Business Procurement

Business Procurement is the aquisition of goods or services for your business. Businesses need to procure goods and services at the best possible price to ensure they maximise their profit margins.

Procurement can be carried out online to a certain degree, by the use of online business directories.

Procurement or purchasing is an important function of business administration, and employs strategic planning and cost cutting techniques.

Almost all purchases will take into account factors such as delivery, handling, scarcity and price fluctuations. If good data is available, it is good practice to make use of methods such as cost-benefit analysis or cost-utility analysis.

Procurement is commonly focused on three areas: Tendering, Vendor Management and Strategic Purchasing.

Tendering

ITT is an Invitation To Tender. Tendering is the process of inviting potential suppliers to bid for your business. You will need to provide a document of requirements, with details such as the type of products or services required, total monetary value, length of contract and any service level agreements and contract terms. Restricted tenders require that vendors pass a pre-qualification process before submitting a price.

It is important to ensure that the tender is fair and transparent, otherwise you invite claims of bias and favouritism, which could lead to a lawsuit.

Vendor Management

Tendering is the important process in drawing up a contract. Vendor management deals with contract compliance and ensures your business actually obtains the expected savings.

Strategic Purchasing

Strategic purchasing is planned purchasing. This may involve your entire organisation submitting purchase requirements for the entire year and then looking for oppurtunities to bundle purchases together to take advantage of bulk buy discounts. If your purchases are time sensitive then planning may involve just-in-time (JIT) purchasing.