The ROLE of

PROCUREMENT

LM303 Principles of Logistics an Supply

TOPIC: The Role of Procurement in an
Organization.
Prepared by: Group 1 (Hauler)
You should be able to:
Understand procurement

To know the goal/ objective of Procurement

Describe the role of purchasing and understand its
impact on an organizations competitive advantage.
What is Procurement?
The act of obtaining merchandise, capital
equipment; raw materials, services, or
maintenance, repair, and operating (MRO)
supplies in exchange for money or its equivalent.
Two Categories:

1. Merchant buyer
wholesalers and retailers who purchase for resale
2. Industrial buyer
purchase raw materials for conversion, services, capital
equipment, & MRO supplies.
Is the process by which companies acquire raw
materials, component, products, services, and
other resources from supplier to execute their
operation.

Definition of Term:

Procurement is the process of identifying and obtaining

goods and services. It includes sourcing, purchasing and
covers all activities from identifying potential suppliers through
to delivery from supplier to the users or beneficiary;

Purchasing is the specific function associated with the actual

buying of goods and services from suppliers;

Sourcing is simply: Identifying and working with appropriate

suppliers.
The role of
Procurement in
an Organization
The primary goals of purchasing are:
1. Ensure uninterrupted flows of raw materials at
the lowest total cost,
2. Improve quality of the finished goods produced,
and
3. Optimize customer satisfaction.

Purchasing contributes to these objectives by:

Actively seeking better materials and reliable
suppliers,
Work closely with strategic suppliers to improve
quality materials, and
Involving suppliers and purchasing personnel in
new product design and development efforts.
 7 Rs of Procurement
1.Right Price
2.Right Quantity
3.Right Quality
4.Right Time
5.Right Place
6.Right Source
7.Right Service
THE GOAL OF PROCUREMENT

Is to carry out activities related to

procurement in such a way that the
goods and services, so procured are of
the right quality, from the right source,
are at the right cost and can be
delivered in the right quantities, to the
right place, at the right time.