PROCUREMENT AND SUPPLY CHAIN

 

In this article, am gonna review some basic concepts you need to know about procurement and supply chain. This article would just cover the surface of the key terms which is PROCUREMENT and SUPPLY CHAIN. So guys after reading this article, kindly go ahead and read more about PROCUREMENT and SUPPLY CHAIN.

Now the term ''SUPPLY CHAIN'' means the movement of goods and services from suppliers to manufactures to distributors and also include the movement of information, funds and products in both directions.

SUPPLY CHAIN MANAGEMENT is the handling of the flow of goods and services from the raw manufacturing of the product through to the consumption by the consumer. Below are some few objectives of a supply chain

1. Maximize overall value created

2. Supply chain value

3. Source of supply chain cost

4. Source of supply chain revenue 

PROCESS VIEW OF A SUPPLY CHAIN

CYCLE VIEW - The procurement cycle is the series of actions required to obtain goods or services from an outside source. The events may include researching vendors, order requests, budget negotiation, purchases, and audits. The procurement cycle can require significant time and capital to complete.

PUSH OR PULL VIEW - Supply chain strategy determines when product should be fabricated, delivered to distribution centers and made available in the retail channel. Under a pull supply chain, actual customer demand drives the process, while push strategies are driven by long-term projections of customer demand.

With the few explanations about SUPPLY CHAIN, l guess you all understand what is meant by supply chain and supply chain management. At this point let's us quickly look at the other key term which is PROCUREMENT 

PROCUREMENT is the acquisition of goods, services or works at the best possible total cost of ownership in the right quantity and quality, at the right time, at the right place and from the right source for the direct benefit or individual via a contract. 

CATEGORY OF PROCUREMENT

1. DIRECT PURCHASES are those goods and services needed for operational purpose. For example, purchase of machinery, raw materials, product for for sale.

2. INDIRECT PURCHASES would include maintenance and repair needs. For example, utilities, professional consultation and marketing expenditure.

BUYING

Organizational buying is the decision making process whereby formal organizations establish the need for product and services, identify, evaluate and choose among alternative brands and suppliers. The overall objective of the public procurement system is to provide value of money to the government by ensuring that public funds are spent in a transparent, efficient and fair manner. Below are some organizations we have....

1. Industrial or Producer Organizations

2. Intermediate Organizations

3. Private Institutions

4. Public-Sector Organizations

A procurement entity is an organisation or person that has legal or administrative mandate for procurement purposes and A procurement unit is an outfil in a procurement entity with the responsibility of superintending procurement. The Head of the procurement unit shall be responsible for undertaking and coordinating all detailed procurement activities within the procurement entity.

OBJECTIVE OF PUBLIC PROCUREMENT

1. Value for money

2. Integrity

3. Accountability

4. Equal opportunities and treatment for all

5. Fair treatment of all suppliers and contractors

6. Efficiency in the procurement process

PROCUREMENT CYCLE 

Procurement cycle is the road map of the procurement process that establishes the key activities required at every stage of the procurement process. It gives direction and provide step by step approach to the implement of the procurement activity. It also provides useful benchmark for procurement monitors and evaluators.

Below are the stages of  procurement process......

• Planning
• Sourcing
• Contracting
• Contract management
• Storage
• Distribution
• Disposal
• Evaluation

So guys, those are the stages of the procurement cycle. So kindly do research about the stages and know more about what goes in the stages. Please share this noble article to all your friends who wants to know more about supply chain and procurement.