Procurement and its importance
Procurement department of any
organization has great deal of importance.
Procurement department of any
organization is of high importance.
To explain the importance of
procurement we can example a family that is a small collection. In each
successful family the purchase responsibility and services is assigned to the
most arithmetic person, in order to evaluate the market, choose the best method
and do a successful purchase and help the family for economic improvement. Procurement
has more importance in production and commercial services and shall be done
professionally in order to boost the organization.
In production organizations there is
separate unit for procurement and industry’s successful managers mention the
procurement as a useful medium to achieve their goals and always try to reinforce
the procurement department of their organization.
The principles of a successful purchase:
The important factors in procurement
Competitive price, high quality and on-time
delivery, and any successful purchase shall meet these factors.
As you know the goods & services
market are in control by related organs and whatever these office to their duty,
the procurement duties get facilitated and otherwise the pressure that emerged
from slumber of these office will transfer to procurement unit so in present
market conditions supplying the goods with appropriate price and good quality
or indeed a purchase that we can defense is a difficult work that needs
endeavor and enough experiment.
In the present market the most
important factor for determining the goods price is two factors of supply and
demand and each alteration in these two factors will have direct effect on prices.
So the duty of procurement unit that arranged in demand step & specially in
large production organization that have huge request volume is very important
and for sending the request to the market, market conditions and should be considered.
quality means that the goods delivered with the quality that secured applicant
comments and presently the products doesn't prepared with the best quality so procurement
unit can place applicant with checking market and consulting technical unit ,
place the products with appropriate price and adequate quality in disposed of
unit and be participate in decreasing expired price of organization production
the product procurement with good quality and price should be accompanied with
on-time delivery to the customer so to achieve this purpose it is necessary
that in contract and agreement with sellers emphasis on the delivery time and
with probable delay prediction , the disadvantages due to the failure of timing
delivery should be on the responsible party .
The role of procurement unit in
One of the skilled procurement
specification is the validity of this market and this validity obtained when
procurement unit provides the goods from valid resources and acted timely to
their obligation toward the sellers, and this validity is the most valuable fund
for commercial and production business and financial crisis could be passed
using credit purchasing .
The above subject is a review on the
importance of procurement duty and the manners position and treatments in
purchase specially articles that some of them mention as follows:
Evaluating regulation of transaction
and its effect on purchase – control methods and purchase managements – the
characters of a successful expert – the role of technical and legal information
in whole sale / macro sale – the procedure of a successful purchase – the
methods on inquiry and its main points.
Finally its remembrance usually
sellers doesn't satisfy from sale experts but admire them, because they know
that he/she is an empowered and persistent expert.
Evaluating deals regulations and its effect
The transaction regulation contains a set
of instruction and methods for controlling and optimized transactions of on
organization that prepared and approved by management and its board of directors,
and all the transaction s should accomplished with consideration of instruction.
A portion of this deal regulation is
related to shipping purchase and service that culled purchase regulation and
the main audience is the procurement unit.
The purchase regulation have an
important role in the procurement function and each weakness or strength have
direct effect on procurement performance.
The regulation of efficient purchase
can practice as one of the affection tools of management toward organization
improvement , and otherwise in the case of weakness in instruction , this
regulation not only have positive effect on purchase optimized but also have an
abstractive role on purchase process always some part of supplies potential
spend for crossing from non-methodical obstacle .
The purchase regulation
The purchase regulation should be prepared based on marketing
conditions, production program, targets, capabilities of this organization, in
this case its instruction is capable to have control and transactions benefit
forwards, otherwise because of non-conformity between the regulation and
present realities, it hasn’t favor application and is weak. Therefore regarding
management method, target capabilities of each organization should prepare
regulation content and using regulation got to challenge similar organization
in its management.
The purchase regulation should be reformed and upgraded
proportional with markets term changes to keep it quality favorable.
In same of observed cases the purchase regulation limited to
number of formulaic instruction that mentioned to some of them: dividing
purchases to major, directions toward its price, pre panning 3 inquiries by
written for major purchase and advertising tender for macro purchases.
Unfortunately these instruction because of their stereotype
structure has been known for many years, even in some cases these methods
suggested by sellers to the purchasing officers such as preparing 3 inquiries by one seller or dividing major
shopping by separation to multi factor in order to preventing from preparing
inquiry of written prices.
Because of weakness in these regulations. The related company
directors always one concern to failure to do deals correctly, and with
creating administrative complex cycle try to control deals that deciding such
methods censed to slowness in purchasing produce and cost making while ,if purchasing
regulation prepared with considered stockiest ,proposing exchange product, and
company capabilities, controls and deals forwarding assigned to regulation. The
most part of director attention will spend for continues investigation of
market conditions, its coordinating with organization purposes and updating
For example, some instructions that can strengthen the regulation
are mentioned as fallowed:
1) Separating purchase resources and emphasis a purchasing from
As mentioned in former article one of the valuable assets in each
economical is the reliability of that organization in all merlots and in
financial crisis we can use the credit purchases to cross from these crisis's
and this credit earn from purchasing valid resources and timely equalization
with sellers, so we suggested purchase resources divided to 3 groups of valid,
invalid and etc., and the list of each group prepared with full specification
of seller and has been and settled in purchase instruction.
Valid resources include those sellers who provide proper goods
services and enjoy financial power, and invalid resources are those seller who
do not stick to their commitments.
In procurement it is desired to purchase from the valid resources
that after assessing them, they can be categorized. It’s better that the price
inquiry and macro purchases have been done as valid or invalid resources.
From valid resources group and use miscellanies resources for
diminutive purchases that set after deals repetition, after evaluating new
resources and getting validity of these seller in valid or invalid resources
Taking such an approach have direct effect on important process of
deals and the seller’s treatment with organization.
2) According to classification of purchases base on numbers or
quality of requested goods in a period usually divided into two group of micro
and macro, and the criteria for determining each group’s purchases is based on
the total amount requested price. For example, if requested 100 bolt for
production unit and the total price is less than 2.000.000 Rials will stand in
micro purchases group, and the approval of purchase officer is enough for this
deal, while if the same bolt is requested for 6 month usage may be its total price
would be categorized in major purchasing group.
The significance of this purchase because of its continuous usage
is more than buying a lift truck that despite of expensive price its purchase will
not repeat in incoming years.
So, regarding this instruction that repeated purchases for
consumable goods in the production line (observing the expiration date) is
forbidden for a 6 month period and cause coordination and optimal planning of
product unit, stock, and supplies and procurement. In addition, to prevent the
breakdown of major purchasing of the goods with high consumption, a better
planning would be taken.
In this Article we mentioned the key points of purchase regulation
in deals and the full explanation about how to set purchase regulation, needs
more studying and identification of the purposes and the company capabilities.