What Is Procurement and Why Does It Matter?

Does your company have its own procurement team? If the answer is no then they might be wasting a lot of time and resources. Procurement can be a confusing topic for many businesses.

Hence, they they tend to avoid the whole concept of it, but in fact, be a great convenience to companies. So, the question still remains, what is procurement and why is it so essential?

The Basics of Procurement

Procurement is a process that allows an organization to acquire specific products and services from the best suppliers, with the required quantity at the lowest price possible. Procurement is often mistaken for just purchasing but its so much more.

Procurement involves activities establishing fundamental activities, negotiation of contracts and also sourcing activities like market research and vendor evaluation. The procured goods can include raw materials, technical equipment and non-trade materials such as office furniture, pantry goods, gifts for special events and even water.

Why is procurement important?

Procurement is viewed differently in the public and the private sector. Procurement is an essential strategic function and plays an important part in the private business sector in terms of increasing the organization’s profitability.

Tasks such as finding the lowest prices for raw materials, finding the best suppliers and streamlining processes. In a nutshell, procurement helps improve the bottom line in businesses. Bottom line refers to the company’s income after all the expenses have been taken away.

In the public sector, procurement is viewed differently, because the concept of “bottom line” is quite blurry. This is because stakeholders’ dividends are not present and public sectors do not announce their profit or losses.

But there is a need to expand output in relation to teaching and research. And funds are received through the public hence, it is important to track of all the spending and amounts received. This is where procurement plays an important role.

What are procurement tools and how are they useful?

The process of procurement is complicated and there is a lot of work that goes into it. There is a possibility of something going wrong between managing vendors, tracking purchase orders and even getting budget approvals. It might seem like a lot of work to manage all these factors at once but getting the right e-Procurement software can save your business all the hassle.

Using a procurement software allows all your companies’ spendings to be accounted at one central location. Procurement tools can also help businesses improve their risk management. Hence, procurement tools simply help keep the company balanced with aligning spending and needs.

Supplycart’s procurement software ADAM can ease your start to the procurement journey. ADAM is an e-Procurement platform which aids you in digitizing your procurement processes. It is a catalogue-based procurement with multi-user and multi-branch feature. Supplycart is the One Stop office Solution for all your business needs. Visit Supplycart.my for more information.

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