Procurement:

Introduction:
In this first we study about procurement and purchasing. Procurement is the act of acquiring
goods or services, especially for business purposes. Procurement is strongly associated with
business because companies need to ask for services or buy goods, often on a large
scale.And then we study about the procurement process in which we see how an
organization works well. And then we study the objectives of procurement process. After this
we study about the purchasing and process and objectives of purchasing. At the end we
study about the differences between the procurement and purchasing. The main objective of
our work is to understand that role of procurement in any organization.

Definition:

Procurement is the act of acquiring goods or services, especially for business purposes.
Procurement is strongly associated with business because companies need to ask for
services or buy goods, often on a large scale. Procurement usually refers to the final
purchase action but may include the process of purchasing everything that is most important
to the companies leading to the final purchase decision. Companies can be on both sides of
the procurement process as buyers or sellers although here we are very focused on the
company of the solicitor company. Procurement practices can be divided into two categories:
Directly Expenditure and Indirect Usage.

Directly Devote All items, exports bought by an association in order to attain the

manufacture of their own merchandise(s). For example, raw fabrics, devices, package’s etc.
Indirect Pay: All items, imports, and local services bought by an association for their
domestic use, For example consultancy public services, office materials, software etc.
[ CITATION LKn15 \l 1033 ]

Process:

Proper procurement procedure consists of following procurement process steps.

Need recognition: This process begins when somebody applies to the buying department.
The application can be simple or complex (new office in Guatemala). In any case, the
application needs to be accepted in writing and is adequately explained.
Supplier choice: After That, the buying division wants to examine suppliers, demand
quotes for the article necessary, and then choose a supplier.
Submit buying application: Now is the time to get a purchase permit. After identifying the
seller and agreeing on the details, you will need written permission from the purchasing
department.
Produce purchase order: Later the purchase appeal has been agreed, the investment unit
will publish a buy request to the seller.
Bill and order: The dealer will then submit an bill to the buyer. The bill is a application for
compensation and provides a complete analysis of the price.
Fee: Later the supplies have been accepted or the maintenance has been complete, it’s
time for your supplier to be given.[ CITATION MAt16 \l 1033 ]

Objectives:

The following are the key objectives of procurement:

Recognition of necessity: When the business wants things, the corporation's demands
must be recognized in order to decide which sort of assistance will suited best.
Discovering and modifying the providers: Utilizing the net or your provider files, you
compile a list of all possible merchandise and assistance workers.
Demanding plans: To become convinced you purchase the goods or service beneath the
best circumstances value, etc.
Engaging: If both sides, the purchaser and the provider, agree on all conditions you can get
it formal by initialing a deal.
Evaluating outcomes: When the development is full, it is vital to analyze the procedure and
assess its achievement as well as history studies for upcoming developments.

Purchasing:

Definition:

Purchase is the formal acquisition of goods and services on behalf of the purchasing
business. Purchasing activities are needed to ensure that the required items are received on
time and at the right cost. The procurement department is very important in the
manufacturing business, where a large amount of raw materials and supplies must be
available on a regular basis. The main objectives of the procurement department are as
follows: To find suppliers who can provide goods and services according to the needs of the
consumer. Purchase items that meet consumer quality definitions. Creating a delivery to a
consumer location that reduces investment in raw materials while ensuring that goods are
available where needed. Reduce the amount of money invested in inventory. The following
are the types of purchases: Individual Buys.

 Business Buys
 Manufacturing Buys.
 Administration Buys.
Process:

As the buying method may differ from corporation to association the key basics stay the
similar, which are defined as follows:
Appeal to buy: This section deals with the need for identification rather than the two main
methods of claiming a manual document which is that it is designed for a form (such as an
application form) or another document and that is automated by the ERP type system
dealer choice: Consumers may already see which provider to to purchase the piece from
that is being demanded.
buy request: A buy request is posted to the provider to notify the seller of the purpose to
buy.
Satisfaction: The supplier will then send the goods to the purchasing organization. Lead
time may be required to allow the supplier to produce the item.
Supplier invoice/payment: At the time of delivery the provider will usually issue an bill with
the goods or distributed individually. This will be approved by the treasury department -
processed and paid.

Objectives:

The purpose of a purchase is sometimes understood to be to buy items of the right quality,
at the right size, at the right time, at the right price, and at the right source. This is a broad
process, reflecting the scope of the procurement process, which includes policy decisions
and analysis of various different opportunities prior to their procurement action. The specific
purchase objectives are as follows:
 Paying the lowest prices with the best prices available, negotiating and fulfilling all
company obligations
 Keeping inventory low in line with product preservation.
 Creating satisfactory resources for providing and maintaining good relationships with
them.
 Protecting the good performance of the seller includes prompt delivery and
acceptable quality.
 Discover new items or products as needed.
 Performing best practices, combined with adequate controls and procurement policy.
 Performing programs such as price analysis, cost analysis, and making or
purchasing to reduce purchase costs.[ CITATION Jea17 \l 1033 ]

