What is Procurement? A 2-minute overview

Most people have heard about procurement, but how many of you actually know what it is?

It is simple.

Procurement is simply the process of buying something. At a basic level it usually involves the purchase of goods or services. It is that simple.

Procurement plays a major part in the revenue generating elements of a business. Yet, most people and most organisations simply think all that is involved is buying stuff. You know, you send an email to another company and ask for a quotation. That company then sends back a quotation document and you then buy it.

Yes that is all that is involved if you are doing procurement wrong. I mean, if this sounds like your Business then you have got a long way to go to doing procurement as it should be.

Procurement is so much more than just buying stuff.

Here are just some of the benefits doing Procurement right:

• Controlled Spending;
• Legal Purchases;
• Protection of a Business/Brand;
• Detailed understanding of your suppliers;
• Data driven decisions;
• Negotiated Prices;
• Cost Savings;
• Improving Supplier Performance.

This list could go on. I think you are starting to get the message though. 

Procurement is much more than just buying stuff. It can make a significant change to your business that could improve profits or cut costs — or both.

When you start looking at procurement as a culture within the business, where every individual understands and believes in its benefits, then this is when you can take your business to a new level.

So, let’s summarise what Procurement is.

Procurement is the purchase of goods/services where all pre-procurement activities, such as supply chain analysis, market analysis, requirement building have all taken place and this has allowed you to find the most suitable supplier. From here, procurements means the establishment of a legally binding contract that allows you to monitor the performance of that supplier and where possible, enhance the performance of that supplier through incentivisations.

Woah — a lot of reading and not much breathing but that seems to be a bit more comprehensive. It still is not touching all the activities you need to undertake but I hope it has given you some benefits.

I’ll be covering off a complete guide to Procurement that will go into a lot more detail on all of this.

For now, if you need some help, just reach out and feel free to email me at [email protected].