What is Procurement?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 18 May 2020
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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 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.

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.

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.

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Post 4

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

Post 3

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

Post 2

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.

Post 1

Why do you need engineers in the procurement department?

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