Procurement is an all-encompassing process of goods or service acquisition, important for an organization. It comprises of a process of vendor selection, establishment of payment terms, selection, strategic vetting, contract negotiation and good purchase. Procurement is a segment of the corporate strategy of an organization. In this corporate strategy, Procurement is influenced by four aspects like company identity, market placement, company capabilities and management issues.
Having the procurement function aligned with the corporate strategy is a section of the entire procurement goal. The purchasing process of the services and the goods, together encompass as “Procure to pay cycle”.
The overall Procure to pay cycle comprises of the below steps:
- Requirement identification
- Purchase Request authorization
- Purchase Request Approval
- Supplier identification process
- Quotation’s inquiry receipt
- Vendor selection
- Acknowledgment of purchase orders
- Notice on advance shipment
- Goods receipt
- Recording of invoices
- 3-way match
- Supplier payments
Procurement enables acquisition of services and goods from suppliers at least time and yet at the best price. It demands to develop and preserving relationships with suppliers at highly negotiable prices.
Hence, some of the key elements comprise of:
- Request for quotations (RFQ) management
- Negotiations skill
- Create competition amongst suppliers to achieve best deal. Dual suppliermanagement
- Contracts with suppliers
- Terms and Conditions (T&C) of the agreement
- Vendor Masters
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