Procurement is the process of obtaining or purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. It is a vital part of conducting business and is intended to ensure that the buyer receives goods, services, or works at the best possible price when aspects such as quality, quantity, time, and location are compared. Procurement can be defined as the act of sourcing and purchasing goods, services, or raw materials for a business from vendors or suppliers.
Key aspects of procurement include preparation, solicitation, and payment processing, which usually involves several areas of a company. Procurement expenses can fall into several different categories, depending on the procurement demand. Competitive bidding is usually a part of most large-scale procurement processes. Procurement teams work to obtain competitively priced supplies that deliver the most value. Procurement encompasses a range of activities involved in obtaining goods or services.
Procurement is important for companies because it enables them to reliably get the supplies they need at the lowest cost, which can directly impact the bottom line. Procurement as an organizational process is intended to promote fair and open competition for business while minimizing risks such as exposure to fraud and collusion. Many organizations have entire teams dedicated to their procurement and purchasing activities.
To optimize the procurement process, organizations can use procurement technology to significantly reduce the time and expense of successful procurement management. Modern procurement tools can transform a painfully slow procurement strategy into a world-class overnight. An official procurement process helps purchasing teams request, approve, and track every purchase and control business spend.
