A business requires various types of goods and services as its input. For a manufacturing unit, a lot of raw material needs to be purchased. A service organization does not need very elaborate regular purchases, but still, regular consumables or services form a significant part of any company’s cost structure. Sourcing and procurement of such materials and services at competitive rates is the primary objective of a Procurement (or purchase) department.
• Procurement involves the process of finding and selecting vendors, establishing payment terms, negotiating, finalizing contracts, finalizing purchase guidelines, cost control etc.
• Procurement is a wider term for sourcing and fulfilling various material and service needs of the organization.
• For practical purposes, procurement or purchase serve essentially the same objective.
• Purchasing is a very important activity within a company because of its impact on the cost of the company’s goods.
• Top management must monitor this very important activity closely and regularly review its performance.
• Typical purchase requirements are related to raw material, consumables, logistics and other business support services etc.
(Expert advice to GROW your business wherever you are, whenever you want.
SMEBusinessGuide.com… https://goo.gl/E3pfoQ)
WHAT YOU CAN READ NEXT
NEXT POST:
Purchase Requisition
