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What Does a Procurement Company Do?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 05 August 2014
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    Conjecture Corporation
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Procurement companies are businesses that contract with clients to locate and secure various types of resources that are desired by the client. A procurement company may be structured to find, qualify, and procure specific types of resources, such as raw materials for a textile plant, or provide services that make it possible to locate and secure any type of items needed by the customer. Companies of this type may establishe long-term relationships with clients, accepting multiple assignments on an ongoing basis, or contract to accept a single assignment from a client. The process of procuring the necessary resources may require very little time and effort, or may take months to accomplish, depending on the client’s circumstances.

In actual operation, the procurement company will meet with the client to evaluate the needs and desires of the customer. After agreeing upon what the company is to find and secure on behalf of the client, a period of research and investigation begins. During this phase, the procurement company will identify and evaluate multiple sources for the goods or services desired, ultimately settling on a few vendors who can provide what is required.

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Along with locating and qualifying resources on behalf of clients, the procurement company will also seek to obtain the best possible pricing for the customer. This often includes conducting preliminary negotiations with prospective vendors to obtain as much of a discount off standard pricing as possible. Once the company has obtained the most agreeable terms possible, the information is communicated to the customer, who can then decide whether or not to accept the terms and enter into a contractual agreement with the vendor. If the terms are not agreeable to the customer, the procurement company continues to search for another solution.

In terms of payment, a procurement company may charge a flat rate, based on the nature of the assignment. Others may charge an hourly rate that is in effect for all consultations, hours spent researching possible providers of the needed resources, and the time spent qualifying candidates. The company itself is usually not a party to the actual contract that results between the client and the vendor. Final responsibility for the contract rests between those two parties, with the procurement company acting only as a facilitator.

Businesses sometimes make use of a procurement company as a means of finding what they need, without having to set aside some of their own resources to handle the process of locating and qualifying potential vendors or suppliers. Often, using procurement services for these functions can save a great deal of money and time, making it possible for the business to begin enjoying the fruits of the new vendor relationship and hopefully enhancing the operation and profitability of the business.

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