procurement

Procurement (also Procurement , Purchasing or Acquisition ) is in business administration an operational function in companies that deals with the purchase and procurement logistics of material for further processing ( production companies ) or for the resale of merchandise ( trade ).

term

Procurement :

The procurement process is intended to ensure the needs-based and economical supply of goods . In the retail sector, for example, it includes the purchasing, scheduling, incoming goods, invoice verification and accounts payable functions.
According to narrower definitions, the focus is on production : making everything available that is needed in production (flow of real production goods)
In order to provide the service, the right goods ('objects') must be available in the right quantity at the right time in the right place , in the right quality and at the right cost (economically) (“6R”).

The scope of the procurement is defined inconsistently:

In the economy , procurement in the broad sense of the word is the cost-optimal provision of all input factors that are required for operational performance. Procurement objects can be materials, property, plant and equipment, rights, services, financial resources and personnel .

Procurement in the sense of materials management deals with the procurement of the input factors required for production, i. A. Materials and assemblies.

In the business literature , all production factors required to achieve the objective of the company ( raw materials , consumables , supplies , personnel / labor, capital , commercial real estate , services , rights , external company data ) are referred to as procurement objects.

In particular, the procurement of financial resources, real estate and personnel / labor brings with it an independent problem landscape, as there are special market conditions in these areas. For this reason, independent areas such as finance , facility management and human resources are responsible for this.

In common parlance, 'procurement' is often interpreted in a narrower sense, as the allocation of material (raw materials, consumables and supplies, semi-finished products, commodities) and services.

Conceptual delimitation and task

Depending on the point of view, procurement logistics are part of purchasing or vice versa. One possible way of looking at it is as follows: If you buy in the store, it is procurement. However, if you steal the goods in the shop, then this is illegal and therefore no purchase, but procurement nonetheless. It would follow from this that purchasing would be part of procurement. The division of tasks between purchasing and procurement, however, is clearer:

Purchasing tasks (in the narrower sense) are

Procurement market research (see also market analysis )
Invitations to tender, examination of offers , preparation of price tables
Contract negotiation and drafting (e.g. framework agreements and planning of order processing)
Selection of suppliers (see also supplier evaluation )

The tasks of procurement logistics (in the narrower sense) are

Organization of delivery transport

Receipt of goods and incoming goods inspection

Warehouse Logistics ( warehousing ) (the input bearing)

u. U. also transport logistics (in-house)

Different procurement options

Procurement processes exist in many different forms . The procedure and focus (such as supplier evaluation, price negotiations, quality requirements, actual delivery (punctuality, quality ...), legal issues, financing, etc.) are determined by the following criteria, for example:

Importance of the goods: strategic / cost-intensive… insignificant
Type of resources to be procured: material, rights, employees, services, software, ...
Repetition frequency of procurement: One-off processes ( software procurement - is often processed in the form of a project ) compared to ongoing processes (reorders in retail; processing via established processes)
Process standardization: Standardized (nationally / internationally standardized, company standards) ... individual processing of procurement measures
Software use: Supported with software ( e-procurement ) ... processed manually or without special procurement software

The procured goods themselves can be differentiated according to the following criteria - also with an impact on the procurement process:

According to the scope of the range of services, for example for capital goods (according to): product business (multiple production, range for a broad market), system business (complex service bundles for an initially anonymous market), plant business (complex service bundles, mainly customized)
Further processing of the procurement goods: unchanged sales (in trade) ... modified (refinement, final assembly) ... production aids (tools, raw materials, by-products)
Holding period of the procured goods: Direct passage to the point of sale (e.g. in the case of delivery to customers by the supplier) ... long retention period (raw materials, goods for own use)

Procurement = sales at the supplier

Procurement: Sales at the same time from the supplier

The 'Procurement' issue is on the vendor side 'Sales', where the procurer appears in the role of 'Customer'. Functional units on both sides therefore interact with one another at the same time when carrying out procurement measures. In Becker's retail H model, the units involved (using the example of retail companies) are described in an almost structurally analogous manner:

Procurement side: Purchasing → Disposition → Goods receipt → Invoice verification → Accounts payable
Sales side: Marketing → Sales → Goods issue → Invoicing → Accounts receivable

While in trading companies, for example, products mostly come from directly upstream procurement, possibly with interim storage, in other industries intermediate inputs are often used directly in the production processes (without specific procurement measures); Example: A bank uses exchange rate data from the stock exchange (= the advance payment) in a securities account management system used to supply customers with information (= own service / product). The procurement focus on the latter is z. B. on the (one-off and earlier) negotiations and agreements on the ongoing use of such advance payments.

Operational procurement process

The procurement of an article is triggered by material planning , which triggers a purchase request ( SAP abbreviation: BANF ). In production, scheduling is a sub-function of production planning and control . The order includes at least the article , the quantity and the time and place of delivery . The order is placed with a supplier who is usually already known and with whom a framework agreement exists. Some procurement procedures even stipulate that the supplier monitors the inventory online and delivers the missing goods unsolicited if the order inventory falls below the limit. Procurement has a major impact on a company's costs and liquidity.

