procurement

What is procurement?

The quick answer people give is “it’s buying”. That is only one part of what procurement is…

Procurement

…enables an organisation to operate by ensuring that the right goods and services are available to fulfil the objectives of the organisation.

Direct procurement

… deals with goods and services directly related to what the organisation sells. For example, windscreens for a car manufacturer or flour to a bread manufacturer.

Indirect procurement

…relates to all goods and services required by the business which do not directly relate to what their core business is. For example, computers or office supplies to both the car and bread manufacturers.

When we say “it’s not simply buying”, consider that it would typically be a procurement-led decision whether or not to outsource management of the IT service desk in an organisation. Procurement’s role is to establish what the particular need is and to work with the organisation to ensure that the need is fulfilled in the best possible way.

Procurement is very important to a successful organisation. Sales and marketing can only do so much to increase revenue whereas the procurement department gives an organisation control of its costs and therefore directly impacts profit.