Procurement can be defined as the purchase of merchandise or services at the optimum possible total cost in the correct amount and quality. These good and services are also purchased at the correct time and location for the express gain or use of government, company, business, or individuals by signing a contract.
The process of acquisition of goods or services required as raw material (direct procurement) or for operational purposes (indirect procurement) for a company or a person can be called procurement. The procurement process not only involves the purchasing of commodities but also quality and quantity checks. Usually, suppliers are listed and pre-determined by the procuring company. This makes the process smoother, promoting a good business relationship between the buyer and the supplier.
The synonyms for procurement, which are gain, purchase, buy, and acquire, can throw light on the meaning of procurement. The process of procurement may differ from company to company, and a government institution may have a slightly different procurement process compared to a private company.
Procurement can also be simply defined as the procedure in which goods or commodities are bought when prices are low. Procurement is advantageous if the goods are bought in bulk. E-procurement is another method in which the electronic media is used for acquiring or purchasing goods. Everything is processed electronically, from the search for the right bidder to the delivery and payoff.
The procurement procedure may differ according to the product and the uses of the product. Healthcare equipment needs to be efficient and reliable, and the procurement process is carried out meticulously in order to avoid the purchase of faulty apparatus. Another important factor that is usually included in the definitions of procurement is the amount in which the product is bought. This is important because the amounts of goods bought are inversely proportional to their cost.
Thus, procurement is a process that is carried out by almost every company and individual for its own personal gain or for profits, which involves buying of commodities by choosing the appropriate bidder.