What is Procurement Management?
Procurement Management is the process of how companies purchase economic resources and business input from suppliers or vendors. It is about how companies negotiate prices with the suppliers and get the best quality of resources for their production. It is better for companies of all sizes to implement procurement management from the early start of their business as it will give many benefits such as greater savings and lower the costs. Big companies need procurement management process as they can purchase resources in large volume quantities. Small companies also need procurement management when they are dealing with vendor or supplier to get goods for their operation and also conserve scarce cash through smarter acquisition method. Companies use procurement management to enter contract with vendors and suppliers to purchase the right or access to resources for their business operations. Companies can secure the discount prices on business inputs when buying high volume purchases from vendors or suppliers. They can lower the acquisition cost of resources by using contracts to set fixed prices on future purchase of resources.
Hiring labor to convert your physical resources into consumer products also requires procurement management. There are various ways in hiring employees such as direct advertisement through websites, newspaper ads, recruiters or headhunters. Human resources departments often used as the main function of procurement management in hiring employees. They make sure that the regional laws are obeyed when hiring employees.
Business’s capital resources also acquired through procurement management departments. People in this process includes accountant, business analysts, financial managers who determine the bank debt or equity investments for company.