"The modern purchasing agent is a more important man by far than he was in older days when purchasing agents were likely to be rubber stamps or bargainers for an extra penny. "The intelligence and fidelity exercised in the purchase, care and use of railway supplies influences directly the cost of construction and operating and affect the reputations of officers and the profits of owners." Īn early reference book from 1922 explains that The first written records of what would be recognized now as the purchasing department of an industrial operation is in the railway companies of the 19th century. 5 Alternative competitive bidding proceduresįormalized acquisition of goods and services has its roots in military logistics, where the ancient practice of foraging and looting was taken up by professional quartermasters, a term which dates from the 17th century.On the other hand, the introduction of external regulations concerning accounting practices can affect ongoing buyer-supplier relations in unforeseen manners. Organisations which have adopted a corporate social responsibility perspective are also likely to require their purchasing activity to take wider societal and ethical considerations into account. Corporations and public bodies often define processes intended to promote fair and open competition for their business while minimizing risks such as exposure to fraud and collusion.Īlmost all purchasing decisions include factors such as delivery and handling, marginal benefit, and price fluctuations.
Procurement as an organizational process is intended to ensure that the buyer receives goods, services, or works at the best possible price when aspects such as quality, quantity, time, and location are compared. If sound data is available, it is good practice to make use of economic analysis methods such as cost-benefit analysis or cost-utility analysis. Procurement generally involves making buying decisions under conditions of scarcity. Procurement is the process of finding and agreeing to terms, and acquiring goods, services, or works from an external source, often via a tendering or competitive bidding process.
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