What is Procurement

What do we mean by Procurement and Procurement process?
Procurement, purchasing or buying, which are all the same in meaning, has been in existence for many, many generations. We all carry out this simple and sometimes complex act everyday whether at a domestic or commercial level.

Procurement process is the step by step stages involved in acquiring goods and or services through to disposal.

National Procurement Strategy for Local Government sees Procurement as the process of acquiring goods, works and services, covering both acquisitions from third parties and from in-house providers. The process spans the whole cycle from identification of needs through to the end of a service contract or the end of the useful life of an asset.

It involves having an agreement between two parties for the provision of a desired service or goods in exchange for payment.
Focusing on the commercial or business aspect of procurement, organisations buy goods and services they need to operate. It is therefore very essential to buy the right product or service at the right time, at the right quality and quantity as well as the right price.

The buyer or the buying organisation can buy from any supplier in any part of the world; thanks to the globalisation of the economy. Essentially, there is a management of relationship between the parties involved in order to make this work.

Benefits Of A Procurement Function In An Organisation

By bringing procurement in at the beginning of projects, you are creating value, saving time and money. Amongst other things, this will mean that you are able to mitigate any project risks even before they start.

Here are some of the benefits of using a procurement professional in your organisation or for your projects:

  • A procurement professional will help you with your specification drafting or reviewing to make sure it aligns with your purchasing objectives
  • Preparation of bids or analysing them requires a professional help
  • Supplier selection. How do you know which supplier to award your contract among the several that had applied?
  • Stakeholder management – how do you convince the key stakeholders and the consumers or end users that your ideas are the best.
  • Contract negotiation and risk management to avoid costly mistakes.
  • Order processing and contract award.
  • Supplier relationship management. After contract award, what happens next?

The cycle continues for every contract you have. These strategies require a good skills-set to implement. You either have these skills in-house or you outsource the requirement.

It is a known fact that the UK government spends more than £175 billion in a year on procurement.
Government procurement focuses on ‘Best Value’ which does not necessarily mean the cheapest price. Therefore as a supplier or proposed supplier to the government organisation, it is important that your business meets the requirements set by the buying organisation in order to succeed in winning any of their contracts.

The UK government is trying really hard to engage with the SMEs; hence it is proposing to spend 25% of its annual spend with SMEs.

Does your organisation have what it takes to bid for government contracts?



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