to: ■ DEFINE the role of procurement ■ APPRECIATE the importance of procurement in the logistics chain ■ CHOOSE an appropriate supplier ■ APPRECIATE the advantages of choosing single or multiple sourcing ■ DISCUSS the steps in a procurement cycle ■ DESCRIBE e-procurement and its advantages ■ TALK about different arrangements for purchasing LEARNING OUTCOMES Introduction In a supply chain, each organisation buys materials from upstream suppliers, adds value, and sells them to downstream customers. As each organisation, in turn, buys and sells, the materials move through the whole supply chain. The trigger that initiates each move is a purchase. This is basically a message that an organisation sends to a supplier, saying, ‘we have agreed on terms, so send us materials and we will pay you’. Purchasing Vrs Procurement; any Difference? Yes ‘Procurement’and ‘purchasing’ are often taken to mean the same thing. Purchasing refers to the
