Large organizations using information technology as the primary source for conducting businesses resort to specialized procurement function which has much more to offer than mere purchasing activities related to the organization.
What is procurement and how is it different from purchasing?
Purchasing refers to the activity of meeting the requirements of an organization by buying the required equipment from the market place with the primary intention of ensuring that the purpose of the requirement is met. In most cases, cost will be factor and quality, reliability, service and such other things will not be mostly considered in a simple purchasing activity.
Procurement, on the other hand, includes purchasing as one of the functions. In an organization, analyzing the need for purchases, calculating the cost-benefit analysis, finding the vendors, selecting the best supplier, agreeing with terms and conditions, taking delivery of the material, finalizing the service agreements, and above-all, building a very good relationship with the supplier are essential activities of a procurement department.
It is in this context that procurement training gains significance. Many community colleges and/or management institutions are imparting this training course to groom people in this important department in any organization.
Procurement training is broadly divided into three broad categories – data processing activities, analysis of purchases, and management of the equipment.
In data processing activities, the need for purchasing equipment will be analyzed taking into consideration the broad objectives of the organization, the role or importance of the equipment and the benefits the organization would reap from purchasing that equipment. The technical aspects of the equipment, the computer jargon used in specifications and such other things should be correctly recorded and ensured that there is no mistake in determining the actual requirement for the organization.
Procurement training includes analysis of the bids submitted by the vendors, where the company floats tenders and invites bids from prospective vendors for short listing. Comparative analysis of the bids – both in technical aspects as well as financial aspects, representing the same in pictorial format such as charts or diagrams, and assessing the cost of purchases forms part of the procurement training.
Procurement training also includes effective management of the equipment that includes periodic maintenance, training, after-sales service and warranty obligations. The training course also includes the legal aspects of contract between the purchaser and the seller, obligations and rights of the buyer, and such other things that will ensure smooth and efficient functioning of the equipment.
Procurement training requires that a person understands the broad procurement policy of the organization and ensures that the procurement process is carried out in line with the policy of the organization. Ensuring that the policy is properly followed – starting from initiating the request for purchase of equipment from the specific department – up to the installation of the equipment and deploying it for use in the organization – should follow the rules and regulations laid out in the procurement policy, and procurement training should ensure that this is strictly followed.
The very need for a separate procurement department is to channelize the purchasing activities, establish standards and specifications, have effective control over costs, reduce wastage, and, in turn, improve the productivity of the organization. Procurement training involves preparing a person to take up the challenges in procurement department such that the mission of quality services at competitive prices is offered to the customers.