Procurement is the acquisition of goods and / or services, preferably at the best possible cost and / or value, and ensuring those goods are purchased in the right quantity and quality, at the right time, in the right place, and from the right source. The complexity of procurement depends on the organization and the goods and services being bought and can range from mostly automated repeat purchasing of office supplies through a vendor punch-out to the complex procurement of custom manufactured goods which involves sourcing raw materials and components from dozens of global suppliers and insuring they all arrive at the manufacturing plant at the right time for finished good production and distribution.
As per the the e-Procurement primer, the basic procurement cycle, which follows the sourcing cycle, usually consists of three to nine steps, depending on the complexity of a buy. Whereas a simple procurement will only consist of an order (requisition or purchase order), an invoice (which might also serve as the receipt), and a payment, a complex (or high-dollar) procurement will also require authorization and reconciliation of the invoice, a confirmation of goods receipt, tax submission and/or reclamation, and a post-mortem analysis of the transaction.
The procurement process is often supported by e-Procurement software in many modern purchasing and supply management operations. These systems will generally support the necessary process steps required by the organization and come with a number of core capabilities, which will include requisitioning, approval routing, purchase order support, receipts, invoicing, e-payment, taxation, reporting, multi-way reconciliation, and a self-service supplier portal.
A well-managed procurement process is important because it streamlines processing, reduces cash, improves cash management, deters maverick buying, reduces fraud, speeds query resolution, enables e-payment, simplifies taxation, reduces inventory cost, and increases spend under management. Details can be found in the e-Procurement primer.
For more insights into the procurement process and supporting e-Procurement systems, see: