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What is Procurement?

Malcolm Tatum
By
Updated May 16, 2024
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The fact is that just about everyone engages in the act of procurement. In its most basic form, this term is nothing more than the word used for the steps taken in the acquisition of goods and services. From this perspective, all consumers participate in the process since, whether for business or for the home, there are progressive steps that everyone follows as they work toward procuring those items that they desire.

The beginning step in the process is the recognition that there is a need or want for a particular good or service. Before there is a chance for the acquisition of goods, there has to be the desire to actually gain possession of something in particular. Without recognizing the want or need, there is no reason to pursue any of the following steps that ultimately lead to a purchase. In short, if there is no desire, there will be no procurement.

Once the need or want has been recognized, it is important to qualify the specifics of what will lead to satisfaction. For example, the want or need may be new transportation. Further thought may yield the fact that a truck would be the most the most effective and useful type of vehicle. From there, it is a matter of determining what features are desired on the truck, as well as determining an approximate amount of money that the consumer is willing to pay for the truck. With a solid vision of what is desired, it is possible to move on to the third step in the process.

Step three involves the evaluation of potential suppliers. This will involve getting to know more about vendors who can supply goods or services that will meet all the specifications, including the price range. This may involve taking bids on a project, negotiating prices, or accepting proposals. Over time, one or two suppliers are likely to stand out from all other vendors. Once the final decision is made between the two remaining suppliers, the time has arrived to move on to the final stage.

The last step involves taking possession of the desired good or service, ensuring that the item is in compliance with all the claims made by the supplier, and rendering payment according to the terms worked out with the supplier. In some cases, it may be possible to engage in the acquisition of services and goods prior to supplying payment, while at other times, payment may be necessary before taking possession. With both scenarios, the consumer usually has a short period where it is possible to reverse the acquisition and move on to another option.

One of the basic rules of procurement is that in the end, it is important to think in terms of the total cost of ownership. This includes not only the purchase price, but also time and resources that are expended in the pursuit. By understanding the steps, it is possible to get a better understanding of the real cost involved with attaining any good or service.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
By anon170672 — On Apr 27, 2011

engineers, will always help in determining the quality of goods before any supply is done, for an efficient and effective supply.

By anon43953 — On Sep 03, 2009

what are sources in the hospitality channels of distribution and explain how they differ?

By mdt — On Mar 09, 2008

Many types of engineers are involved in evaluating quality and value as it relates to the usage of the product. Since the idea behind procuring goods and services involves getting the most for the price paid, their input can be very important in many businesses.

By anon8130 — On Feb 08, 2008

Why do you need engineers in the procurement department?

Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
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