Corporate objectives for procurement
Contents |
[edit] Introduction
Procurement involves the purchase goods or services. It must be carefully managed to ensure value is obtained, the correct goods or services are purchased, a high level of quality is received, timescales are met and good relationships are maintained between the procurer and the supplier. Establishing a procurement strategy at the outset is key to a successful outcome.
[edit] Five objectives of corporate procurement
One approach to the corporate objectives for purchasing includes five basic principles. These are sometimes referred to the five Rs:
- Right quality
- Right quantities
- Right time
- Right price
- Right source
[edit] Right quality
The most appropriate items for a project may not always be the most expensive or the highest quality. Suitability is instead based on a combination of factors, including cost, characteristics and application requirements. These factors should be established by personnel who are knowledgeable in the business and technical aspects of the project and are able to verify the quality of items supplied.
[edit] Right quantity
Accurate purchasing can be based on a type of inventory management referred to as economic ordering quantity (EOQ). When calculated properly, the EOQ formula can help an organisation keep the size of an order at a minimum while still maintaining enough inventory to support the activities of the project.
[edit] Right time
The timing of purchases should be scheduled so materials are available - in the proper quantities and at the appropriate time. Inventory management methods should be put in place to trigger reordering based on historical data that tracks both material usage rates and necessary lead time (for delivery purposes). Since carrying excess inventory can be costly, it’s important to track this data closely and accurately.
[edit] Right price
The lowest bid isn’t always the most suitable bid for the project. However, every attempt should be made to negotiate a reasonable price based on specifications that have been carefully researched.
[edit] Right source
Selecting the most suitable vendor can not only contribute to a beneficial outcome, it can also help establish a self sustaining procurement strategy. Vendors can serve as partners who inform clients about possible factors - such as supply chain interruptions, pricing changes, additional potential partners and so on - that may have an impact on market conditions linked to the outcome of a project.
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
Net zero electricity grids BSRIA guide NZG 5/2024
Outlining the changes needed to transition to net zero.
CIOB Global Student Challenge 2024
Universitas Indonesia wins for second year running.
New project and cultural district described in detail.
The nature of EPCs, crticism and inaccuracies.
History, issues and redesign.
From waste recycling to energy performance the hierchy.
An introduction to WERCS and WEEE responsibilities
Dealing with 2 million tonnes of waste equipment a year.
Global BACS Market: analytics and optimisation
A BSRIA glance at building automation and control systems.
What it is and how to use it.
Types of insulating plaster by binder and insulant.
Investors in People: CIOB achieves gold
Reflecting a commitment to employees and members.
Scratching beneath the surface; a guide to selection.
ECA 2024 Apprentice of the Year Award
Entries open for submission until May 31.
UK gov apprenticeship funding from April 2024
Brief summary the policy paper updated in March.
For the World Autism Awareness Month of April.