Procurement is the process of identifying, agreeing on terms, purchasing and receiving goods, services, or contracting labor from an outside source, often through bidding or a competitive pricing process.Procurement of equipment, in general, requires decisions about the purchase of equipment, machinery, goods and services that are either scarce and expensive or difficult to procure. Procurement of equipment requires the preparation, submission, and payment process, which requires the coordination of different parts of a company, the application of new management methods in the integration of work procedures, a comprehensive archive, and the interaction of different departments with the client. Costs associated with procurement include different categories depending on the demand for the supply of equipment and parts.
Using the right data available and using methods of economic analysis such as cost benefit analysis, we try to make the best possible purchase. Of course, it should not be forgotten that the right price offer is competitive, which is usually a part of most of the processes related to the supply of equipment in a larger scale. Managing procurement or procurement processes may require a company to use a significant portion of its resources. The equipment procurement process is often a key part of a company’s strategy because the ability to purchase certain materials or services can determine the profitability or non-profitability of a project.
Comprehensively, a procurement supply process includes purchasing planning, setting standards, preparing a list of specifications of goods or services to be purchased, researching the best manufacturers or suppliers of these goods or services, selecting the best available option, procurement finance, negotiation and bargaining over price and coordination and supervision of the supply, receipt, warehousing, distribution and registration of purchased equipment and goods.
The difference between Purchasing and Procurement
Many people mistakenly use purchasing instead of procurement. But despite the similarities between the two terms, their meanings are quite different. Let us clarify the difference between the two to eliminate this misunderstanding. Procurement is a term used in industries and commerce to refer to activities related to the acquisition of equipment, goods and services from a reliable and main source, activities that, in general, include the identification, negotiation and selection of goods and service. Whereas, purchasing or purchase of goods and services simply means the process by which a set of goods and services are ordered.
Various steps related to procurement process
- Identify the equipment, goods and services that a company or employer needs
- Submit and deliver the purchase request
- Evaluate and select vendors
- Negotiate prices and terms
- Set up a purchase order
- Receive and review the delivered goods
- Confirm the invoice and make the necessary arrangements to pay the fee
- Record purchased items
Steps related to the purchase process
- Confirm the purchase order
- Preparing a list of sent goods
- Receive goods
- Purchase invoice registration