Page 1 of 38This report outlines the best practice research undertaken by BPIR.com in the area of procurement. The best practices have been compiled under seven main headings. This layout is designed to enable you to scan subjects that are of interest to you and your organisation, quickly assess their importance, and download relevant information for further study or to share with your colleagues.
In This Report
The DefinitionPeople sometimes confuse the terms ‘procurement’ and ‘purchasing’. Procurement refers to all work relating to the acquisition of those goods and services that are vital to an organisation’s functioning. Purchasing, which is the process of ordering and receiving goods and services, is a subset of procurement. Procurement is, therefore, a much wider process. It usually involves establishing fundamental requirements; sourcing activities such as market research, vendor evaluation and selection; negotiation of contracts; and, the purchasing of goods and services.
The StageWhat has an organisation to gain by developing its procurement capacity? The answer is simple: procurement management is essential for the sustainability of a successful organisation. It ensures the goods and services necessary for an organisation to thrive are obtained in the most cost-effective and efficient manner possible.
Good organisations understand that procurement is an overarching function that ties in with their overall business strategy. They treat procurement as a strategic function, one that has to be distinguished from the simple acquisition of goods and services. For example, a centralised purchasing strategy may concentrate all procurement activities in one main location; a single procurement strategy may mean using a single vendor with a proven track record of dedicated, excellent service; and, an emphasis on environmental responsibility may see an organisation develop a green purchasing strategy.
An organisation can spend more than two-thirds of its revenue on buying goods and services, so even a modest reduction in purchasing costs can have a significant effect on profit. Managing your procurement well can add value to all your organisational practices and reputation. It can also save you time and money.
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