Buying and selling is a two-way process in which the buyer accepts the offered terms of sale and fulfills or assumes an obligation to the seller in terms of payment and takeover of purchased funds or services. There are two types of purchases, and these are the purchase of individual consumers and the commercial purchase. Procurement in trading companies is the basis for the normal course of business.
Procurement determines the quantities for individual products/articles/goods which are needed to fill vacancies in the store. Thus, we can say that it is a process conducted within the organizational unit in charge of supplying goods and services at the right quality, quantity, and price at the right time, and managing suppliers to contribute to competitiveness and achieve business strategy goals.
In commercial companies, the procurement of merchandise is crucial, which is used for resale to customers and consumers. The role of procurement has changed over the years. While in the past it dealt mainly with administrative tasks of ordering and advertising defects of delivered goods and storage and issuance of goods according to customer requirements, today it is increasingly becoming a strategic function that bases its decisions on philosophy and value creation policy to meet consumer requirements maximize the effects and profits of the business system.
The modern importance of procurement is reflected in the relationship with suppliers. From the procurement of which are the most important suppliers with low purchase prices that are the focus of the business, procurement today strives to do business with reliable suppliers whose business is based on quality.
Procurement in the narrower and broader sense
Procurement in the narrower sense implies the conduct of operational activities in the process of acquiring the object of procurement; Procurement facilities are raw materials, operating and auxiliary materials, parts, assemblies, systems, and solutions of complex business processes and merchandise.
Operational procurement problems:
- – Timely procurement requests;
- – Delay in delivery;
- – Delivery of inappropriate goods;
- – Complaints;
- – Problems of tracking goods, compensation.
- Four basic elements to be taken into account in all tasks:
- – Quality;
- – Quantity;
- – Delivery deadlines;
- – Price
Procurement in a broader sense implies strategic tasks on which the effects and profits of the business system depend.
All of this leads us to the next, perhaps most important issue when it comes to procurement, and that is effectiveness. So, let’s see benefits of the effective procurement.
The most important general objectives of procurement are to procure materials and services:
- Functionally appropriate quality
- At the best price
- In economical quantity
- At the right time
- From the most favorable sources
- With the least risk
- With high delivery service
- With the achievement of the greatest possible protection of the environment
- With good relationships with suppliers.
Thus, the procurement process is much more than just a buying activity. This includes market research, organizing and monitoring deliveries to ensure timely delivery, quality, quantity, and price control of the purchased product, as well as receipt, storage, and all accompanying accounting activities that require a lot of time and effort. Precoro offers you a solution on how to make this job easier for yourself.
Efficient procurement in industrial companies enables uninterrupted operation production and significantly affects the economic and successful operation of the entire company, which is why we must pay due attention to it in business practice. Procurement in the narrowest sense can be equated with purchase as an act of buying and selling contract. It includes the conclusion of a sales contract or ordering and execution purchase contract by delivery of funds for production and execution of services and payment seller’s account.
Procurement in a broader sense encompasses the entire activity related to purchasing the means of production and services, in addition to the purchase, it also includes the activities that precede it and follow. Procurement in a broader sense is called the supply or supply of means of production and services. For the successful organization and functioning of procurement, it is necessary to include consideration of the notion of procurement in relation to the time horizon.
The trend of e-procurement is more and more present on the market. It is a procurement system that uses digital / internet means of communication in procurement procedures, ie concluding procurement work. Thus, e-procurement is most often used in combination with traditional procurement because companies further increase their profits in this way. According to the mentioned author, this way of doing business has its advantages and disadvantages.
The advantages are:
- availability of twenty-four hours every day of the week (they can be accessed at any time – either from home or from work and thus contribute to saving time and money)
- a wide range of products (there are infinitely many different products for different customer needs while physical stores are often limited by a range of products)
- availability of new procurement markets and materials
- low transaction costs
- global availability of products and services (it is possible to access products from all over the world).
The disadvantages are:
- limited knowledge of suppliers
- questionable supplier reliability
- potential loss of quality of manufactured goods.
The purpose of the company’s business is certainly the successful sale and profit. That would be it Successfully you need to research the market beforehand and identify the needs of the customers in order to meet them offer products that meet their criteria. Of course, it is not possible to please everyone segments and it is necessary to find a ‘golden mean’ through which sales and profits will be realized ultimately.
Additional attention could be focused on the shopping center by involving the retail manager and the saleswomen themselves from the stores who know the needs of the store better because in the company in the procurement only the owner and the production/procurement team participate in the center.
By turning on the saleswoman and retail manager will be given clearer information. It is also necessary focus on doing business with new suppliers. So, equal attention is needed focus on all stages of the procurement process in order for the procurement to be successful.