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What is Procurement?

Malcolm Tatum
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum

The fact is that just about everyone engages in the act of procurement. In its most basic form, this term is nothing more than the word used for the steps taken in the acquisition of goods and services. From this perspective, all consumers participate in the process since, whether for business or for the home, there are progressive steps that everyone follows as they work toward procuring those items that they desire.

The beginning step in the process is the recognition that there is a need or want for a particular good or service. Before there is a chance for the acquisition of goods, there has to be the desire to actually gain possession of something in particular. Without recognizing the want or need, there is no reason to pursue any of the following steps that ultimately lead to a purchase. In short, if there is no desire, there will be no procurement.

Once a person decides they require transportation, they engage in the process of procurement to purchase a vehicle.
Once a person decides they require transportation, they engage in the process of procurement to purchase a vehicle.

Once the need or want has been recognized, it is important to qualify the specifics of what will lead to satisfaction. For example, the want or need may be new transportation. Further thought may yield the fact that a truck would be the most the most effective and useful type of vehicle. From there, it is a matter of determining what features are desired on the truck, as well as determining an approximate amount of money that the consumer is willing to pay for the truck. With a solid vision of what is desired, it is possible to move on to the third step in the process.

A procurement engineer is basically a buyer, albeit a buyer of quite technical goods.
A procurement engineer is basically a buyer, albeit a buyer of quite technical goods.

Step three involves the evaluation of potential suppliers. This will involve getting to know more about vendors who can supply goods or services that will meet all the specifications, including the price range. This may involve taking bids on a project, negotiating prices, or accepting proposals. Over time, one or two suppliers are likely to stand out from all other vendors. Once the final decision is made between the two remaining suppliers, the time has arrived to move on to the final stage.

Procurement, or purchasing, is the process of selecting suppliers and signing contracts for the purchase of goods and services by a business.
Procurement, or purchasing, is the process of selecting suppliers and signing contracts for the purchase of goods and services by a business.

The last step involves taking possession of the desired good or service, ensuring that the item is in compliance with all the claims made by the supplier, and rendering payment according to the terms worked out with the supplier. In some cases, it may be possible to engage in the acquisition of services and goods prior to supplying payment, while at other times, payment may be necessary before taking possession. With both scenarios, the consumer usually has a short period where it is possible to reverse the acquisition and move on to another option.

One of the basic rules of procurement is that in the end, it is important to think in terms of the total cost of ownership. This includes not only the purchase price, but also time and resources that are expended in the pursuit. By understanding the steps, it is possible to get a better understanding of the real cost involved with attaining any good or service.

Malcolm Tatum
Malcolm Tatum

After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.

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Malcolm Tatum
Malcolm Tatum

After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.

Learn more...

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Discussion Comments

anon170672

engineers, will always help in determining the quality of goods before any supply is done, for an efficient and effective supply.

anon43953

what are sources in the hospitality channels of distribution and explain how they differ?

mdt

Many types of engineers are involved in evaluating quality and value as it relates to the usage of the product. Since the idea behind procuring goods and services involves getting the most for the price paid, their input can be very important in many businesses.

anon8130

Why do you need engineers in the procurement department?

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    • Once a person decides they require transportation, they engage in the process of procurement to purchase a vehicle.
      By: stocksolutions
      Once a person decides they require transportation, they engage in the process of procurement to purchase a vehicle.
    • A procurement engineer is basically a buyer, albeit a buyer of quite technical goods.
      By: auremar
      A procurement engineer is basically a buyer, albeit a buyer of quite technical goods.
    • Procurement, or purchasing, is the process of selecting suppliers and signing contracts for the purchase of goods and services by a business.
      By: Monkey Business
      Procurement, or purchasing, is the process of selecting suppliers and signing contracts for the purchase of goods and services by a business.