Emerging Issues in Procurement

2401 Words Jul 2nd, 2012 10 Pages
According to Kenneth lysons and Brain Farrington, procurement and supply chain management, procurement is the acquisition of goods and services in return for a monetary or equivalent payment. Procurement however, is the process of obtaining goods and services.(http://en.wikipedia.org/wiki)
Emerging issues are issues that are coming up to improve on the purchasing process. The following are some of the issues, Out sourcing, E procurement, Group/consortium purchasing , purchasing card and Green procurement/purchasing.
Out sourcing, is the management strategy by which major noncore function are transferred to specialist, efficient, external service providers
This is normally done after negotiating on a contract agreement with a vendor who
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"Automating the procurement process can, in theory, reduce unauthorized spending, slash administrative costs and enable companies to better manage purchasing by analyzing spending patterns. In fact, Degnan cites research showing that the average cost for processing a purchase order manually is $114 per P.O. By automating that procedure, the cost goes down to an average of $31.50 per purchase order, she says. In terms of time, e-procurement drives days out of the process - from just over a week to two days, Degnan adds. And unauthorized, or maverick, spending drops by 51%.
The e-procurement system helps companies consolidate data on procurements of various goods, direct or indirect. These data enable them to go in for bulk purchases, on which suppliers extend handsome discounts. For instance, the ten different independent departments of the company may be buying a particular product in small numbers. However, a centralized and well-networked procurement system in the organization will help track the periodic demand for the product and bulk purchase orders can be made accordingly. If the company can easily demonstrate to the supplier that there is a consistent demand, it can successfully leverage its purchasing orders. Moreover, by channeling all orders for certain parts and supplies through a specified route, the purchasing company can reduce the number of transactions needed for these items.
E-procurement can be advantageous in the area of MRO…