STUDENTS' CORNER - 111

In this session, we shall briefly look into ‘Procurement’ as the second function of inbound logistics.

In business, procurement is a crucial process of getting things for the company in the right quantity at the right time from the right people at the right competitive price. It can also refer to getting services for the company. This is easier said than done effectively. All ‘rights’ converging on a point cannot be so easily achieved. In the chain of ‘ rights’ there is always the possibility that some ‘right’ might slip off the control leaving the entire process at fault. This is just to underscore a point that procurement is a very difficult task involving effective coordination from various quarters.

Indeed, when everything is available in plenty, procurement will not pose a challenge; in fact, procurement is said to refer to purchasing things when they are scare. Under the situations of scarcity, the process of procurement becomes a real challenge since it has to achieve fraud-free supply of things to the company.

The Procurement process is said to have some progressive steps, leading to final decisions of purchase.

The first step appears to be identifying the need.  The identification of the need must be based on fact, arrived at after a careful investigation of the market in terms of the need for a new product from the company or rather reordering of a product.  Need and want must be distinguished. Need is a fact but want is rather a projection of a desire or plan. In Need, the customer is focus; but in Want, there is more than Customer, may be, the Business man and his so-called vision. All this goes to prove that the right beginning begins with the right identification of the Need of the customer. 

Once the Need is identified, the attention must be in identifying the source for acquiring the product of the Need. In other words, choosing the right supplier of the materials is the next step.  Today, business is discussed in terms of building relationships.  A network of reliable suppliers guarantees success in the process of procurement, to say the least. Your suppliers might change your business flow itself. Therefore, reliable partners of business form foundation of a sustained enterprise.

We will see the other steps in procurement process next.