As a procurement professional, Esteban Messuti shares his expertise through this blog. Although he has already established a few pieces of content within the industry, today he’s taking you back to the basics. Before you dive into the world of procurement, its critical that you understand what exactly this industry entails, and why there are high expectations for professionals in this field. This blog will serve as your guide to understanding an industry that has changed how global purchases are made on an everyday basis. Let’s get started!
Procurement can be defined as a process in which selecting vendors, determining payment terms, negotiating contracts, and making actual purchases occurs within business. Many assume that procurement is making a simple purchase, almost like “shopping” in a sense, however it’s much more than that.
As a core component in any business, procurement requires strategy. Any successful corporate organization will have an established procurement strategy for their business. Corporate strategy is vital to understand in procurement and includes: company identity, market placement, management issues, and company capabilities. Together, these 4 elements serve as the key to a strong, clear corporate strategy.
As a procurement professional, you will touch each of those for elements within corporate strategy. Procurement strategy should always reflect the corporate strategy. For example, if your business is environmentally conscious, the procurement plan should incorporate sustainable spending. Because of this, procurement and corporate identity are intertwined.
In the same sense, market strategy connects to procurement as well. Marketing strategy includes target audience, tactics to reach goals, and the overall value of the company. Procurement wouldn’t be successful if it didn’t align with the company’s established market strategy.
While aligning the company’s procurement process to corporate identity and marketing strategies is a vital step, there’s more to the process. The ultimate goal of procurement is to find goods and services to purchase. Therefore, procurement is the process of purchasing.
The process of obtaining and managing the items which are purchased comes out of the “Procure-to-Pay” cycle. This involves the actual transaction between the business that’s buying and the seller. With the use of technology, its often a seamless process from point of order to purchase.
Purchasing is a process under the overarching industry you now know as procurement. From finding vendors and sourcing to negotiating and finalizing transactions, procurement is a process that has been connecting people since it’s dawning.