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
COP28 and the Path Ahead for Industry
The last few days, but action needed over the next decade.
Finalists for 2024 CIOB Awards revealed
80 construction leaders and companies from across the UK.
Promoting the importance of building and fire safety.
Health and Safety Training for Construction Employers
A brief run through essential training tips from a user.
3D Laser Scanning in Building Construction
A comprehensive guide from a Cohesive BIM wiki user.
BIM for structural reinforcement modelling
From the basics to the future from our Cohesive BIM wiki.
ECA skills recharge at the House of Commons
As electrical sector feels skills shortage bite.
The impact of pandemic and new legislation on courses
CIOB Academy’s course take-up inked to external factors.
An artist, philanthropist and ex-Army helicopter pilot
Q and A with self-representing artist, Hannah Shergold.
Building Safety Regulator appoints permanent director
And publishes three-year strategic plan.
Update on the Energy Savings Opportunity Scheme (ESOS)
Introducing changes to make it more effective from 2024.
2023 CIOB photography competition
Shortlist announced for 2023 public choice award vote.
The last of the Victorians. Book review.
Grimsby's Kasbah: where’s that?
An exotic name that is shrouded in mystery.
This weeks guest editor, Ankita Dwivedi of Firstplanit.
From practice to research and the business of materials.