Procurement is: understanding, process, and difference with e-procurement

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Procurement is: understanding, process, and difference with e-procurement

Procurement is understanding process and difference with e procurement

Procurement is an activity that is very common in a business or company. The company that is in need of products or services in a very large number will generally make or organize the procurement process.

As technology develops, it is currently applied an e-procurement system, which is made to better efficiency of the procurement process. Well, on this occasion, we will focus on discussing the actual understanding of the procurement and its relationship with e-procurement.

As we already know together, that in business activities will always involve two main characters, namely buyers and sellers. Actually, this process looks quite simple, but in reality the practice in it is very complex. So, the e-procurement system is born which can help facilitate the process of procurement.

The definition of procurement is

Basically, procurement is a form of activities carried out by a company to buy raw materials, various business tools, production machinery, or various building materials, repair equipment, and services that are currently needed by the company.

So, why does the company need to hold a process of procurement? Because procurement is a process that aims to help the company in obtaining goods that are in accordance with their needs and needs in quantity, location, quality, time, and at the lowest possible cost.

In addition, the other purpose is that the company can reduce the cost as much as possible so that the company can get a big profit. Therefore, the process of procurement is one of the right methods to obtain this profit.

Procurement process

Usually, the process of procurement will include various processes that must be done. The process will certainly look simpler than the practice. The following are some process proocurement

1. Identify company needs

Induring on the need or company requirements in the process of procurement are the initial stages that must be done. In this case, the company’s management must already know exactly what they need, because this is very crucial and important.

Because, if there is a purchase that is not too needed or there is a purchase error, it will only waste all resources owned by the company, so that it will cause uneven losses.

2. Purchase authorization

In this case, the company’s management must be able to provide sales authorization in the process of implementing procurement. It is very important to avoid various internal conflicts that are very prone to occur.

So, the company will only make a purchase if it has been approved by certain parties that have been appointed directly by management. Because of these parties who can give approval to buy goods that are certainly an agreeable by the company’s management.

3. The form of approval must be a written document

In this case, Approval Management is usually made, which is in the form of a sign of approval that the process of procurement in a company can already be done. But, even though this is important, it will be returned to the SOP on each company.

4. Opening tender to suppliers and vendors

Tender is a auction system for vendors and suppliers in submitting prices, quality, and also the best features, which they will compete with each other to be able to obtain a project organized by the company.

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For the tender company, they will choose vendors who file the cheapest at the highest quality. The opening of this tender will be opened and will also be disseminated in order to attract the attention of suppliers and also the best vendors.

5. Identification and analysis of suppliers and vendors

After you get a list of suppliers and vendors, then you must be able to analyze every supplier to be able to ensure their history or experience, both in terms of professionality, timeliness, etc.

6. Reception Quotation or Offer of Goods and Services

After you analyze a list of vendors and suppliers, it will certainly be some vendors and suppliers to be eliminated because of the mismatches of the criteria needed by the company.

Then, the next process is to make a request for offers to the vendors and also the supplier of escaping. This can be used as an important indicator for the buyer’s company, because of this it can be seen whether the supply to be obtained by the company will later provide profits or not.

7. The process of negotiating the term of payment, price, quality, time, etc.

When the company receives an offer, the company will get an overview of which vendors or suppliers have the potential to win the project. Later, every candidate for vendors and companies will negotiate so that the company can get maximum profits.

8. Selection of suppliers or vendors

By based on the need and the company’s needs, the suppliers and vendors who are able to provide the best offer will be selected as the winner of the Tender Procurement organized by the company.

9. Manufacture of Purchase Order (PO)

If the company has chosen supplier, the company will carry out the procurement process will make PO or Purchase Order to the supplier as a purchase sign. In general, this document is signed by individuals from the management.

10. Reception Delivery Order (DO) or Work Order (WO)

When the supplier has received a PO, the supplier will send a delivery order or work order, depending on the type of purchase. Then, this document will be sent to the buyer’s company to be re-confirmed and signed by certain authority.

11. Acceptance and Check Quality of Goods & Services

After the company and suppliers approve the PO and DO document along with the nominal price, then the item will be sent and the buyer’s company will receive goods from the supplier. Later, the buyer must check the quality of goods or services in accordance with the quality and also the quantity.

12. Documentation Invoice

Furthermore, the buyer’s company will receive an invoice. The invoice document will be used as proof of the purchase of the company. The company must pay attention to the purchase tax and also various other taxes that must be paid in accordance with the agreement or initial agreement.

13. Check Invoice, Delivery or Work Order, and Purchase Order

The company must be able to carry out carefully checking related delivery orders, purchase orders, and invoices to avoid nominal payment errors.

14. Payment to supplier or vendor

After checking it has been done, the company must pay according to the approved nominal in the quotation sent by the vendor or supplier.

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In general, the focus of consideration in conducting proocurement projects has four things, namely the benefits, time, risk and costs. Four things must be considered by the goods provider or supplier.

However, the company that holds a procurement will strive to get goods or services at the cheapest price, the fastest time, the smallest risk and also benefits or features that are very large and also effective.

Conversely, suppliers who follow the procurement process have the opportunity to sell goods or services with expensive prices, quantity and low quantity, and maximize profits by minimizing the project of project workmanship. So, negotiations in this process of procurement will be a process that will definitely occur.

Therefore, the process of procurement is a complicated process and is not easy to do because it will include many parties, a good market analysis is needed, and also a transparent and trustworthy tender method.

The complexity of the procurement makes the process of the procurement manual has begun to be abandoned slowly, and many companies have switched using the e-procurement system.

E-Procurement is

If we talk about 3-procurement, in general we will immediately remember the e-procurement initiated by the government.

In fact, e-procurement can not only be done by the government or state-owned companies. At present, many companies have used the e-procurement system for the process of procuring their goods or services because they are considered more efficient.

E-Procurement is a process of procuring goods or services carried out electronically and facilitated by software or websites with an internet connection.

In general, this process starts from public auctions, then digitally prequalification and process of sourcing by utilizing a website-based module.

Chaffey explained that e-procurement is an integration carried out electronically in the management of all procurement activities, including purchasing, demand, authorization of an order, delivery and also payments made between buyers and suppliers.

Countries that have succeeded in developing this e-Procurement system are Australia and Scotland. Based on the developments initiated by the two countries, Indonesia finally also used this e-procurement system.

Conclusion

Thus an explanation of procurement. Based on the explanation above we can conclude that procurement is a form of activities carried out by a company to buy raw materials, various business tools, production machinery, or various building materials, repair equipment, and services that are currently being needed by the company.

In this process, the Company will choose suppliers capable of offering supplies of goods or services at the lowest price but with maximum quality and features. So, the company can maximize its profits.

However, the process of the procurement manual has been abandoned a lot because it is very complicated and wasted a lot of time, thus developed into an e-procurement process which is considered more efficient and the benefits that can be achieved by the two parties can be more.

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