SUMMARY ABOUT PROCUREMENT MANAGEMENT "DEFINITION AND PURPOSE OF PROCUREMENT"

This summary talk about Procurement Management "DEFINITION AND PURPOSE OF PORCUREMENT" we also discuss about process, direct procurement and indirect procurement, and anything that connected to procurement. This sumary will start about definition of procurement management and why procurement is important

Procurement Management

Procurement Management is the process companies use to purchase the materials and services to support the firm's operations from production to marketing, sales and logistic from suppliers or vendors. Procurement not always economical for the companies to make all materials used in manifacturing, and some item produced from other companies, and some are produced from our company.

Procurement also is the core activity of a manufacturing industry. It helps in procurement planning, supplier selection, purchase order creation, invoice verification and payment management.

There are 7 stages of procurement:

1. Need Identification
2. Pre-Solicitation
3. Solicitation Preparation
4. Solicitation Process
5. Evaluation Process
6. Award Process
7. Contract Process

source[http://doas.ga.gov/state-purchasing/seven-stages-of-procurement]

Procurement is very important because it is a complex process that help business to become more efficient and all goods and services they buy will be the right quality and quantity. So procurement is very important because its can transform companies when it's done right, and it can actually help to increase profit. source[http://www.valuestreamguru.com/?p=195]

Purpose of  Procurement

The purpose of procurement is to ensure that the procurement process run smoothly, so the required products and services can be found at the right time, the right quantity, with the quality of the nail and with the right price.

For fulfill the purpose of procurement there should be a team that highly trained individual if procurement plays a key role. As an example, a hospital should have dedicated procurement team and employ strong procurement management techniques and tools.

Procurement Management Processes

There are four processes in procurement management:

1. Plan Procurement
2. Conduct Procurement
3. Administer Procurement
4. Close Procurement

This is explanation of Procurement Management Process from above. First of all is Plan Procurement is the first process within the procurement management knowledge area which is used to obtain goods, services or scope from outside the organization. Second, Conduct Procurement is the process where we make sure our potential costumer have an opportunity to bid in fairness. Third, Administer Procurement this is the process of managing procurement relationships, monitoring contract performance and making changes and corrections as needed. The last is Close Procurement this is the process of completing each project procurement. It supports the close project or phase process.

Direct and Indirect Procurement

Based on the consumption purposes of the acquired goods and services, procurement activities are often split into two distinct categories. The first category being direct, production-related procurement and the second being indirect, non-production-related procurement.

First I will explain about direct procurement. Direct Procurements occurs in manufacturing settings only. Direct procurements encompasses all items that are part of finished products, such as raw material, component and parts. The next is Indirect Procurement. Not like direct procurement, indirect procurement activities focus on "operating resources" only that company purchases to enable it's operation.

Project Procurement

Project Procurement Management includes the processes required to acquire goods and services from outside the performing organization. For simplicity, goods and services, whether one or many, will generally be referred to as a product. sources[http://www.softwareresearch.net/fileadmin/src/docs/teaching/SS06/PM/PMBOK12.pdf]

There are five Processes of  Project Procurement:

1. Project procurement management: Acquiring goods and services for a project from outside organization.
2. Requesting seller responses: Obtaining information, quotes, bids, offers, or proposals from sellers, as appropriate.
3. Selecting sellers: Choosing from among potential suppliers through a process of evaluating potential sellers and negotiating the contract.
4. Administering the contract:Managing the relationship with the selected seller.
5. Closing the contract: Completing and settling each contract, including resolving any open items.

Conclusion

In brief procurement is an important act and important part from logistic and it's the core of manufacturing industry. So Procurement and logistic cannot be separatted and it's part of our life.