What is role of Procurement department in an Organisation? &
How can they help in minimizing price of finished product?
What is role of Procurement department in an
Organisation?&How can they help in minimizing price of finished
product?11Group MembersNamesRoll no.Vaibhav Kadam04Mihir
Panchal08Niyaz Khan18Manu Shaji20Pratik Tantia312Introduction
Procurement :- The action of obtaining or procuring something A
procurement department is responsible for managing the purchasing
activity for the organization. In a procurement department, the
director is responsible for strategic planning, policy development,
and providing procurement advice to senior management.
3Procurement Process4How it works/ ExampleProcurement may be a
simple purchasing arrangement with a supplier. It may also involve
a more complex arrangement with the seller or a group of suppliers
that ties required quantity, quality, and delivery into a
production process.The stages of procurement include information
gathering (i.e. who are potential suppliers),Supplier contacts
(i.e. gathering information about the potential
suppliers,Background reviews (i.e. vetting, screening, checking
references of potential suppliers),Negotiations (i.e. setting the
price and terms), fulfilment (i.e. delivery and installation),
consumption,Maintenance, and disposal (i.e. monitoring the actual
delivery and use of the supplies or equipment), Renewal (i.e.
reorders and continuing relationship with the supplier).
5ExampleDirect procurement systems involve the integration of
purchasing into a company's supply-chain management system,
delivering the right supplies at the right time. This procurement
method is classified in manufacturing systems as "just-in-time,"
which minimizes inventory holding costs and ensures the smooth
delivery of supplies needed in the manufacturing process.
6Role of Procurement departmentTo procure required services,
materials, equipment, and construction while ensuring that quality,
safety, and cost-effectiveness are achieved. Assessment of demand
or description of needSelection of sources of supplyReceiving of
quotationPlacing orderMaking delivery possible at the proper time
by following up the orders.77Role of Procurement
departmentVerification of invoicesInspection of incoming
materialsMeeting transport requirements of incoming and outgoing
materialsMaintaining purchasing records and filesReporting to top
managementDeveloping coordination among other departmentsCreating
goodwill of the organisation in the eyes of the suppliers.
8How can they help in minimizing cost?AdvertisingCheck online
media marketing versus traditional advertising. See if businesses
in your neighbourhood can team up with you to get better prices
from advertisers.Trucking and Shipping ExpensesDeduct costs for
your car or truck in your business.Contract LabourConsider
contractors. Often, it can reduce costs to contract as opposed to
hire full-time employees.DepreciationCheck with your accountant to
see if your eligible for depreciation tax credits.Consider Buying
UsedAre there any categories of supplies you can buy used,
reconditioned, or get for free from sister businesses? Look online
for opportunities to get gently used items.MaintenanceIs it
possible to use equipment longer? Regular maintenance can save
thousands. Educate your employees before problems arise.Eliminating
MiddlemanIs it possible to use equipment longer? Regular
maintenance can save thousands. Educate your employees before
problems arise.UtilitiesSmall savings per month ends up being large
savings per year.
9Cost reduction through Procurement strategies10
11
Effective Procurement StrategiesMonitoring supply markets and
trends. (e.g. material price increases, shortages, changes in
suppliers) and interpreting the impact of these trends on company
strategiesIdentifying the critical materials and services required
to support company strategies in key performance areas,
particularly during new product developmentDeveloping supply
options and contingency plans that support company plansSupporting
the organizations need for a diverse and globally competitive
supply base
12
13
