In the Fundamentals of Purchasing and Procurement course, we learned about the basic activities, objectives, responsibilities, and structure of a procurement organization. We started by distinguishing between purchasing and procurement.
Purchasing goods and services is a fundamental function of all businesses, including manufacturers, distributors, retailers, and service organizations. However, the purchasing function has evolved to include more strategic responsibilities, leading many professionals and organizations to use the term procurement.
Today, companies are adopting a more strategic approach to procurement, focusing on building long-term relationships with dependable suppliers to reduce total cost of ownership and drive innovation. While procurement processes may vary between businesses, they typically involve seven basic steps in the purchasing cycle.
1) purchase requisition
2) supplier selection
3) price determination
4) purchase orders and agreements
5) delivery
6) acquisition of goods/services
7) invoice approval
The importance of companies creating a successful procurement strategy has increased because it impacts their competitive position. To wrap up, we analyzed the components of a successful procurement strategy.