According to www.proximagroup.com, “The work that an average business does with its suppliers accounts for 70% of the total revenue. Furthermore, their research found that for every income generated, 70% of it is invested back in the supply chain. And for this reason the procurement role is born in order to get the maximum value from all that money spent.”
Understanding Procurement
Procurement is the process of locating and agreeing to terms and purchasing goods, services, or other works from an external source, often using a tendering or competitive bidding process. It encompasses a range of activities involved in obtaining goods or services for business purposes. Now, let’s dive into the 4 important facts about procurement that will enhance your business profitability.
1. Procurement Purposes:
- 1. Procurement Purposes:
- Procurement teams work to obtain competitively priced supplies that deliver the most value.
- It involves stages such as gathering business requirements, sourcing suppliers, tracking goods receipt, and updating payment terms.
- Some companies define procurement more broadly, while others focus on specific activities like issuing purchase orders and making payments.
2. Procurement Key Aspects:
- Sourcing: Identifying reliable suppliers for goods and services.
- Negotiating Terms: Ensuring favorable terms and pricing.
- Purchasing: Acquiring necessary items.
- Goods Receipt: Receiving and inspecting goods.
- Record Keeping: Maintaining records of the entire process.
3. Procurement Ideology:
- Understanding supply chains: Procurement helps find reliable suppliers that match business needs.
- Impact on profitability: Efficient procurement can directly affect a company’s bottom line.
- Continuous improvement: Monitoring and assessing the process to identify weaknesses or inefficiencies.
4. Procurement Technological Automation:
- Technology can reduce costs and administrative overhead by automating and tracking procurement processes.
Remember, procurement goes beyond simple purchasing; it’s a strategic process that influences a company’s success by ensuring the right goods and services are obtained efficiently and in a timely manner. This is our watchword at Aurous Energy Limited.
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