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A company needs to acquire materials or services from sources that are external in nature. It helps the company to acquire these works, services or goods at cost effective rates maintaining the time, location, quantity and quality. This is the process of procurement and forms an essential part of cost base in retailing, manufacturing and services companies alike. With the growth of a company, t he procurement benefits also grow as does the risk in doing international business. The purchase based decisions are inclusive of factors like handling, deliver, price fluctuations and marginal benefits. Purchasing involves buying decisions mainly at times when there is scarcity. Below is a list of the steps that are involved in the process of purchasing. Steps in Procurement • How to identify the need: Identification of the need is an internal function of any enterprise which helps in identifying the needs of the enterprise by making strategies that are short-term based. This strategy lasts up to a maximum of five years and gives definition to requirements and technical direction. • Identifying the supplier: After finding out the answers to questions like multiple suppliers as against single ones and make-buys, a company can move forward to find out which supplier would be most profitable. • Communicating with the supplier: Post the identification process, the company will need to communicate with the suppliers requesting for tenders, proposals, quotations or information. This can either be done through direct contact or via advertisements. • Negotiating: In the negotiation process, the topics under consideration are availability, customization and price possibilities. Schedules for delivery and contracts are also fulfilled in this step. • Managing logistics: Expediting, supplier preparation, delivery, payment and shipment are all based on the terms of the contract. Often, training and installation are made part of the process. Outsourcing Procurement It is a process in which the specific procurement activities based on supplier management and sourcing are shifted to another party that specializes in these functions. Specialists in purchasing are divided in the following two categories: • Indirect procurement: These procurements include those activities that directly help in the growth of the company like advertising, services related to IT, office services and facilities management. • Direct procurement: It involves buying products for the company directly. For instance, for a food based company, packaging and ingredients will be main categories of procurement. Processing Consulting Consulting for procurement is a service of professional nature. This service is provided by those procurement consultants that have acquired expertise and experience in all t he spheres of purchasing process. This process includes selection of suppliers and contract signing of various purchasing possibilities. The main types of companies that take professional help from consultants include the following: • Firms those are Vendor-specific • Boutique Firms • Multinational Firms If you want to outsource your procurement needs, you need to search for a reliable consultant that has a reputation in the market for offering the best procurement solutions for its clients. You can always use the internet for help as most of the companies are available online, providing solutions of high quality. Justin Turner writes articles on Procurement Consultants. For further queries and information visit the website Routeorg.co.uk
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