Procurement

Procurement

Introduction

In the world of business, there are many things that need to be looked after. Right from the start of the business till its end, a lot of operations are done for the business. This is to make sure that the business keeps on running as smoothly and productively, as possible. When one talks about business, the first thing that comes in the mind of a person is buying and selling. This buying and selling can be subjected to both, products, as well as, services. A business runs with several people and various departments. All of the people are related to some part of the business that they carry out and look after. The most basic function that the administration of any business organisation needs to look after and carry out is the purchase or procurement of materials. This procurement can be of the raw materials that are needed to make the finished products, or the machinery that is required to convert the raw materials into final goods. The procurement department of any business organisation affects the overall functioning of the business as it is the very first step towards achieving significant productivity. The costs, as well as, the quality of the products produced, depend heavily on the type and cost of the material purchased by the people of the procurement department. Michael Porter has laid considerable emphasis on the importance of procurement in the strategic functioning of any business organisation. The trends and ways of procurement have changed according to the needs of the modern world. The importance of procurement in the accomplishment of strategic goals cannot be neglected.

Discussion

Value Chain Analysis

Michael Porter was the pioneer of the concept of the value chain. He wrote about it for the first time in his book "The Competitive Advantage", which was published in the year 1985 (Porter, 1996. Pp. 61-78). According to Porter, the activities which are carried out within the premises of the organisation, add value to the service or product that is produced by the organisation. If the organisation wishes to remain competitive, as well as, maintain the competitive advantage it has over the competitors, then the value adding activities of the company should keep running at an optimum level. The generic value adding activities of the organisation are the core of the process of the value chain. There are some primary activities of the value china and some supporting activities. The primary activities are the ones which are of prime importance to the process of procurement. They include

1.Inbound logistics

2.Operations

3.Outbound logistics

4.Marketing and Sales

5.Services

These activities are necessary for the proper functioning of the organisation. They also add a large part of value in the products and services of the company. There are some support activities, which support the primary activities of the value chain. These activities are of paramount importance too, as without these activities, the main activities of the value chain cannot be accomplished in the best possible way. The support services include ...