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What is procurement and Supply?
Starting a business involves dealing with many problems and processes. In most cases we give too much of importance to setting up of the business, the product process, market research, location for the business, and so on. By driving your attention to such aspects, it is common to give less importance to the Procurement and supply chain for your business. Many entrepreneurs believe that procurement and supply would turn out to be easy and least of their problems, but we need to understand that it is an important aspect as well. Let us have a look at each of them.
What is Procurement?
Procurement can be described as the purchasing or the location of purchase for your goods. Every business has its own contact through which they make their purchase for products, raw materials, and so on. Procurement is the process and the method of purchasing your goods from your supplier or point of purchase. It is always important to have the right contact or supplier through whom you purchase your goods for business, as he wouldn’t be your point of purchase for one transaction but all the transaction in the future.
Supply chain or simply the supply of goods and products from either the buyer to the seller or the seller to the consumer. In our case, let us take the example of the seller to consumer. Your supply of goods to your consumer would highly depend on your procurement method and time zone. If you receive your goods late, then you would supply them late to your consumer. Hence, you should always have a good procurement method, because supply depends on this particular aspect.
The Purchasing process
How does this normally work? You draft a document and place an order with your supplier with the necessary details and after confirming the proper terms and conditions of the bill or purchase order you receive a confirmation from your contact and according to the decided payment terms, the process is carried on, and you finally receive your goods on the date mentioned. It is always better to have a known contact as your supplier.
How can you carry out the supply part of your business on time and effectively? Sooner or later, you are going to run out of stock, and hence it is necessary to order on the right date to receive the goods again before the stock ends and you run out of inventory. You need to have a dedicated team who can work on your behalf and handle all the ends from the point of purchase to the point of supply.
One of the effective ways to keep things smooth in procurement and supply would be to maintain good accounting of the same. If you have accounted for all the things in a good manner, you will understand all the flaws or mistakes which you are making, resulting in the delay of goods or delivery and so on. This can help you keep track and also run your business smoothly.
Yes, procurement and supply are two aspects that should always remain constant throughout your business to avoid delay. However, you can conduct some research and have a look if you are getting the products at the right price and at the right time? Sometimes, many suppliers offer different prices to different sellers and so on, you need to always be cautious. There’s never any harm to change your purchasing point in case you feel a need or a strong reason to do so.
The Terms and Conditions
Always have a good look at the terms and conditions upon which you are carrying out the transaction with your supplier. Since you are new in the game, a third-party seller may try to take the advantage of the same. If you feel the transaction is not in your favour, you can always choose the alternative. The time zone for delivery of goods, the amount of cost covered in case of loss of goods in transit, and so on. These are a few points which you should always watch out for.
Procurement and Supply may seem easy concepts, as once you have selected the respective parties you never have to look after those aspects again, but it is always in your best interests to always keep accounting and look out for other sources if necessary.