Procurement

What does Procurement mean?

Procurement is the process of acquiring goods, operating resources, materials, services or works from an external source. Often, procurement is determined through a competitive bidding process or by the offer of tender.

The primary objective of procurement is to ensure a long-term supply in line with demand at the lowest possible cost. Procurement includes several sub-areas: determination of requirements, source of supply, ordering, material acceptance and storage.

As an essential operational function, the term procurement is closely related to the term purchasing. However, procurement is often understood to be more comprehensive and strategic, with purchasing "only" forming a sub-function of procurement. Modern procurement forms a part of corporate management that helps to ensure the viability of a company by ensuring long-term supply, cost minimisation and market orientation.