Procurement is the process by which a company’s needs for products, software or services are contracted for and delivered:
Procurement is different from the practice of haggling over a price. Hagglers negotiate many times only negotiate price. They don’t need to make the purchase and can wait to see if time and circumstances will change the Supplier’s need or desire to make the sale. The vast majority of Procurement purchases are based upon the Buyer needing to make the purchase because internal demand is immediate or there is a problem the Buyer’s company needs to solve where delays will cost the company money.
Each company organizes their Procurement function differently, but most companies will have:
With the amount of outsourcing that has occurred over the last 25 years, the dynamics of what is being purchased has changed Procurement dramatically. More companies are relying on Suppliers to meet needs that the company once may have managed internally. With that increase in outsourcing, the nature of procurement documents has changed from making simple purchases that the company used to perform the work themselves (many times by Purchase Orders) to contracting with a Supplier to perform the entire operation (which frequently requires contracts. Outsourcing has significantly and forever changed what’s referred to as “Procurement”.