Procurement covers all the actions and procedures that organisations take to acquire the goods and services they need to operate on a day-to-day basis, from purchasing raw materials to hiring temporary cleaners. Many organisations acquire goods and services based on immediate needs, identifying a requirement and then purchasing the appropriate solution.
-
Services procurement: In services procurement, ‘intangible’ services are required from external suppliers, contractors, or consultants. Common examples include IT support, accountancy, HR, and marketing.
-
Goods procurement: Goods procurement involves purchasing physical products or materials for organisational use or resale, and encompasses equipment purchases, finished goods, and other ‘tangible’ items. Key considerations in goods procurement are quality, cost-effectiveness, supply reliability and timescales.
-
Capital Procurement: Works or capital procurement refers to the process of acquiring long-term assets or investments that are crucial for the organisation’s growth and infrastructure. This includes purchases related to construction projects, machinery, equipment, or any other significant investment that has a long lifespan and contributes to the organisation’s capital value.
-
Direct procurement: Direct procurement covers any goods or service that are directly incorporated into a final product or service. In manufacturing, for example, this includes metals and plastics, components, and subassemblies. Optimising your direct procurement strategy will help improve product quality and lower costs.
-
Indirect procurement: Anything not directly related to the production process but still necessary for operations is considered indirect procurement. Examples include office supplies, business travel costs, software subscriptions, consulting services, and maintenance. A strategic approach to indirect procurement could help you optimise your operational costs, reducing overheads and improving cash flow.
What Factors Affect Strategic Procurement?
Strategic procurement itself is an evolving concept that requires businesses to stay up-to-date with the latest trends and best practices – especially regarding the shift towards more sustainable and socially conscious procurement, which accommodates not just cost factors but also environmental and ethical impact in the supplier selection process.
Strategic Procurement Solutions
Strategic procurement solutions embrace the various strategies, technologies, and techniques available to organisations to integrate these changing technologies and best practices into their procurement strategy. Procurement solutions are a very broad umbrella term, and can range from implementing new software to adopting new processes for supplier management. However, the goal of any of these solutions is to optimise the procurement process at each level, from needs analysis to final delivery.
Find Out More
If you would like advice or more information about how our strategic procurement solutions can support your organisation, please get in touch with one of our expert team at Quantum 360 today.
