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Why Procurement Is Important?

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The term business procurement is used to describe the activities related to purchasing of goods and services for a business entity. Procurement or purchasing is an important administrative function that employs the use of cost reduction and long-term strategic planning techniques to manage outgoing costs. The field of business procurement has three primary areas of focus: Tendering, vendor management, and strategic purchasing. People who work in business procurement are known as procurement professionals. There are three main job titles in procurement: Buyer, procurement officer, and procurement manager. A buyer is responsible for managing the purchase of commodities from selected suppliers. The procurement officer manages the tendering and vendor selection process. The main responsibility of the procurement manager is the overall operation of the department and negotiations with large dollar value suppliers. Tendering is the process of inviting potential suppliers to review a detailed requirements document and to submit their bid for the business. The requirements document contains the total dollar value and length of the contract, the type of product or service required, quality requirements, and contract terms. A significant amount of civil lawsuits are based on flaws or perceived bias in the tendering process. Following appropriate business process and ensuring a fair and transparent tender is very important. There are three terms commonly used in business procurement: Request for proposal (RFP), request for information (RFI), and request for quotation (RFQ). The type of response required is indicated in the body of the document, along with the dates and contact information. All three terms are used to describe a process when vendors are either invited to respond or the requirements are posted on a public website or procurement tool, allowing a wide range of suppliers to respond. Dates are very important in this process, and ignoring deadlines or missing them will exclude the response from consideration. Make sure to get a receipt with the time and date stamp indicating when the documents were received by the purchasing department, to avoid exclusion.

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