Skip to main content

Purchasing 101 – Summary

To listen to the summary, click the audio icon on the toolbar.

Fundamentals of Purchasing and Procurement introduced the basic activities, objectives, responsibilities, and structure of the procurement organization. We began by differentiating between purchasing and procurement. The purchasing of goods and services is one of the basic functions performed by all types of businesses, from manufacturers and distributors to retail and service organizations. An expansion of more strategic responsibilities within the purchasing function has prompted many organizations and professionals to start using the term procurement.

Companies are moving from tactical buying that focuses on the lowest price available to a more strategic approach that involves building a long-term relationship with fewer and more dependable suppliers to reduce total cost of ownership and improve innovation. Although the details of procurement processes might vary from business to business, it boils down to the 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, and 7) invoice approval. The need for companies to develop an effective, enterprise, procurement strategy has grown, due to the affect that procurement has on competitive positioning. We concluded by examining the anatomy of an effective procurement strategy.

To learn more, see the Additional Resources page to explore suggested readings and resources.

For example, to further explore the procurement life cycle, we recommend that you explore the interactive Procurement and Supply Cycle model.

Developed by CIPS, the Procurement and Supply Cycle is well-known model that shows each step of the procurement life cycle.

The Chartered Institute of Procurement and Supply (or CIPS) is a well-recognized, United Kingdom-based membership organization. CIPS offers education and professional qualifications for Procurement professionals around the world, including this interactive tool.

Next Post

Contact Us