Strategic procurement

While procurement measures for operational purposes are usually processed within the framework of defined business processes, in cases of particular importance, for example if they are strategically important, it can be expedient to process the procurement formally as a project . Reasons for this can be:

To plan the procurement as early as the product development phase [... at the manufacturer].
The procedure for obtaining individually or in contrast to the procurement process (default) to determine, for example, the application of a specific procedure model, individual decision criteria clearly defined milestones , etc.
To involve certain stakeholders with individually defined roles
Define special requirements for budget and deadlines - for B. standard reporting for projects is expected.

Procurement is also processed via processes - which are, however, integrated into a project procedure.

The PMBOK Guide provides six main processes for such an approach:

Procurement planning

The procurement planning determines which services or material resources are to be procured. This will often result from a comparison of the types of results (definition of content and scope) and the internally available resources. Tasks are quantity planning, time planning, and price planning.

Offer planning

The service descriptions for the offers to be obtained are created in the offer planning. In addition, the potential suppliers must be identified. In addition, the criteria according to which the suppliers are to be assessed are defined (e.g. price of the goods or service, technical competence, good experience / reliability, financial stability of the company, availability, etc.)

Solicitation of offers

The offers are then obtained from the potential suppliers.

Supplier selection

In the supplier selection process, the defined selection criteria are applied (or adjusted again if no supplier is able to deliver in accordance with the service description).

Contract processing

In the present context, contract processing means the continuous support and review of the supplier with the aim of ensuring the correct and timely provision of the agreed service. If difficulties emerge, the project manager escalates at the supplier company.

Contract termination

After completion of the delivery, the delivery relationship is properly terminated. For this purpose - depending on the project - z. B. the payment of the final invoice , implementation of a final discussion ( lessons learned ), agreements on naming the project as a reference project for the supplier, etc.

Procurement in Germany

The largest purchaser in Germany is the state: the federal, state and local governments buy goods and services for around 250 billion euros each year. At the federal level there are two large procurement authorities: On the one hand, the Federal Office for Equipment, Information Technology and Use of the Bundeswehr (BAAINBw) with an annual volume of around 3.7 billion euros and the procurement office of the Federal Ministry of the Interior with an annual volume of around 700 million euros. In the business sector, Deutsche Bahn AG is one of the largest procurers in Germany with an annual volume of around EUR 20 billion.

literature

Peter Spiller, Nicolas Reinecke, Drew Ungermann, Henrique Teixera: Procurement 20/20: Supply Entrepreneurship in a Changing World . Wiley & Sons, Hoboken NJ 2014.
Procurement , Part III B. In: Tilo Pfeifer, Robert Schmitt (Ed.): Masing Handbook Quality Management . 6th revised edition. Carl Hanser Fachbuchverlag, Munich / Vienna 2014, ISBN 978-3-446-43431-8
Gerd Kerkhoff: Purchasing Agenda 2020. Procurement in the future - secure and expand competitive advantages through visionary purchasing . 1st edition. Wiley-VCH, Weinheim 2010, ISBN 978-3-527-50501-2 .
Cornelius Mauch, Christoph Seyfarth: Purchasing in a crisis . FAZ Institute, Frankfurt 2011, ISBN 978-3-89981-717-1 .
Ulli Arnold: procurement management . 2nd Edition. Schäffer-Poeschel, Stuttgart 1997, ISBN 3-7910-9181-6 .
Gerhard Heß: Supply strategies in purchasing and procurement. Systematic approach and practical cases . 2nd Edition. Gabler, Wiesbaden 2010, ISBN 978-3-8349-1991-5 .

Web links

Wiktionary: procurement - explanations of meanings, word origins, synonyms, translations

Individual evidence

↑ Jörg Becker / Axel Winkelmann, Handelscontrolling , 2008, p. 168.
↑ Planning, managing and monitoring procurement processes (PDF; 397 kB) University of Hamburg.
↑ Wirtschaftslexikon24 (www.wirtschaftslexikon24.net/d/produktgeschaeft/produktgeschaeft.htm)
↑ J. Becker, A. Winkelmann: Handelscontrolling . ERCIS, 2006.
↑ 4managers strategic procurement (www.4managers.de/management/themen/strategische-beschendung/).

[1] Jörg Becker / Axel Winkelmann, Handelscontrolling , 2008, p. 168.

[2] Planning, managing and monitoring procurement processes (PDF; 397 kB) University of Hamburg.

[3] Wirtschaftslexikon24 (www.wirtschaftslexikon24.net/d/produktgeschaeft/produktgeschaeft.htm)

[4] J. Becker, A. Winkelmann: Handelscontrolling . ERCIS, 2006.

[5] 4managers strategic procurement (www.4managers.de/management/themen/strategische-beschendung/).