Procurement

Procurement covers the full purchasing process, including identifying needs, finding and evaluating suppliers, negotiating prices and terms, placing orders, receiving goods, paying invoices and managing supplier relationships.

Effective procurement can significantly affect a company's profitability. Purchased goods and services often make up a large share of total costs, so even small improvements in prices or terms can increase profits considerably. Procurement also affects quality, reliability and risk, since dependence on poor suppliers can disrupt operations.

For example, a manufacturer might run a competitive tender for its packaging materials, inviting several suppliers to bid, and choose the one offering the best combination of price, quality and delivery reliability.

Public sector procurement, by governments and public bodies, is usually subject to strict rules to ensure fairness, transparency and value for taxpayers' money, often requiring open competitive tenders for larger contracts.

Modern procurement increasingly considers wider factors beyond price, such as suppliers' environmental impact, labour practices, financial stability and resilience to disruption. Many organisations use specialised software to manage procurement and analyse spending.