Procurement
In everyday speech procurement is often used as a short hand term for buying goods and services. This has led to arguments with customer suppliers over what is really meant when referring to a specific purchase. Over the years, the word has come to take on certain meanings in law and accounting that have given it more gravitas than it might otherwise merit. The word is derived from Latin "procurare" meaning "to manage, provide, pursue."
What is Procurement?
Procurement includes all business related disciplines encompassing the sourcing, selection, negotiation of agreement terms and conditions on all inputs required by an entity. Procurement includes the acquisition of tangible or intangible assets, services, or both.
What is the difference between Procurement and In-house Procurement?
Procurement refers to sourcing inputs (goods or services) off the shelves of a global marketplace whereas in-house procurement refers to sourcing inputs that are available only internally within the organization. In a typical scenario, a company orders an item from a supplier based on its internal requirements and does not determine what to buy until after it has obtained its information/data from another source. "Over time, however, the term procurement came to refer exclusively to purchases made from external vendors". This shift in meaning was first formalized by ITU Gvt. Standard 1471: "Procurement of Goods and Services" which was published in 2000.
What is a Procurement Officer?
A procurement officer, commonly known as a PO, is an employee whose duties include sourcing and purchasing goods or services for the company. This person is often responsible for the management of daily purchases that need to be made for business purposes. The role of procurement officer can vary depending on whether one's firm engages in government contract work, or if they deal with commercially available products. Procurement officers typically have a degree in related field such as accounting, finance, industrial engineering etc., and people with bachelor degrees tend to do better in the role than those who hold master's degrees. Also, a variety of certifications are available to those who want to enhance their careers. Some helpful certifications include: CPPP (Certified Purchasing Professional), CPIM (Certified in Production and Inventory Management), CSCP (Certified Supply Chain Professional), CCP (Certified Contracting Professional), and others.
What is the difference between "Procurement" and "Sourcing"?
While procurement refers to the overall process of looking for suppliers, actual buying is commonly called sourcing. The term "sourcing" has become so common over time that most people use it interchangeably with procurement in general.
What is Reverse Supply Chain Management?
Reverse supply chain management (RSCM) is the process of identifying and eliminating wasteful processes in a company's goods life cycle. RSCM employs the same fundamentals as traditional supply chain management, but instead of focusing on logistics to get products from producers to consumers, RSCM analyzes how well products are utilized after they are delivered. This includes analyzing design, usage in the field, returns and recycling. Reverse Supply Chain Management can have positive effects beyond just saving money. One survey indicates that companies concerned with sustainability have greater sales than their competitors.
What is the difference between "Procurement" and "Marketing"?
Procurement is the process of buying goods for a business. Marketing is a broader term that can be applied to any activity, but by definition deals with getting a company's name out there and making an effective connection with potential buyers or clients. There are some who argue that it's possible to have all aspects of procurement work without marketing, but this seems like a difficult goal to accomplish in practice. Accordingly, many consider marketing and procurement as two distinct functions of supply chain management.
What is the difference between "Procurement" and "Supply Chain Management"?
Procurement focuses on the procurement of inputs (goods or services) to a company. Supply chain management, on the other hand, is a wider term that encompasses all processes within a supply chain. Referring to it as a single definition may be incorrect, but it's also not incorrect to consider procurement and supply chain management as one and the same subject matter.
What are some of the common challenges that Procurement faces?
The challenge for most companies today is keeping up with ever changing technology. There are a number of changes in technology that are making it difficult for companies to keep their procurement arms up to date with their own demands. One challenge is the use of social media such as Twitter and Facebook as new tools of communication. Another challenge is finding qualified professionals in the field who have up-to-date training on trends in procurement. Although you can expect to see some changes, there are others that are here to stay such as online shopping and loyalty cards.
What should one do if they want to break into the Procurement Field?
In order for one to break into the field, there are a few things that they should consider doing. The first thing is to work with a firm that is looking for someone with strong procurement skills. One should also make sure that they have an online presence as well, so as to get their name out there to those who have a need for procurement services.
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Procurement Association of Canada (PAC) is the national trade association that represents the procurement profession in Canada. PAC brings together thought leaders and suppliers in the supply chain management sector to drive excellence and value through collaboration, knowledge sharing and networking.
There are many organizations in Malaysia related to Procurement and Supply Chain Management. The procurement profession in Malaysia is still in its developing stage. The annual conference of the Malaysian Association for Supply Chain Management (MASCM) which was previously known as the Malaysian Association for Purchasing and Inventory Control (MAPIC) has been supporting this profession for more than 25 years now. There are also universities that provide education and training related to purchasing. The Malaysian Institute of Purchasing & Supply Management (MIPSM) is an ISO 9001:2008 certified organisation which focuses on strengthening standards, professionalism, technical knowhow and certification within the supply chain management industry.
Conclusion of the study:
The core competencies for purchasing managers are planning, forecasting and evaluating. Among the most important business skills are analysis and negotiation. A manager procures by using different strategies such as open market bidding, negotiated bidding, and fixed-price contracts.
The job of a purchasing manager largely depends on the type of procurement that take place. The most common techniques are direct purchase and indirect purchase. Direct procurement involves acquiring materials directly from vendors while indirect procurement is the process of buying all kinds of needed materials through intermediaries, distributors or brokers.
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