Essay The History of the Procurement Function in Business

History Fifteen to twenty years ago companies only had purchasing departments. The procurement function was treated more as a need or necessary evil. So when companies use to procure their goods and services the main thing was to cut a purchase order and get that item or services delivered. Not much was thought concerning leveraging the suppliers or putting long-term contracts in place to protect both the company and the supplier. About ten to twelve years ago or so, companies starting getting smarter and reasoned that any good they bought it doesn’t make good business sense to have too many suppliers. They reasoned they should have a limited number of suppliers and should be able to manage it and understand what they were buying and how†¦show more content†¦Firstly, define what the organization buys and needs on a recurring basis. Then, the organization should take a current evaluation of its sourcing needs (a snapshot if you will) and then forecast future state sourcing ne eds for say where the firm would like to go in 3-5 years; 5-10 years and so for forth. Then arrive at a good understanding of total cost and the distinction of supplier price. Total cost could entail transportation, poor or premium quality of materials, salaries of premium employees, etc. Then you do a market scan or market research to evaluate competitiveness, similarities and the like to ensure you under the marketplace for a particular supply or service group. Before selecting a supplier, a firm can survey the capabilities by issuing a request for information (RFI) or a request for proposal (RFP), followed by negotiations and finally you evaluate vendor performance management for the supplier that has been chosen. So how is strategic sourcing different from traditional procurement? Traditionally procurement had been more operations oriented or needs based. Whereby whatever the company wanted or needed would be requested through the procurement department and the authorized representative would just make a few calls to find the item and its availability and make the purchasing arrangement. Rarely were there long-term contracts in place to optimize delivery, availability, or to ensure the quality of the products met or exceeded the firm’sShow MoreRelatedBusiness Process Integration with Sap R/31295 Words   |  6 Pages{draw:frame} Business process Management with SAP R/3 Index 1. Executive summary 2. ERP Introduction 2.1. Evaluation of ERP 2.2. Vendors of ERP 2.3 Advantages and disadvantages of ERP 3. Legacy Systems 3.1. Advantages 3.2. Disadvantages *3.3 Procurement of E*RP instead using legacy systems 4. * Nature of *SAP R/3 4.1. Advantages of SAP R/3 4.2. Disadvantages of SAP R/3 5. Business process integration in the procurement cycle of SAP ERP 5.1. 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