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The Role of Procurement Decision Programs Essay

Procurement is when a certain firm or business entity purchase goods or services at the best possible financial estimation that can help the consumers and the firm’s managers in assessing direct and indirect costs related to the acquisition of capital investment. By procurement, purchasing these goods and services must be in the right quantity, quality, time, and place so that many parties can benefit such as governments, companies, and individuals through a contract. Although procurement is done through a contract, it is not restricted to it (“Procurement”, 2006).

Procurement decisions include repeat purchasing and finding partners as well as suppliers. Actually, the main goal of procurement decisions is purchasing goods given a budget constraint. For example, a manager in a health service could have a wide selection of which health equipment to purchase. He can opt to purchase an MRI scanner for a hospital or allot the budget for a campaign on vaccination. This is where the role of procurement decisions enters. Another example is when a military officer is given the choices of buying aircrafts or trucks. With the help of procurement, decision making can largely help the firm or the individual (“Procurement”, 2006).

Programs that are involved in procurement decisions

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include bidding, information gathering, supplier contract, background review, negotiation, fulfillment, consumption, maintenance and disposal, and lastly, renewal. Bidding plays an important role in lowering cost. For example, if ABC Company desires a product but is over the threshold that has been set by the company will require a bidding process. Information gathering is also important in procurement decision since it can help the firm decide on what suppliers to choose.

Information gathering is used in seeking suppliers that can meet the firm’s standards. Supplier contact is used to obtain direct contact with the chosen supplier. Background review plays a very important role in assessing the quality of the products offered by the supplier. Negotiations are done when price, quality, and delivery schedules are being talked about.

Fulfillment involves the shipment, delivery and payment of the good or service rendered by the supplier. Consumption maintenance and disposal is responsible for assessing the performance of the good ore service provided by the supplier. Lastly, renewal is the process of deciding on whether the company will continue with the supplier or not (“Procurement”, 2006).

In general, the role of these programs in procurement decisions is its impact on savings, quality, and time.

Reference:

Procurement. (2006).   Retrieved December 13, 2006, from http://en.wikipedia.org/wiki/Procurement

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