Chapter Outline
   Chapter Outline
   • Nature of Procurement
   • Development  of  Purchasing  and  Supply 
     Strategies
   • Knowledge of Supply Markets
   • Purchasing    Decisions    and   Business 
     Strategy
   • The Legal Aspects of Purchasing
   Learning Objectives
   Learning Objectives
   • Understand     the    nature     of 
     procurement 
   • Understand  the  legal  aspects  of 
     purchasing 
   • Identify purchasing and supply chain 
     as a procurement activity
    Nature of Procurement
    Nature of Procurement
            What is Procurement?
            A process of obtaining services, 
            supplies  and  equipments  in 
            conformity  with  applicable  law  and 
            regulations.
            The  acquisition  of  appropriate 
            goods  or  services  at  the  best 
            possible total cost of ownership.
            The term has wider meaning and it covers all purchasing 
            activities  whose  purpose  is  to  give  buyer  the  best 
            value for money.
      Nature of Procurement
      Nature of Procurement
      Cycle View of Supply Chain 
      Processes
                                                                  .sr dero s’remotusc
        Customer Cycle         het ngillf nda ngiviecern id evlovni yltcerdi sessecopr lla sudelncI•
        Customer Cycle
                                                .ecafretni reliater/remotusc het ta surccO•
                                                              . ndam de eurfut teem oT•
        Replenishment         .yrotnevni reliater nghisnieplern id evlovni sessecopr lla sudelncI•
        Replenishment 
            Cycle                                    .ecafretni robutirtsdi/het ta surccO•
            Cycle
        Manufacturing      .yrotnevni robutirtsdi nghisnieplern id evlovni sessecopr lla sudelncI•
        Manufacturing 
            Cycle                        .secafretni reurtcanufam/robutirtsid het ta surccO•
            Cycle
                                                           . ngiurtcanufam rof eblaliava
         Procurement          era slairetam lla that eurnse ot sessceorp ryassceen lal sudelncI•
         Procurement 
            Cycle                           .ecafretni reiuppls/reurtcafunam het ta surccO•
            Cycle
  Nature of Procurement
  Nature of Procurement
  Types of Purchases:
  1. Commodities/Raw materials – petroleum, gas 
    oil,  rubber,  copper,  gold,  cotton,  soybeans, 
    grains etc.  
  2. Semi finished Products and Components – 
    single part number components, subassemblies, 
    subsystems etc.
  3. Finished Products – outsourced all production 
    capability and capacity
  4. Maintenance, Repair and Operating Items
  5. Production  Support  Items  –  pallets,  tape, 
    bags etc.
  6. Services – consultants, machine repair, courier 
    etc.
  7. Capital Equipment – furniture, machinery etc.
  8. Transportation and Third-Party Purchasing