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Procurement is the process of locating and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. [1] The term may also refer to a contractual obligation to "procure", i.e. to "ensure" that something is done.
In commerce, supply chain management (SCM) deals with a system of procurement (purchasing raw materials/components), operations management, logistics and marketing channels, through which raw materials can be developed into finished products and delivered to their end customers.
Although there are several organizations that attempt to set standards in the purchasing process, processes can vary greatly between organizations. Purchasing is part of the wider procurement process, which typically also includes expediting, supplier quality, transportation, and logistics .
Engineering, procurement, and construction (EPC) contracts (a type of turnkey contract) are a form of contract used to undertake construction works by the private sector on large-scale and complex infrastructure projects.
In some companies materials management is also charged with the procurement of materials by establishing and managing a supply base. In other companies the procurement and management of the supply base is the responsibility of a separate purchasing department.
Followup. The purpose of purchase orders is to procure materials for direct consumption or for stock, procure services, fulfil customer requirements using external resources, or procure a material that is required in production from an internal source (long-distance intra-plant stock transfers).
Expediting is a concept in purchasing and project management for securing the quality and timely delivery of goods and components. The procurement department or an external expeditor controls the progress of manufacturing at the supplier concerning quality, packing, conformity with standards and set timelines.
Procurement operations support tactical day-to-day transactions such as issuing purchase orders to suppliers, whereas strategic sourcing represents to strategic planning, supplier development, contract negotiation, supply chain infrastructure, and outsourcing models.
Purchasing is the formal process of buying goods and services. The purchasing process can vary from one organization to another, but there are some common key elements. The process usually starts with a demand or requirements – this could be for a physical part or a service.
Indirect procurement is the sourcing of goods and services not related to manufacturing for a business to enable it to maintain and develop its operations.