People Innovation Excellence

Importance of Procurement Management

Different organizations have different management techniques to carry out the efficient functioning of their departments. Procurement management is one of the management techniques to make sure goods and services that acquired from different organization run smoothly. Procurement management will help organization to save much of money spent when purchasing goods or services.

Some benefits are reaped by organizations that adopt procurement management are they can save valuable time, helps organization to run procurement process faster and smoother, large scale savings, quality assurance in each purchase, effective delivery times, management of warranties for each purchase, savings based on operational efficiencies, saving in fix costs, transparency, enhanced business relationships with supplier, and so on.

Procurement management works in four main working areas:

  • Whenever you want to purchase goods or services, you need to consider whether it is cost-effective and absolutely necessary or not as not all goods and services needed to be purchased from outside.
  • You have to make a list of potential suppliers that will give you the best deal for your organization. Use a selection criterion to select best provider.
  • The next step, you can call for bids. Finally, you have to choose which supplier you would want to go with by considering cost and different criteria.
  • After evaluating and select the best supplier, you need to go into contract discussion. Mention all the financing terms, payment method and so on to prevent any confusion arising later.

Maintain good relationship with suppliers is the most important includes the agreement that have been made by both parties. This will help the sustainability of your business and supplier’s business. All of these steps will help you to acquire goods easily and quickly.

Procurement management relates to supply chain management. In order to manage uncertainties in project management, supply chain management concept used as a strategic weapon. Effective procurement strategies and well managed supply chains enable organization to focus on developing and delivering products and services that exceed customer expectations. Benefits of procurement and supply chain service are reduced operating cost, increased procurement capability, improved service quality, simplified processes and effective supplier management.

To make the procurement process work efficiently, we should keep checking and tracking on the suppliers to ensure everything is on track and the goods or services are delivered on time as written on contract. It is good to keep a good communication with suppliers and letting them know if there is any issues by using method of communication decided on the contract before. The organization should be ready to change to ensure the efficiency of process.  To have better result, organization should have a team of highly-skilled and trained individuals who are specialized in different fields as some will deal directly with the suppliers. Each team will have the expertise required to deal with the relevant areas of buying.

Published at : Updated
Written By
Sugiarto Hartono
Subject Content Coordinator | School of Information Systems
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