Purchasing management
Introduction
Procurement is the action of finding, acquiring, or purchasing goods or services or works from an external source, often through an auction or tender. The process is used to ensure that the buyer receives the goods, services or works at the best possible price, when comparing aspects such as quality, quantity, timing, and location.[1] Companies and public bodies often define procurement processes to promote fair and open competition, while minimizing risks, such as fraud and collusion.
Overview
Almost all purchasing decisions include factors such as delivery, transportation, marginal benefit, and price fluctuations. Procurement generally involves making purchasing decisions under conditions of scarcity. If sufficient data is available, good practice advises using economic analysis methods such as cost-benefit or cost-effectiveness.
An important distinction must be made between analyzes without risk and those with risk. When there is risk, whether in costs or benefits, the concept of optimal value should be used (best value, a valuation method[2] of the North American federal government that takes into account more factors than price, and which should not be confused with the Best Value policy of the United Kingdom, which is totally different).
Procurement activities are often divided into two distinct categories: direct and indirect spend. Direct spending refers to supply related to production, which covers all elements that are part of finished products, such as raw materials, components and parts. Indirect sourcing is not related to production. Direct sourcing, which focuses on supply chain management, fully affects the production process of manufacturing companies. In contrast, indirect sourcing refers to operational resources that a company purchases to enable its operations. Indirect sourcing encompasses a wide variety of goods and services, from standardized objects such as office supplies and machinery lubricants, to complex and expensive products and services, such as heavy equipment, consulting services and outsourcing.[3].