Strategy:

Strategic procurement is a comprehensive organizational process that aims to ensure the

timely delivery of goods and services in line with the business objectives of the organization,
while minimizing risk within the supply chain. It is closely related to principles such as
strategic procurement and strategic acquisition, including activities such as budget
management and research, identification and selection of suppliers. Strategic procurement is
a task that requires the cooperation of all departments across the organization. Companies
may choose to have a dedicated procurement team strategically to set the business direction
using information from the existing procurement process for future operations.
Tactical purchasing method: The subsequent are the tactical purchasing method
relevance to procurement and purchasing:
Requires assessment: Considerate what kinds of supplies and facilities the firm wants to
buy.
Devote assessment: Evaluating current pay by obtaining information from dealers as well
as from inside the association.
Provide market place assessment: Exploring the provider marketplace to find dealers able
to join various requirements.
Obtaining policy formation: Verifying the assembly's provider needs, choice procedure,
obtaining strategies and tactical goals, and putting these out in a procurement plan.

Compromise: Negotiating with selected suppliers and granting agreements.[ CITATION

KHa15 \l 1033 ]

The following are the goals of strategic procurement relevance to procurement and
purchasing:
While strategic procurement objectives are likely to be involved in achieving cost savings,
this is not the only consideration. By focusing on the broader business objectives,
companies may be using strategic purchasing for a number of reasons, such as:
 Selecting providers that best fit the company’s business objectives.
 Buying high quality goods
 Build strong relationships with suppliers.
 Reducing supplier base to focus on meaningful relationships and benefit the
economy of scale.

supply chain management:

Procurement departments are the center of effective asset management. Often, they assist
other departments in identifying their needs, managing the recruitment process and
obtaining competitive pricing, and often acting as regulators to ensure adherence to budgets.
To ensure quality and prevent bad practices, purchases often vary in receipt and payment.
Here are the top goals for most business purchasing departments.
Lesser expenses: This is the main function of the procurement department. A well-
managed department should allow you to earn quick savings by choosing a combination of
suppliers that can give you the best prices and prices. In this process, relationships with
suppliers who can provide the right level of quality at the required prices are terminated. The
procurement department can also provide savings by taking advantage of warranty and
discounts that are often overlooked by non-professionals.
Lower threat: Procurement management involves sharing and risk management with
suppliers. This can be done by moving the risk to providers who are better able to handle it.
Or it can be done with a variety of feeds. The procurement department should identify what
goods and services are important to the company and take appropriate steps to protect their
chains accordingly.
Enhance excellence: Procurement departments can help improve quality by establishing
targeted quality performance standards and track performance against expectations. Central
to the quality indicators is the standard metrics used to measure things such as durability,
appearance and feel of a product or the appropriate delivery time.

Control equipment: Your buying unit should identify technical solutions to deliver your
procurement issues. The procurement division should also play a crucial role in the choice
and execution of ERP systems, asset management systems and other technologies aimed
at improving the management of your assets.

Differences and similarities:

Purchasing and acquisition are two procedures that take place during the process of
acquiring the company's goods and facilities. However, they are very distinct in their
approach and methods. The following are the differences between a purchase and a
purchase:
emphasis on supplier interactions: Focusing on building relationships with suppliers is
almost non-existent within the purchase as it usually only works with an existing provider
base. However, procurement places great importance on building long-term, collaborative
relationships with popular suppliers. Procurement helps providers to become strategic
partners of an organization that continues to increase the value of supplier relationships -
one of the main reasons why Supplier Relationship Management (SRM) becomes an
integral part of the procurement process.
Risk assessment and relief: Given the nature of the transaction, it does not focus on
identifying and mitigating risks. Lack of focus is detrimental to the organization. The
organization faces various procurement risks while encountering suppliers such as
operational risks, financial risks, data security risks, etc. Procurement aims to identify
potential risks to the business and reduce it by forcing compliance across all stakeholders.
tactical against defensive: purchasing is a tactical function, while procurement is strategic.
Purchasing pertains to the transactional aspect of buying goods and services; it starts and
ends with placing an order and receiving it. However, procurement contains the whole ambit
of processes that commence the moment there is any business requirement of procuring
goods and services.
Similarities:  procurement is an end-to-end function that covers the entire cycle of fulfilling
an organization’s requirements of goods and services, even after receiving an order. It aims
at strategic activities that will maximize value-creation from the purchaser-supplier
relationship. Purchasing, on the other hand, is a subset of procurement that pertains to
fulfilling the transactional aspect of acquiring the goods and services which begins and ends
with placing an order and its fulfillment.[ CITATION Jij19 \l 1033 ]

Conclusion:

It should be kept in mind, however, that this procurement management system must run
efficiently and smoothly for all benefits to be gained. The key to this would therefore be an
efficient system as well as the right supplier and resources. For the purpose of procurement
management, there should be a team of highly trained individuals, if procurement
management plays a key role. They play a vital in progressing of any organization.