PROCUREMENT.

Procurement Types.

1. Direct procurement.
2. Indirect procurement.

Based on the consumption purposes of the acquired goods and services, procurement activities are often split into two distinct categories.

• The first category being direct, production-related procurement.
• The second being indirect, non-production-related procurement.

Procurement Types- Direct Procurement.

Direct procurement occurs in manufacturing settings only.

• It encompasses all items that are part of finished products, such as raw material, components and parts.
• Direct procurement, which is the focus in supply chain management, directly affects the production process of manufacturing firms.

Procurement Types-Indirect procurement.

In contrast, indirect procurement activities concern "operating resources" that a company purchases to enable its operations.

It comprises a wide variety of goods and services, from standardized low value items like office supplies and machine lubricants to complex and costly products and services like heavy equipment and consulting services.

PROCUREMENT

Purchasing.

• The term is used in the industry and management to denote the function of and the responsibility for procuring materials,suppliers and services
• Purchasing may also be called procurement, sourcing,supply management or even materials management.
• Purchasing is responsible for the inbound or upstream channel activities of the logistic function .
• Purchasing is focused in getting the right product or service to the right place at the right time, in the right quantity, in the right condition or quality from the right supplier at the right price.

Strategic Role of Purchasing.

• The strategic role of purchasing is to perform sourcing related activities in a way that supports the overall objectives of the organisation.
• Purchasing can make the strategic success of the organisation through its role as one of the organisation's boundary spanning functions.
• Integrating with the supply market purchasing can gain important information on new technologies, potential new materials, services, new sources of supply and the changing market conditions.
• This is a competitive intelligence where purchasing can assist the organisation strategise to optimise market opportunities to its advantage.
• Strategic purchasing function that include supplier sourcing, supplier evaluation,selection, total quality management, planning and research activities that maximise the organisation effort towards meeting its goals and objectives.
  

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