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WHAT IS PROCUREMENT MANAGEMENT?

What do you understand by the term procurement management?

Is it related to Supply Chain Management and Logistics?

Confused? Let’s understand what procurement management is. 

To ensure efficient operations, procurement practices are an essential element to execute, regardless of the company or industry. Putting it in simple words, procurement involves processes concerning the acquisition of goods and services from other parties. Procurement can be goods such as furniture, raw materials and office supplies or services such as training and consulting.

Different organizations follow different techniques to execute their business operations. Procurement management helps in ensuring that they are done as planned. Also, time and again, it has proven its caliber to be a deserving and vital business function to follow.

How important is procurement management?

In simple terms: To ensure the success of business operations and enabling you to meet your specific business goals.

Let’s make it simpler. 

It helps in maintaining better relationships with the vendors or suppliers. Also, it allows you to stay organized at every step of the procurement process. With the procurement process, organizations are able to avoid costly downtime. This helps them in boosting the bottom line of their business.

Moreover, with the continuous advancement in technology, procurement techniques are becoming very popular. It helps in cutting down costs, delays and promotes efficient performance. Also, managing procurement processes is a crucial business aspect that cannot be eliminated.

What are the steps involved in procurement management?

Let’s Take A Look.

  • Planning – Organizations put together a comprehensive plan for the procurement process while specifying the goods and services that will be required, internally or externally
  • Finance – Further, a budget is made. Moreover, with the plan, it helps in staying organized throughout
  • Supplier Identification- Supplier research and identification help in determining whether they will meet all the requirements or not
  • Proposals – Upon supplier identification, the company makes requesting proposals along with negotiating whenever required. This requires effective communication of the requirements.
  • Contract – The contract is made and signed with the supplier, now the organization’s purchasing department controls the delivery and payments of the goods and services
  • Analysis – The organization analyses the entire procurement process with the key performance indicators. This helps in finding areas for improvement and making the process better for further procurement plans.

How does it benefit the organizations?

Now that we have an overview of procurement management, let’s see the benefits it brings along.

  • Saves valuable time for the organization as the goods or services are readily available
  • Enables the organization in running the procurement process smoothly and quickly
  • Helps in large scale savings for the business through strategic sourcing of the products/ services
  • Quality assurance is made for the purchases made during the procurement process
  • Improves business relations with the vendors or suppliers and improves transparency

Procurement management proves to be a crucial step in ensuring smooth business operations. With plenty of supply chain management courses available, you should choose the best having all the concerned aspects including procurement. It ensures that you learn the steps with ease. Having a certificate in Supply Chain Management (CSCP) and Logistics (CLTD) would ensure that you attain the finest knowledge of the same. KnoWerX enables you in getting Supply Chain Management Certification (CSCP) and establish a successful career in the field with the required skills. 

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SCM Talk Show-Trends in Procurement, Episode 4.

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SCM Talk Show, Episode-7

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