What is role of Procurement

department in an Organisation?
&
How can they help in minimizing
price of finished product?
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Group Members
Names
Vaibhav Kadam
Mihir Panchal
Niyaz Khan
Manu Shaji
Pratik Tantia

Roll no.
04
08
18
20
31

Introduction

Procurement :- The action of obtaining or procuring

something

A procurement department is responsible for managing the

purchasing activity for the organization.
In a procurement department, the director is responsible for
strategic planning, policy development, and providing
procurement advice to senior management.
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Procurement Process
Identificatio
n of
requiremen
t

Advertise
requiremen
t

Expression
of interest

Tender
document
produced

Contract
Manageme
nt

Contract
Implemente
d

Contract
Award

Tender
Evaluation

How it works/ Example

Procurement may be a simple purchasing arrangement with a supplier. It may
also involve a more complex arrangement with the seller or a group of
suppliers that ties required quantity, quality, and delivery into a production
process.
The stages of procurement include information gathering (i.e. who are
potential suppliers),
Supplier contacts (i.e. gathering information about the potential suppliers,
Background reviews (i.e. vetting, screening, checking references of potential
suppliers),
Negotiations (i.e. setting the price and terms), fulfilment (i.e. delivery and
installation), consumption,
Maintenance, and disposal (i.e. monitoring the actual delivery and use of the
supplies or equipment),

Example
Direct procurement systems involve the integration of
purchasing into a company's supply-chain
management system, delivering the right supplies at
the right time.
This procurement method is classified in manufacturing
systems as "just-in-time," which minimizes inventory
holding costs and ensures the smooth delivery of
supplies needed in the manufacturing process.

Role of Procurement
department
To procure required services, materials, equipment, and
construction while ensuring that quality, safety, and costeffectiveness are achieved.
Assessment of demand or description of need
Selection of sources of supply
Receiving of quotation
Placing order
Making delivery possible at the proper time by following
up the orders.
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Role of Procurement
department
Verification of invoices
Inspection of incoming materials
Meeting transport requirements of incoming and outgoing
materials
Maintaining purchasing records and files
Reporting to top management
Developing coordination among other departments
Creating goodwill of the organisation in the eyes of the suppliers.
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How can they help in

minimizing cost?
AdvertisingCheck online media marketing versus traditional advertising. See if businesses in
your neighbourhood can team up with you to get better prices from advertisers.
Trucking and Shipping ExpensesDeduct costs for your car or truck in your business.
Contract LabourConsider contractors. Often, it can reduce costs to contract as opposed to hire
full-time employees.
DepreciationCheck with your accountant to see if your eligible for depreciation tax credits.
Consider Buying UsedAre there any categories of supplies you can buy used, reconditioned, or
get for free from sister businesses? Look online for opportunities to get gently used items.
MaintenanceIs it possible to use equipment longer? Regular maintenance can save thousands.
Educate your employees before problems arise.
Eliminating MiddlemanIs it possible to use equipment longer? Regular maintenance can save
thousands. Educate your employees before problems arise.
UtilitiesSmall savings per month ends up being large savings per year.

Cost reduction through

Procurement strategies
Customer
Requiremen
t Analysis

Forecast
Purchasing
Requireme
nts

Supplier
Identificatio
n&
Rationalisati
on

Identify All
Suppliers for
each type of
cost and
identify top 3
suppliers

Tender
Process
Negotiation

Negotiate
with
suppliers
Initiate
performanc
e reviews

Selection &
Approval

Obtain
feedback
from
Company
to review
costs.
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Effective Procurement
Strategies
Monitoring supply markets and trends.
(e.g. material price increases, shortages,
changes in suppliers) and interpreting the
impact of these trends on company
strategies
Identifying the critical materials and services
required to support company strategies in
key performance areas, particularly during
new product development
Developing supply options and contingency
plans that support company plans
Supporting the organizations need for a
diverse and globally competitive supply base

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