There are organisations those who manufacture merchandises ( or services ) in majority and so direct their finish goods into the market. To fabricate goods in immense measure. the companies normally want stuffs. accoutrements. and equipments etc that are used for the production procedure. Most of the companies don’t have these natural stuffs. So what they do is acquire these goods from the recognized providers. those who can acquire the company with their desired goods. in measure wanted and in clip. So what companies do they contract providers and acquire the natural stuffs.
As discussed in the debut paragraph that companies do when they need natural stuffs for production. So this procedure of buying the natural stuffs and related goods is called Procurement or Acquisition. Thus. procurance in basic footings can be called as the procedure of buying of natural stuffs for the procedure of production. The procurance can be direct and indirect. The Direct includes the geting of merchandises. and Indirect includes services. care of the acquired goods. So managing and managing the procurance related issues is called Procurement Management.
As we know that organisations. particularly the fabrication houses. follow the construct of Supply Chain Management. which includes the natural stuffs required for fabrication boulder clay it eventually acquire available for the consumers. Most of writers. take procurance as the first stage of the Supply concatenation. Most of the houses have dedicated procurement sections. which deals with procurance related issues and post-procurement activities. The most basic undertaking of procurance is to guarantee that fabricating section gets supplies on clip and in described measure.
The timing of supplies is an of import issue because the stuffs must make production on clip. JIT and it all reduces the cost of stock list. The procurance section besides needs to do relationship with the providers. In many houses. there are many providers. supplying with different stuffs. These providers might hold their ain providers as good. So procurement direction besides include the keeping relationship with providers and their grades.
The procurance procedure constitute of the related activates that are used in the procedure of geting the goods. The procurance procedure is slightly similar for organisation. i. e. military. natural resource fabrication houses etc. However. the complexness of the procedure might be different depending upon the size of the house. A good established houses need to give accent on the procurance procedure. and there are aims that are the procurement section needs to guarantee. First of the company. demand to see weather the measure and quality of the stuffs are harmonizing to described demands.
The section needs to look into that are stuffs are good form. are run intoing the proficient facet. and harmonizing to quality demands. The 2nd aim is to look into clip agenda. As already discussed earlier. the purpose to have goods before the agenda deadline. Most of the houses get supplies before the clip. but in procedure the quality of goods are compromised. So it is better to present on clip. and in good quality. And the last aim. and frequently considered as the most. is the cost issue. In this procedure. the chief purpose to hold least cost. but that should run into the old demands of quality. proficient facets. clip etc. It is non necessary that house go for cheapest supplies. The cost can travel high. if the goods supplied are of good nature.
Now as we have discussed the standards that procurement section demands to maintain in head when look intoing the supplies. Now. allow us travel through the stairss that houses follow when they select the providers. from which they get supplies. To explicate this procedure. I would choose a house. for which we would choose the providers. The house is have chosen is maker of apparels. particularly T-shirts. Following is the stairss that are:
The first measure is placing the goods ( or services ) that are required for fabrication of the merchandise. For this. the house needs to specify the stuffs required. along with description. which covers all the above-discussed aims. For case. in instance of T-shirts. the major stuff that has to secure would be cloth. I would besides hold to state the stuff required. i. e. cotton. polyester. silk etc. Then the measure of stuff besides has to specify and likewise. the estimated cost that my house is willing to pay. This measure is besides referred as measuring the stamps.
The 2nd is to choose the providers that are run intoing the demands. described in the first measure. Then the providers are required to subject their Request for Proposals ( RFP ) . The procurance section analyzes the proposals ( RFP’s ) of the major providers and asks them for their Request for Quotations ( RFQ’s ) . So what our house would so here is happen the bidders that uncluttering the demands that we have asked for.
The 3rd measure is to inquire for the qualified providers to fix their command proposal. The procurance section will analyse the proposal of campaigners. The providers to make this activity are given clip by the house. In instance of our. we the section will travel though their cost along with the demands. Actually. the house starts that auctioning procedure.
The 4th and frequently considered as the chief measure is which evaluate the concluding bidders that are offering supplies at the most sensible monetary value. The steadfast looks at their past repute and records. The procedure is frequently complex in nature. as house besides need to see the quality of the supplies. In this procedure. the house selects the concluding provider.
Once the house has selected the concluding providers. the measure of doing contract with the provider comes. In this procedure. the house needs to travel for concluding understanding with the house and all issues are discuss. A formal papers as a cogent evidence is signed among the houses. which is harmonizing to contract act. The clip period of the contract is besides discussed in this stage. The manner of payment is besides settled.
The concluding measure is the formal shutting of contract. The shutting of contract require the some activities to carry through. We can state that when exchange of supplies and payment is made. the formal shutting of contract topographic point. In instance of house. the contract closes out when that we receive all stuffs i. e. apparels and payment of the stuff is made. Both the parties need to screen of issues. But in worst instance. if issues go unsettled. any party can take the other party to tribunal and work out this in legal manner.
There are activities that are related to post-procurement period i. e. once the purchase has been done. the activities such as care. mending and operating services ( MRO’s ) take topographic point. These activities are related to indirect procurance. For case. we have agreed with our providers to supply us with MRO’s. and now measuring their public presentation we have an option of reclamation of the same providers. if we are satisfied with their public presentation.
The procurement direction is considered as one of the chief stage of firm’s supply concatenation direction. which is responsible with the goods used for industries. Therefore. we may name procurance as bosom of supply concatenation direction. The houses need to emphasis on procurement policies and seek to accommodate to new engineerings that are assisting them pull offing procurement activities.
- Quentin Fleming ( 2003 ) Project Procurement Management: Catching. Subcontracting. Teaming. Fmc Press ;
- Fred. C. P. M. Sollish. John. C. P. M. Semanik ( 2007 ) The Procurement and Supply Manager’s Desk Reference.Wiley ;