Procurement Definition

Procurement is the act of buying or acquiring goods or services from an external source (a vendor), typically via a bid or tendering process. A broad definition of procurement includes the activities and processes to acquire goods and services needed for operating a business. It includes the following:

Core Procurement Activities

  • Purchase planning: Organizations need to plan purchases whether for manufacturing or supplies.
  • Development of detailed specifications of the goods or services to purchase.
  • Research the market to identify suppliers and choose the best supplier according to predefined business criteria such as quality, pricing, time for delivery, etc.
  • Negotiate the best price with the selected vendor(s) and development of contracts inline with the business objectives.
  • Financial planning and budget management involves identifying and setting aside funds for the procurement.
  • Making the purchase. This involves proper documentation and tracking of the purchasing process.
  • Inventory control and tracking involved proper management of purchased goods.