A comprehensive definition of Procurement

Source: Sourcing force

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You may already know that Procurement is usually used as a generic term for “purchasing” within an organization.

Though, there is a lot of variables and invisible details that make it trickier to understand than just the overall aspect.

I’m going to dive into a thorough definition of procurement and highlight the details.

What is Procurement? 

Procurement (or purchasing) is the process for an organization to obtain products or services from external parties (market supply) to ensure that production and business activities are smoothly carried out. Procurement practices can be divided into two parts : Direct Spend and Indirect Spend.

Direct Spend 

All materials, goods and services purchased by an organization in order to achieve the production of their own product(s). For instance, raw materials, machines, softwares etc…

Indirect Spend

All materials, goods, and services purchased by an organization for their internal use, e.g consultancy services, office supplies, software, hardware etc… 

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