What is the importance of procurement in an organization?

Hello,

Let us discuss the importance of procurement in an organisation:

Procurement is the act of obtaining goods or services, typically for business purposes. Procurement is most commonly associated with businesses because companies need to solicit services or purchase goods, usually on a relatively large scale.

In the private sector, procurement is viewed as a strategic function working to improve the organisation's profitability. Procurement is seen as helping to streamline processes, reduce raw material prices and costs, and identifying better sources of supply.

In essence, helping to reduce the ‘bottom line’. Indeed, in many organisations the importance of procurement is recognised by having their head of procurement placed at an Executive Board level.

Procure Right Quality Material at the Right Price

One of the major objectives of Procurement is to ensure the best quality goods & materials. It involves gathering detailed specifications during need identification stage such as item description, item make, required quantity, specific quality requirements (if any), required date.

Identifying suitable substitutes that can retain or improve product quality, selecting most efficient vendors who can deliver optimum quality goods, negotiating with vendors to supply at optimum prices, terms and so on.

Healthy Working Capital

By adopting various demand planning methods for developing a Procurement strategy, purchases are made just in time, only for the required quantities. This avoids situations of idle stock, overstocking and ensures a healthy working capital.

Reduced Purchase Cycle Time

Continuous focus on selecting the most appropriate source of supply as well as a wider network of vendors/suppliers, well laid out procurement policy all work towards reducing the purchase cycle time

Savings in Procurement Cost

Consolidating companywide Procurement requirements, long term forecast of procurements, conducting negotiations for staggered deliveries, identifying suitable alternate materials, having a larger vendor base all lead to having improved negotiation leverage; which eventually helps achieve significant savings in Procurement Costs.

Reduces Cost Per Unit

Significant savings in procurement costs, ultimately help to “Reduce the Per Unit Manufacturing Cost” and Improve Profitability.

It Directly Affects Your Bottom Line

Purchasing often takes up a significant portion of a firm's total annual budget. The cost of goods and services bought has a direct impact on the profit margin and the bottom line of the company.

These costs are unavoidable, of course, but through the implementation of an effective procurement strategy, it is possible to make significant savings in your expenditure.

Such savings – even minor ones – can have a huge impact on your company's finances, with a reduction in input cost meaning an increase in your profit margin as well.

It Reduces the Risk in Your Supply Chain

A smooth and constant flow of goods is the hallmark of a healthy supply chain. Disruptions in supply can have serious consequences for the entire organisation, both in the short term and the long term.

It could lead to a slowdown in production, delay in the delivery of goods, a loss of reputation, or other severe consequences and increased costs.

It Helps Drive the Long-Term Strategy of Your Business

Businesses, particularly small and medium enterprises, are always seeking growth. But as technology enables fast-paced expansion, supply chains are also strained.

A lack of insight into existing supplier capabilities can result in a critical shortage of materials at times when you can least afford it.

It Can Impact Your Reputation

The scale and complexity of supply chains have only grown in recent decades, particularly as the shift to a globalised world has quickened.

In the last few years, even smaller firms have gained access to international suppliers and, aided by technology and advances in communications, supply chains have grown even more complex.

There are many Procurement Professional Certifications available in the market at present.

From my experience I will recommend the best certified procurement professional certification.

As I have one reference for a certified procurement professional course I found one course on google they provide a certificate course . The cpp certification courses cost is also affordable here.

Cost : $400

Location: Online

If you are wondering where to begin this journey? Then you should check the procurement professional certification online here.

The GSDC certification bodies provide certified procurement professional certification online and it is valid and accepted globally.

Many of the reputed company employees have done certified international procurement professional courses from here and give good responses and rated the certified international procurement professional certification bodies.

To get this certification you have to pass the procurement professional certification exam from GSDC Institution.

GSDC's procurement certification is aimed towards sharing a deep understanding of all the basic procurement professional certification .

Hence from above information this will definitely help you to know about the importance of procurement in an organisation